AIANC's STREET WISE - July 2014

More Information about AIANC Membership at www.AllianceInsuranceAgentsNC.com

STREET WISE Alliance of Insurance Agents of NC

Are you breaking the law when you buy or sell an insurance agency?

Where’s Your Privacy Policy?

In This Edition ARE YOU BREAKING THE LAW WHEN YOU BUY OR SELL AN INSURANCE AGENCY? ....................................... 1

WHERE’S YOUR PRIVACY POLICY? . 1 CYBER LIABILITY, YOUR AGENCY & YOUR CLIENTS ............................... 6

Last weekend, as I was updating the content of my “How to Evaluate, Buy & Sell a ‘Mom & Pop’ Insurance Agency” Ethics CE, I stumbled over a potential roadblock in the “Buy / Sell” scenario.

A COMMODITY VS. A RELATIONSHIP 8

Did you know that our insurance companies have Privacy Policies? Ever read one?

ACQUIRING AND KEEPING GOOD PRODUCERS ................................ 11

Have you created such a notice for your agency?

HOW TO EVALUATE, BUY & SELL A ‘MOM & POP’ INSURANCE AGENCY ................................................... 13

The Gramm-Leach-Bliley Act (GLBA) imposes privacy obligations on every insurance agency:

AFFORDABLE CARE ACT 2015 ..... 13

http://www.ncdoi.com/

AIANC’s STREET WISE

Privacy Notice Disclosure Requirement. Every insurance agency must provide all customers with an initial and annual notice that describes the manner in which their nonpublic information is collected, maintained and disseminated.

Are you breaking the law when you buy or sell an insurance agency?

Since the prospective buyer was not a party to the original application for insurance, does the owner have the right to sell the personal information without getting permission from each policyholder?

Would that be considered a Data Breach under the current regulations?

Insurance agencies are at risk of having a data breach on multiple fronts — negligence, a rogue employee, stolen equipment, or a network security failure. If the proper insurance protection is not secured before a data breach occurs, the future of the business could be in jeopardy due to extensive recovery and reimbursement costs as well as damage to its reputation.

Opt Out Notification Requirement. Before sharing nonpublic personal information about a consumer with a nonaffiliated third party for a nonexempted purpose, the consumer must be notified of the right to prohibit the sharing of such information for such a purpose (an “opt out”).

Core Cyber™ provides organizations the expert assistance and financial relief needed to confront a data breach head on.

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July 2014

Continued on page 2

More Information about AIANC Membership at www.AllianceInsuranceAgentsNC.com The program has important protection to satisfy mandates and appropriate risk management, while also delivering the peace of mind that comes with financial protection and on demand breach assistance.

Privacy Policy Continued from page 1 With a host of value-added consultancy services available before, during and after a data breach incident; and financial assistance in the event a covered breach occurs, Core Cyber is the comprehensive solution organizations need to ensure a data breach incident does not challenge their future.

More information https://biz.identityfraud.com/goagents/PIA

“Our relationship with the AIANC has been longstanding. We are pleased to have the AIANC leverage our click and bind platform that has now also integrated the cyber protection program from IFI. Agents can not only add value to their customers but reduce their E&O exposures as well.

at

Everyone has data and everyone needs cyber protection. Our combined efforts simplify the process and make it workable in the SMB space,” states Michael Mandell, COO of GoAgents.

Data Security and Integrity Requirement. All insurance agencies that collect or maintain a customer’s nonpublic personal information must institute mechanisms for protecting the security and integrity of that information.

Program Highlights: Prevention

Security Mechanisms are designed to protect the nonpublic information from inadvertent disclosures.

• Computer Vulnerability Scans (Internal) • Unlimited Access to Employee Education

Integrity Mechanisms are intended to protect nonpublic personal information that is maintained in an electronic medium from becoming corrupted.

Modules • Risk Assessments, Written Policies/Templates, Incident Response Plan

Have you ever read your Agency – Company Agreement?

• Keystroke Encryption Software Protection

Agents should be careful about agency contracts that include specific provisions requiring agents to adhere to an insurance company’s privacy policy. If the privacy polices of different insurance companies address security and integrity mechanisms differently, agents agreeing through agency contracts to adhere to those differing requirements may find it impossible to comply with all of them.

• Limits of Liability – $50,000 up to $1 Million – Retentions $1,000 ($2,500 for limits at or above $500,000) • Cyber / Breach / Privacy Legal Liability and Defense Coverage

The Gramm-Leach-Bliley Act (GLBA) imposes privacy regulations for all insurance producers unless they qualify for an insurance agent exception.

– Loss/Theft of Personal and/or Business Data – Failure to Disclose/Notify – Regulatory Fines and Penalties

Do you qualify for the exception? Maybe.

But there’s no exception for your responsibility for a data breach regardless of the reason.

– PCI DSS Fines and Related Contractual Obligations ($250,000 sublimit)

That’s why you need Cyber Liability … before and after the sale!

• Web Site / Media Liability for libel, slander and certain related web site risks

As insurance professionals, we all know coverage gaps exist in traditional insurance policies and that these gaps need to be filled. Agents can now more aggressively pursue and succeed in providing valued cyber solutions to their clients based on having our program”, states Tom Widman, president and CEO of Identity Fraud, Inc.

Pricing: $229 per year up to $1699 based on organization size and desired limits.

The new program combines the GoAgents.com unique agency distribution platform together with the cyber risk management and insurance solutions provided by Identity Fraud, Inc. and their A rated insurers.

AIANC’s STREET WISE

https://biz.identityfraud.com/partner/goagents/AIANC

Learn More: http://www.goagents.com/data-risk-liability?code=AIANC Direct Link to start quoting:

Learn More: http://www.goagents.com/data-risk-liability?code=AIANC Page 2

July 2014

Giving agents and organizations new products and benefits.

Increase sales. All online. Easy to use.

OFFERING HIGH QUALITY NICHE PRODUCTS Home Warranties Appliance Protection Plans Auto Service Contracts Power Sports Service Contracts Pet Health Insurance Boat Insurance Discount Medical Plans Individual Identity Theft Business Identity Theft GoAgents is proud to be working together with the highest valued companies in the industry to bring you niche products, enabling you to cross sell and increase revenue with new and existing clients.

Questions? Call us at: (Toll Free)1-855-854-7387 or Learn More online at www.goagents.com

More Information about AIANC Membership at www.AllianceInsuranceAgentsNC.com But, that day was different. I was in a different mood and so were many of the passengers. And it was all because of our pilot, Gerald Worthington. His mood was contagious. And that is what brings me to the point.

You may have heard the old expression: Enthusiasm is contagious. Well here’s a new one: Customer service is contagious. Actually it might be better to say that…

When it Comes to Customer Service, Be a Leader

Friendly customer service is contagious.

There is no doubt that Gerald put us into a better mood. His mood made accepting the bad news easier.

It wasn’t the airlines fault that there was bad weather.

And, by the way, there are many passengers that seem to think it’s the airlines fault when there is a delay due to weather. But, I digress. It just seemed that the outward friendliness of our pilot made everyone a little happier, more accepting and more tolerant.

And, guess what else? The other captain and all of the flight attendants were in a better mood too, and as a result, they delivered an even higher level of customer service.

Here’s the lesson: A friendly, outgoing, customer focused employee can raise the bar for everyone.

Gerald set a great example for the rest of the employees to follow, and they did. In a sense, Gerald created the plane’s “culture.” Just like any other company might have a customer focused culture, it starts with leadership.

And, here is a reminder about leadership. My friend and colleague Mark Sanborn says that you don’t need a title to be a leader. And when it comes to customer service, anyone can step up and be a leader and role model. So, step up. Set an example. Others will follow.

It’s contagious!

I was boarding a very early morning flight to Dallas.

One of the pilots of the plane, Gerald Higginbotham, was greeting every single person who walked on the plane.

He was so outgoing and engaging. He welcomed everyone and built rapport with many of the passengers.

He would ask, “Where are you going?” If they said anywhere other than Dallas, he would say, “Well we’re flying to Dallas, and as long as that is on your way, you’re on the right plane.” Then he would laugh.

Shep Hyken is a customer service expert, professional speaker and New York Times bestselling business author. For information contact (314)692-2200 or www.hyken.com. For information on The Customer Focus™ customer service training programs go to http://www.thecustomerfocus.com. Follow on Twitter: @Hyken (Copyright ©MMXIV, Shep Hyken)

He had lots of little sayings that put smiles on everyone’s faces. I was sitting in my seat and admiring this amazing display of enthusiastic interaction. I’ve seen pilots engage with passengers before, but not at this level.

Then came the bad news. Our flight was going to be delayed by at least a half hour due to weather. That didn’t scare too many people. But, a few minutes later we found out it would be at least an hour. Typically when this kind of news is announced many of the passengers start to get restless. They want to leave the plane, see a gate agent, call reservations or do just about anything, to feel like they are proactively doing something to avoid missing connections or being late to their destination. I’m one of those passengers.

AIANC’s STREET WISE

“We Know Who You Are!” Check out www.DigitalShadow.com

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July 2014

Security, Accuracy & Reliability Focus on what you do best!

Selling insurance.

Let us focus on what we do best!

Ensuring your financial peace of mind.

Give Rosemary A Lambert, CPA, PA a call.

Whether you need daily financial guidance, or yearly tax planning services, our professional staff will work with you to customize a plan that aligns with the goals of your agency.

Our firm understands the need for absolute confidentiality. We will ensure the security of your financial systems and provide you with accurate and reliable data.

With more than 20 years in the business, Rosemary A Lambert has extensive experience in accounting for the insurance industry.

704704-855855-1509 WWW.ROSEMARYALAMBERTCPA.COM Closeout Services Include: ∗ ∗ ∗ ∗ ∗ ∗

Daily database management reports Company draft verifications File uploads Finance company integration Reconcile bank account(s) weekly Premium difference reconciliation

Other Financial Services Include: Full-service payroll functions ∗ Bill pay services ∗ Financial statement compilation ∗ Corporate, partnership & personal tax returns ∗ Business consultation ∗

More Information about AIANC Membership at www.AllianceInsuranceAgentsNC.com Our new Cyber Program will provide you with a strong response. It offers a streamlined underwriting approach without a long detailed application. We can link your agency to an automated platform that describes the coverage and processes quotes, binders and policy issuance. Our carrier is a market leader in this class and offers a competitive product, with limits, SIR’s and underwriting guidelines specifically tailored to the SMB market segment.

Cyber Liability, Your Agency & Your Clients It seems every day some business gets hacked and their data exposed to the world.

It’s no secret that identity fraud and data breaches of the personal information held in trust by you or your customers are becoming a huge exposure. In fact, most of the associations tracking these crimes have stated that small businesses have become the target of choice for hackers and fraudsters.

We’re offering this program to our members to be used in two ways…

First, protect your own agency.

And, “Nearly six out of ten (59%) of SMBs do not have a contingency plan outlining procedures for responding and reporting data breach losses”

You have data and data risks and need comprehensive and affordable protection. Think of all the personal information you have on clients and prospects.

What would you do if you suffered a data breach?

Simply go online and purchase. Limits are up to $1 million. All documents are issued instantly. Take advantage of these risk management tools right away.

— National Cyber Security Alliance and Symantec Small Business Survey How it happens…

Lost or stolen laptop, unsecure smart phones, or hacked systems

Visit www.goagents.com/AIANC Next, protect your clients

Fraudulent purchase orders used to buy goods in the company name

All of your SMB customers are at risk, and the exposure to a small business can be devastating. Not only will you add value and help protect your clients, you will strengthen your relationships, deliver the optimal or “best deal” available and reduce your own E&O risk along the way. Leave the administration and fulfillment our new program partner while you build a new source of incremental, recurring revenues.

ID Thieves who impersonate the company to collect account receivables A disgruntled former employee selling the personal information of your customers.

Why are small businesses targets?

SMBs having less than $10MM in revenue and 50 or less full time equivalent employees automatically qualify for our pre-pricing – the quotes are already live. Simply bind and print. (For data risk liability, select the Core Cyber™ program.

Credit limits are higher than most individual victims Lack of formal internal data security used by larger companies Businesses control large amounts of Personal Identifying Information of others (credit card transactions, file records, customer and employee data)

To add business identity protection/business identity insurance, monitoring and alerts, choose SB Core Protector which is the flagship program providing the most comprehensive protection, i.e. cyber liability, business identity, employee identity coverage and more…)

Delayed reaction times to discover a problem The consequences of fraud or a breach...

Many experts agree that when it comes to SMB ID Theft and Data Breach exposures it’s not a case of ‘if’, but ‘when’. Don’t run the risk of becoming victimized without the proper coverage, and take steps to point out these exposures to all of your SMB customers.

Financial loss and damage to credit ratings Negative impact on future revenues Damage to the company brand and reputation.

Loss of customer confidence and loyalty

We encourage you to check the link to the program to learn more and make this coverage part of your new and renewal placements. In today’s market these data risks are simply too serious to ignore.

Disruptions with vendors and suppliers We are pleased to announce a new strategic alliance to provide all of our members with a Cyber Liability program specifically designed for your small to medium sized customers.

AIANC’s STREET WISE

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July 2014

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).

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Free 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. Click here to enjoy the one I created for my brothers’ agency.

This could be your agency!

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

More Information about AIANC Membership at www.AllianceInsuranceAgentsNC.com

The actual reason is that they are assuring themselves that they are spending their insurance money wisely and the hope that someone stands behind them in case they need to use the protection.

A Commodity vs. a Relationship

By Al Diamond www.AgencyConsulting.com

But attitudes about insurance agents tend to change in the year after they purchase the product depending on the attitude of the agent or of the agency.

While most agencies have great slogans and logos about personal service, the reality is that the pressure of time and volume of work causes us to treat most of our clients just like the “commodity” that they feared they would become if they just signed up on line or over the phone.

One of the reasons that the direct writers and internetbased companies do so much business is that the buying public, feel that insurance is a commodity -we’re all the same and the price is the only differentiation. In an impersonal internet-based world in which texting replaces actual conversations this concept makes sense – until a sour experience with a claim or service issue illustrates the need for personal service and relationship.

We treat them like numbers.

We don’t get to know them.

The statistics show that while a large number of people “shop” for insurance on line, most people choose to actually BUY from a human being. They want to touch, feel and speak to their financial counselor. But I’m pretty certain that they don’t quite know why – it just comforts them.

AIANC’s STREET WISE

At best they may know the agent who sold them the insurance but are not likely to establish relationships with the agency or with other staff members.

Continued on page 9

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b) Our agency operations take up so much time that we are hardly in the insurance business at all any more – we’re managers, administrators and “firefighters”

A Commodity vs. a Relationship Continued from page 8

c) We promise on-going communications and relationships but, in reality, we have hundreds of commercial clients and thousands of personal clients – we simply can’t see them all.

Yet few intelligent agents deny that their best clients are ones with whom they have a long and lasting relationship, personally and professionally. Some may have been friends before becoming clients, but most agents create a relationship with clients who are important to them and friendship often follows and stems from a strong business relationship.

Before we can even address the issues raised above, we must actually gauge our commitment to the concept of Personal Relationships as the primary point of differentiation between our agency and your competitors.

So where’s the DISCONNECT?

Commitment is the way you operate your life. That to which you are committed (marriage, children, church, sport, hobby, your business) gets attention and gets accomplished. That to which you aspire but are not committed are the things that you TRY TO DO. And, in the words of the immortal Yoda, “Do or do not. There is no try.”

Why do we only see many of our clients once a year (if that often) to confirm renewals? Are these the same clients that you wooed and enticed when you initially sold them on using your service because they lost contact and trust with their prior insurance provider?

Too Much To Do, Too Little Time to Do It, Too Many Clients to Visit---

I know folks who are COMMITTED to golf. They are agents and some are successful, but they play golf three to four times each week – they certainly maximize their success at that which they are committed.

When it boils down, the reasons we hear in response to the questions above is a) We have so much to do that we’re lucky if we see any clients at all

AIANC’s STREET WISE

Continued on page 10 Page 9

July 2014

More Information about AIANC Membership at www.AllianceInsuranceAgentsNC.com They never assume that you are working on their behalf unless you actually tell them of your efforts.

A Commodity vs. a Relationship Continued from page 9 Similarly, I know agents who have hundreds of commercial clients and thousands of personal clients and are so committed to the concept of personal relationships that every client thinks that the agent (or agency) considers them a VIP and treats them accordingly.

If you commit to personal relationships, you understand that there are others in the industry who can outspend you – there are always better prices than yours if the client looks hard enough – but as long as your clients know that you give them a grade of service that they cannot achieve elsewhere, they will not only remain your clients, but they will tout you to their friends as their ‘go to’ insurance expert.

If you’ve reconciled your feelings and find that the Personal Relationship point of differentiation is the one that will best serve your and your clients’ needs, you are ready to attack the “symptoms” of the ailment that keeps you from maintaining strong relationships with your clients after the sale.

1.

We All Have Too Much To Do – Lack of Prioritization – We have a small staff and a very busy consultancy. We have to remind each other of lunchtimes and at the end of the day or we will work through them. But there are a few things that we remember because they are our priorities. Our health and alertness is a priority so we remind ourselves and each other of break and lunch times in order to be most effective in our business and personal lives.

Our families are priorities so no matter how much work we have, we force ourselves to become husbands, wives, parents and grandparents evenings, weekends, during time off (we criticize each other for calling in while on vacation) and whenever a family event needs to supersede our daily lives.

For agents and their staffs who have become converts to Personal Relationships, seeing and talking to clients must become the primary function of your working lives. Many of us have been shocked by longterm clients who we visit at renewal who tell us that they have found less expensive insurance elsewhere. We are hurt and feel that we think of the clients first, but we fail to keep the clients in the loop. The worst case scenario is when our agency DOES spend a great deal of time working on behalf of customers but we never bother to include the customer in the communications loop.

AIANC’s STREET WISE

2. We are pushed and pulled into management of people, process, underwriting, marketing, administration and anything else instead of being able to work with our clients – Lack of Delegation and/or Lack of the right managers. As our agencies grow we tend to take on more and more work instead of identifying lead workers who could become supervisors and eventually managers who should take on these needed roles IN OUR SUPPORT as the key producer/insurance professional.

Once you have more than three or four employees you must breed your own managers. If you have ten or more employees and are still the only manager, you are automatically doing your clients a disservice by spending your time on administration instead of with them.

3. We have TOO MANY CLIENTS to communicate with regularly – Lack of Process. Classify every client (we spreadsheet ours) by the appropriate number of times that client should be seen or communicated with in a year. Then by virtue of the revenue size and/or personal relationships, define who should be seeing or speaking to the customer and start tracking and managing that communications line every week and every month. When we establish a relationship, it doesn’t always have to be with the agency owner or producer. Most clients find themselves dealing with service staff much more than with a salesman anyway.

If a client is large enough, the owner/producer should be the lead (but not necessarily the only) point of contact. But size DOES matter. You must differentiate in treatment between a $10,000 commission account and a $100 commission account. Both should feel they have a special and personal relationship with someone in the agency, but not every personal relationship has to be with the owner.

PRIORITIZATION – DELEGATION – PROCESS MANAGEMENT are the tools that allow the agents truly committed to PERSONAL RELATIONSHIPS AS THE POINTS OF DIFFERENTIATION between them and their competitors to accomplish their goals and to have the vast majority of their clients feeling “special” all of the time.

Contact us and we’d be happy to advise you how to teach Personal Relationships to your agency and to establish all of the tools needed to make you successful as an independent agent competing against the Commodity Agencies and against the direct writers who thrive on making insurance a commodity business.

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www.AgencyConsulting.com

July 2014

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ACQUIRING AND KEEPING GOOD PRODUCERS

By Al Diamond www.AgencyConsulting.com

Deferred Compensation and Shadow Stock Producers, experienced or new, who are talented enough to help agencies develop, are the goals of every agency owner that is focused on growth and perpetuation.

No one strives to be a maintenance owner, servicing a declining agency client base. Yet many agencies find themselves in that very position. They only grow when rates or the market drives premiums higher. And they pay no attention to the key element of agency success growth of client base. So their client base silently and slowly erodes until the pressures on cash and profit drives the agency to sell or merge to maintain some value to the asset.

The answer for insurance agency owners is to recruit producers who will both grow the agency in support of their compensation needs AND become the agency owners’ successors.

Finding producers that fit into the successor category is excruciating. Most of the experienced insurance agency producers who are available are only available because they are not supporting themselves or their current agency.

They are considered Journeymen Producers. They work in the field for five or ten years to attain a large enough client base to support their compensation needs and then move from agency to agency, taking their clients with them, until the agency realizes that it bears little profit or growth from the producer after the initial rollover of clients. The producer has Retired In Place and is taking producer compensation (usually higher than service compensation) to become a service representative for the same group of clients that they have had for years.

However, every year there are some experienced producers who realize that they will never achieve their earnings potential or agency ownership with their current employer. While they may have non-competition periods that require an investment by a new agency, their motivation is exactly what most agents are seeking – someone willing to work consistently, grow a book of business for which they expect fair compensation AND some form of equity to support themselves and their families in retirement.

Two simple methods exist for those producers, Deferred Compensation and Shadow Stock. Both can be used to sponsor and retain good producers, whether new to the industry or experienced, without giving them real agency ownership until they have proven their value over a long period of time.

The first rule is never give ownership or equity of a book of business or the agency to a producer who is new to the agency and hasn’t shown evidence of his/her long term value.

Continued on page 12

AIANC’s STREET WISE

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We have had countless experience as Expert Witnesses in cases which an optimistic owner granted either equity in a producer’s book of business or even agency ownership as an enticement to acquiring a producer the owner hoped would be the agency’s salvation and perpetuation – only to find that the promises weren’t kept and the equity position remained.

In the rare occasions that ownership is appropriate for a new entrant to an agency, a contract of at least two years in duration that provides some ownership interest to the producer IF the growth expectation is actually achieved. The participant should have no concern that the ownership potential may not be forthcoming because of the contractual relationship. But the agency owner no longer need be concerned about being the only participant at risk if the situation does not mature as expected.

Regardless, we NEVER recommend equity in only the book of business generated by the producer for the agency. It is ALWAYS our position that the business brought to an agency through the efforts of an employed producer belongs to the agency. By agreeing to an equity position for a producer, you are yielding the possibility that the producer’s efforts could be separated from the agency’s owned business. No one has ever suggested that the future purchases of an appliance store client belong to the salesman who first sold them a refrigerator. Future purchases BELONG to the store and the commissions for those purchases belong to the salesperson who sells the products to the store customer. The customer is the store’s customer, not the salesman’s customer. If all agencies treated their books of business in that way there would be little need for AIANC’s STREET WISE

litigation if a producer leaves and tries to steal customers and the confidential data produced on those customers by the agency.

The second reason we don’t recommend granting equity in a producer’s book of business is that you are trying to get everyone in the agency concerned with the growth, retention and profitability of the agency.

Equity in a book of business naturally inclines the producer to be concerned first (and sometimes ONLY) with the book of business in which the producer has an equity position. They will certainly use the agency’s assets to support them and their customers, but will assume the customers to be “theirs”.

However, the trail to agency ownership and success often lies with young or experienced producers who first build a substantial book of business for the agency and then become more valuable to the agency in its growth and progression than simply through their sales.

The Second Rule is to make sure a producer validates sufficiently to support himself before ANY consideration of extending long term compensation and other benefits to him/her. The validation level must be at the discretion of the agency owner. Some agencies are satisfied with producers who have achieved $100,000 or $200,000 of agency revenue before they are considered sufficiently valuable to be giving retention incentives.

Others look for producers to break into six digit earnings (taking commission compensation above $100,000) before being considered valuable enough to warrant retention programs.

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Continued on page 13 July 2014

More Information about AIANC Membership at www.AllianceInsuranceAgentsNC.com ACQUIRING AND KEEPING GOOD PRODUCERS Continued from page 12 Deferred Compensation – the first level of retention program.

In a deferred compensation program, the producer is told that for every dollar generated by him, a percentage will become a deferred liability to the agency, payable to the producer upon retirement (from the business of insurance), death or disability, or, minimally, upon achievement of a time period in the agency (usually at least ten years). At the triggering event payments will begin over a stated period of time to add to the producer’s other benefits.

This program is good for pure producers and for producers who are pretty much concerned only with their task of selling insurance. There are many producers who are good at what they do and will never have (nor want) ownership or management involvement. The deferred compensation program is designed for them because they know that they are working toward retirement and this builds their value.

Each level of Retention Program, Deferred Compensation, Shadow Stock can be upgraded for the lucky producer who comes into an agency, builds a strong book of business on behalf of the agency, becomes a valued asset whose loss would impact agency value and, finally, becomes worthy of being a part of the agency’s ownership and succession plan.

Please call Agency Consulting Group, Inc. (856 779 2430) to discuss how to establish one or more of these retention programs within your agency to attract new producers, to motivate continued growth of existing producers and to retain successful producers and agency perpetuators who will be constantly accosted by your competitors with offers of “greener pastures.”

How to Evaluate, Buy & Sell a ‘Mom & Pop’ Insurance Agency

The key to a deferred compensation program is to specifically indicate that this only applies if they remain employed by the agency through the triggering event. If they leave early for any reason, the deferred compensation agreement terminates without benefit. As you can imagine, the longer the producer is in place and the more successful (s) he becomes, the greater the loss if they leave early.

Shadow Stock – on the path to ownership The second level of Retention Program is Shadow Stock, a side agreement between the agency and a producers that promises the producer an equivalent value to a percentage of ownership if the producer dies, becomes disabled or retires from the business of insurance – or if the agency is sold before another triggering event. The appropriate time to use this retention tool is when a producer becomes sufficiently successful to have an impact on agency value if (s) he leaves. Shadow Stock has no impact on agency ownership since it is a side agreement, not a real ownership position.

However, it is used to create a sense of ownership and to determine whether that producer can be as concerned with overall agency growth, retention, profitability and value as the producer has been concerned about personal production.

The third level of Retention is actual granting of stock through stock sales or stock options for producers who have evidenced the desire and capability of becoming the next agency owners.

AIANC’s STREET WISE

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July 2014

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Affordable Care Act 2015 The registration process for agents and brokers in the Federally-facilitated Marketplaces (FFM) is now live for the 2015 plan year! You can begin by accessing Part I (training, exams, and the FFM Agreements) on the Medicare Learning Network® (MLN) at https://Marketplace.MedicareLearningNetworkLMS.com.

Below are the 5 tips that we hope they will help to ensure a successful registration experience for the 2015 plan year! #1—Any agent or broker who wishes to facilitate FFM enrollments for the 2015 plan year must complete Part I on the MLN website again, for the 2015 plan year. #2—If you have already successfully completed Part II, you don’t need to do Part II again this year.

AIANC’s STREET WISE

#3—If you successfully registered last year, use the same MLN user ID when you complete Part I again for plan year 2015. (This will best enable our systems to recognize you as the same user from last year.) #4—Make sure your NPN is correct in your MLN profile before you complete Part I this year. #5—Finish Part I before September 30, 2014. (You are not required to finish Part I before September 30, 2014, but we highly recommend that you do so, to ensure there is no lapse in your FFM registration status.)

Remember that there is an array of supporting materials for you on our webpage: http://www.cms.gov/cciio/programs-andinitiatives/health-insurance-marketplaces/a-bresources.html, under the section titled “Registration for the Federally-facilitated Marketplace (FFM) for the individual market and the Federally-facilitated Small Business Health Options Program (FF-SHOP).”

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More Information about AIANC Membership at www.AllianceInsuranceAgentsNC.com

17 Terrific Networking Tips

by Emily Huling, CIC, CMC Networking should play a big part in your overall personal development and career plan. Why? Networking demonstrates your commitment to your industry and your clients.

Networking gives you the most exposure for the time spent.

Networking sows the seeds for long-term friendship and business relationships.

Networking exposes you to peers who have similar aspirations.

Networking enables you to connect colleagues who don't know each other.

Here's a short course for effective and constructive networking:

12. Remember names. Say the person’s name when introduced.

13. Be curious about the other person. Ask questions. Those that are interested are interesting.

14. Jot down relevant information on the back of their business cards (or yours if they forgot theirs).

Transfer that information to your electronic format later.

15. If you have to eat, eat early so you can concentrate on the crowd. Avoid alcohol. You are there to work!

16. Stay late. Some of the best connections are made after the crowd thins.

17. Follow up with those you meet with an e-mail or personalized LinkedIn request to stand out and to provide your contact information electronically.

Emily Huling, CIC, CMC helps the insurance industry create top-performing sales, service, and leadership organizations. She is the author of Selling from the Inside, Great Service Sells, and Kick Your "But." Visit www.sellingstrategies.com to learn how Emily's programs and materials can benefit your organization.

Emily Huling

1. Get involved in the organization by knowing the leaders, volunteering, and going to all the meetings.

Selling Strategies, Inc.

2. Be prepared. Have business cards and pen handy. Keep your cards in one pocket and those you receive in another.

P.O. Box 200 Terrell, NC 28682 Phone: 888-309-8802

3. Practice your 20-second compelling personal commercial that briefly tells people who you are and what you do.

www.sellingstrategies.com

Mobile: 704-516-5114

4. Have a goal. How many new people do you intend to meet and learn about? What’s realistic for that specific event?

5. Arrive early. Position yourself near the door to meet and greet.

6. Wear your name tag on the right. It makes it easier to see both the person and name badge.

7.

Have a good, strong handshake. It tells a lot.

8. Don’t spend time talking to those you already know. If a longer conversation is needed, schedule a follow-up call.

9.

Travel solo even if you arrive with a friend.

10. Walk the crowd, work the room. Look at people’s faces and make eye contact.

11. Be approachable. Have a smile on your face.

Make sure your posture and stride exude a positive attitude.

AIANC’s STREET WISE

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July 2014

More Information about AIANC Membership at www.AllianceInsuranceAgentsNC.com

Can you ‘cheat’ your way to more customers?

Yes, and embracing technology can increase revenue, retention

By Michael Jans Let’s look at the good news.

For starters, let me share my perspective. With more than 20 years of training, coaching and designing directresponse marketing campaigns, tactics and strategies, I don’t put a lot of stock in people’s opinions.

Even my own.

I prefer to see tests, the answers to tests, real metrics—and proof. If someone says, “That ad has too many words” or “It should have more pictures,” I want proof. Run that split A/B test—that digital marketing makes so easy—and “show me the money.”

There’s a reason I’m sharing this: The insurance industry has been under the microscope lately.

Several of the major research and consulting firms seem to be thinking this industry is either ripe for AIANC’s STREET WISE

disruption or already has been disrupted (and perhaps we haven’t noticed)—and they want to reveal the trends they’ve discovered.

Candidly, a lot of what they’ve discovered should be filed under “bad news.” For example: • Eighty percent of new private passenger auto written in 2003 was by local agents. This dropped to 63 percent in 2010.

• Roughly, 40 million quote requests were submitted online. Seventy-two percent of those went to GEICO, Progressive Direct and Esurance.

• Seven percent of private passenger auto policies were purchased online if the relationship is five years or older.

• Twenty-six percent purchased insurance online if the policy is a year.

In 2007, the service experience delivered by local agents was the No. 1 driver of customer satisfaction.

Now it’s No. 4.

Continued on page 17

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July 2014

More Information about AIANC Membership at www.AllianceInsuranceAgentsNC.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.

Ad Size

Monthly

Pre-Pay 6 Issues

Full Page (7.5” x 10”)

$275.00

$1450.00

Half - Page (7.5” x 5”)

$150.00

$800.00

Quarter-Page (3.75” x 5”)

$75.00

$375.00

1/8 - Page (3.75” x 2.5”)

$50.00

$250.00

Those (happy) clients retain at a 95.5 percent.

Compare that to the lower Customer Satisfaction Index score of 750; those clients only retain at a (dismal) 82 percent. And, yes, the math on that is easy: an extra $130,000 for every million dollars in your book of business. (And, by the way, that delivers an extra $3,694,595 over the next 10 years.)

Those (happy) clients “intend to recommend” the gent to others at a sky-high rate of 63 percent. (That’s not just “like” you or “might recommend if the situation occurs.” They intend to.)

UH

Compare that to a meager 29 percent at the lower level of 750. (Want to reduce your customer acquisition costs? Unleash 63 percent of your happy customers on the marketplace!) Those (happy) clients won’t leave— even if your carriers (or the market cycle) throws a serious premium increase at them. Forty-five percent claim they won’t leave “at any price increase.”

GEICO doubled market share (4.8 percent to 9.7 percent) in 10 years. (No other carrier came close.

Progressive came in second in that race.)

Fifty-one percent of small-business owners declare they are “likely or very likely” to be open to purchasing their commercial insurance online.

And on and on …

(Compare that to 21 percent in the lower and middle tiers of customer satisfaction.)

What agents can do But there’s a glaring, eye-squinting ray of bright news in the recent industry analysis. According to this new analysis, it seems, insurance agents can (almost) “cheat” their way into more customers, more revenue per customer and higher retention.

How is that? Let’s look at this revealing research from the standard bearers at J.D. Power, which has identified five ways that consumers interact with the industry: 1.) No interaction 2.) Agent only 3.) Agent who uses emerging technology 4.) Agent who uses traditional technology

For example, the baby boomers reported an 852 Customer Satisfaction Index rating if they interacted with an agent who used emerging technology.

The study also found that as the Customer Satisfaction Index rating went up, the revenue per customer increased as well. What this means is:

Questions? Contact Eddie K. Emmett at eddie@fyiexpress.com or (770) 312-2342.

HU

And, here’s the magic: Whether it was measuring the interactions of the Millennials or the interactions of baby boomers, J.D. Power found the same thing: the Customer Satisfaction Index went up in one critical interaction category: Agents who use emerging technology. According to the 2011 J.D. Power National Auto Insurance Study “emerging technology” is classified as email, smartphone apps, chat and texts.

The future is now For an agency owner who is serious about marketing; committed to building long-term equity; and somewhere between “bewildered” and “terrified” about changes in consumer behavior, the trove of recent research doesn’t all show, as McKinsey declared, that “there are signs now that the economics of the traditional agent model are beginning to unravel.”

Well, on the other hand, perhaps McKinsey was right. If “traditional” means “old school” or “still acting as if it’s the 1990s,” then, for those agents, the end may be near. But, as consumers, industries and technologies change, the savvy entrepreneur changes, too. And, as always, the future belongs to those who embrace it, not to those who deny it.

5.) No agent

I’d like to end with one observation.

Continued on page 18

AIANC’s STREET WISE

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July 2014

More Information about AIANC Membership at www.AllianceInsuranceAgentsNC.com

Can you ‘cheat’ your way to more customers?

Simply installing “emerging technology” in your agency or brokerage is not enough. Scratch the surface and you’ll discover that there are the agents who know what to do with it ... and those who don’t.

Our Newest Member Benefits

Emerging technology allows you to communicate. It lets you do it efficiently, automatically (almost magically).

Do you write Commercial Lines Insurance?

How would you like to have an Excel spreadsheet of Company Names, Addresses, Websites, Social Media, and e-mail addresses (if available) for any specific type of risk you can name?

The savvy professional, independent insurance agents consider seriously what they are going to communicate.

They think deeply about the core values of their business. They ponder their value proposition. They create a culture of success built on world class sales and service.

As a marketing consultant to the industry, many agents include me on their email and text-message list.

And, sadly, I get a lot of messages that are irritating or pushy or “value-subtracting.”

Current members can get the information on up to 200 of these risks within a 30 mile radius.

Want to try? Are you a member in Good Standing?

Send your type of commercial risk and zip code to eddie@FYIExpress. com.

Just because some marketing consultant says you should touch your clients 17-21 times per year doesn’t mean you should irritate them 17-21 times per year! You should be nurturing, cultivating and delighting them on each and every point of contact. Technology multiplies everything. Use it to multiply value.

Create a QR Code for clients to scan while sittng at your desk.

I’ll show you how to do it for

That’s how you grow your business.

Michael Jans is the CEO and founder of Agency Revolution, “the most trusted marketing company in the insurance industry.” Get a copy of his white paper, The 2014 State of the Industry: 3 Reasons Insurance Will Never Be the Same for free at www.InsIndustryTrends.com or call (800) 606-0477. To learn more about the services of Agency Revolution visit www.agencyrevolution.com.

AIANC’s STREET WISE

free.

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July 2014