HAPPY THANKSGIVING
LDI Directive 209 & Consumer Alert RE: Health Insurance Agency Fees
IIABL STAFF
4-5
Jeff Albright Chief Executive Officer jalbright@iiabl.com
Big I Lawsuit Results in Preliminary Injunction for DOL
Francine Berendson Director of Communications & Events fberendson@iiabl.com
IIABL Board Meeting Recap
Mike Edwards, CPCU, AAI Director of Education medwards65@aol.com
4-5 6-12
Are You Missing Out on Free Money?
12-13
InsurTech Companies Are Not Competing On Price, They’re Competing on…
30-33
Kim Jackson Education & Membership kjackson@iiabl.com Karen Kuylen Director of Accounting kkuylen@iiabl.com E. Lee Mowe Marketing Representative lmowe@iiabl.com Rhonda Martinez, CIC Director of Insurance rmartinez@iiabl.com Jamie Newchurch Insurance Services jnewchurch@iiabl.com Lisa Young-Crooks Executive Assistant lyoung@iiabl.com
Commissioner’s Corner
14-16
Ask Mike
18-25
IIABL Calendar
26
Rate & Rule Filings
27
Tech Tips IIABL Partners
28-30
35
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LDI Directive 209 & Consumer Alert Re: Health Insurance Agency Fees On October 28, 2016, Insurance Commissioner Jim Donelon issued Directive 209 advising health insurance agents that the Commissioner has determined that agency fees are not permitted on individual health insurance policies. On November 18, 2016, Insurance Commissioner Jim Donelon issued a Consumer Alert advising consumers that agency fees are not permitted on individual health insurance policies and urging consumers who are charged such fees to file a complaint with the Louisiana Department of Insurance. The Independent Insurance Agents & Brokers of Louisiana (IIABL), Health Agents For America (HAFA), Louisiana chapter of National Association of Insurance & Financial Advisors (NAIFA), and Professional Insurance Agents (PIA) of Louisiana strongly disagree with LDI’s interpretation of the law and Continued page 5
Big I Lawsuit Results in Preliminary Injunction for DOL The Big “I” along with the Chamber of Commerce and multiple other trade associations filed a federal lawsuit challenging the United States Department of Labor’s (DOL) overtime rule. At the same time, another lawsuit was filed by 21 state governments. Because the cases have similar facts and legal issues the court consolidated the cases. Last week arguments were heard regarding a request for a preliminary injunction filed by the states and a motion for summary judgement by IIABA and the other business claimants. A preliminary injunction pauses the rule from taking effect until the judge issues a final ruling and a summary judgment is a final ruling without a trial. In a positive development for IIABA (which was the only insurance trade association joining the suit against the DOL) and its small business members, U.S. District Court Judge Amos Mazzant issued the Continued page 5
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LDI Directive continued
Big I Lawsuit continued
have retained legal counsel which filed a petition in the 19th Judicial District Court on November 9, 2016, asking the court to issue a declaratory judgement rendering Directive 209 null and void. However, it will take some time for the court to hear and decide the merits of this case.
preliminary injunction on November 22, 2016. This means that the DOL overtime rule is delayed until further notice. The overtime rule will not go into effect on December 1 as planned. While this is a good sign that the judge is favoring arguments against the rule, it also means that the judge is unlikely to grant our motion for summary judgment and the case will go forward.
Therefore, persons and entities licensed as health insurance producers in Louisiana should be aware of Directive 209 which states that agency fees are not permitted on individual health insurance policies. With full reservation of all rights to challenge this determination, our strong recommendation is health insurance producers should not charge agency fees on individual health insurance policies until such time as the law is clarified by the court, or by legislation, to clearly allow agency fees on individual health insurance policies.
While the Federal Government is expected to file an interlocutory appeal to the U.S. Court of Appeals, the DOL overtime rule is on hold for the time being. As soon as the Big “I� has an update on when or if the rule will go into effect we will let our member agencies know. If you have any questions regarding the status of the litigation or the rule please contact Jennifer Webb at Jennifer.webb@iiaba.net or 202863-7000.
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INDEPENDENT INSURANCE AGENTS & BROKERS OF LOUISIANA BOARD OF DIRECTORS MEETING OCTOBER 27, 2016 CROWNE PLAZA—BATON ROUGE Board members in attendance: Johnny Beckmann Derek Canchola Byram Carpenter Brenda Case Joe Cunningham, Jr. David Dethloff Morris Funderburg Ross Henry Bret Hughes Richard Jenkins Harry Kelleher
Philip “Phe” McMahon Joe Montgomery Joey O’Connor Paul Owen Teeny Perret Neil Record Robert Riviere Lee Schilling Armond Schwing Mike Scriber Don Stiel
Board members absent: Donna DiCarlo & David Perry Other attending: Jeff Albright, Jeff Mohr, David Tatman, Kathleen O’Regan
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Opening
The meeting was called to order by Neil Record. A quorum was certified. The minutes of the June 19, 2016 Board of Directors meeting were reviewed. On a motion by Don Stiel with a second by Paul Owen, the minutes of the June 19, 2016 Board of Directors meeting were approved by the Board without objection. LDI Directive 209 prohibiting agency fees on individual health insurance policies – Jeff Albright Directive 209 has a significant negative impact on IIABL member agents writing individual health insurance policies. IIABL has obtained a legal opinion from Breazeale Sachse in opposition to the LDI Directive 209. The board discussed the possibility of filing a petition in the 19th JDC asking for declaratory judgement to void Directive 209.
On a motion by Don Stiel with a second by Robert Riviere, the plan to file a petition for declaratory judgement to void Directive 209 was approved by the Board without objection. Limitation on resident producers working for nonresident agencies writing policies with LA Citizens – Jeff Albright Act 367 of the 2016 Louisiana Legislature authorizes Louisiana resident producers to write policies with LA Citizens. LDI has advised LA Citizens that LDI interprets Act 367 to restrict authorization to LA resident agencies. The result of this interpretation is that resident producers who work for nonresident agencies cannot write policies with LA Citizens. The board discussed the possibility of getting a legal opinion and file a petition in the court to overturn this interpretation of Act 367.
IIABL will try to involve the other agent associations in the legal action.
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On a motion by Brenda Case with a second by Phillip Mc Mahon, the plan to advocate obtain a legal opinion and file a petition against LA Citizens if necessary was approved by the Board without objection. Proposed LDI Regulation 105 limiting P&C insurance company rate increases to no more than once every 12 months – Jeff Albright IIABL plans to act in a support role to oppose proposed Regulation 105 IF there is broad industry opposition Replacement of windows in the IIABL office – Jeff Albright Wooden windows in the IIABL office building are in various stages of rot and causing leaks. Jeff Albright and the IIABL Executive Committee will work together to get bids and engage a contractor to replace them with vinyl windows.
A. Mission Statement B. SWOT analysis C. Member survey D. Revise mission statement: to work in the public interest as the unrelenting advocate for independent agents E. Distill SWOT analysis to determine possible strategic work areas 1. Communications 2. Technology 3. For-profit products 4. Membership 5. Workforce development 6. Perpetuation of IA System F. Perpetuation of IA System 1. Perpetuation planning 2. Best practices 3. Strategic alliances
6. Strategic Planning – David Tatman & Kathleen O’Regan
4. Strategies to deal with alternative distribution system Continued page 10
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5. Perpetuation financing
Professional development Producer training
G. Membership
Research partnering with insurers
1. Increase number of members
Incumbent worker training
2. Increase member engagements 3. Explore merging with other associations
Help members with internship programs
4. Diversity
Online education resources
5. Promote value of membership 6. Address negative perceptions 7. Membership incentives H. For-Profit Products and Services 1. Enhance E & O program
Communications Communicate value of membership to members and non-members Disseminate press releases on IIABL and members Help agencies develop websites
2. Develop new for profit services
Develop IIABL social media
3. Grow IMS
Train members on social media
Workforce development Help agencies recruit new employees New employee training Education
Branding Communication segmentation Review and Prioritization Membership
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For-profit products and services Education
from cash accounts at Chase Bank to Merrill Lynch long term investments.
-Workforce development -Perpetuate IA system 4. Communications 6. Approval of 2015-2016 Financial Audit – Johnny Beckmann The IIABL Finance Committee met with the Hannis Bourgeois CPA firm and conducted a thorough review of the 2015-2016 IIABL financial audit. Audit results were excellent. Beckman reviewed the audit with the board and asked the board to approve the audit. On a motion by Brenda Case, with a second by Morris Funderburg, the 2015-2016 financial audit was approved by the Board without objection. 7. IIABL Cash Management & Investments – Johnny Beckmann The IIABL Finance Committee reviewed cash management with staff, Hannis Bourgeois and David Ellis of Merrill Lynch, and directed IIABL staff to move $500,000
8. Staff Perpetuation Plan – Jeff Albright The board discussed the need to develop plans to perpetuate the IIABL staff. Ideas were discussed and the board agreed to continue working on the development of a staff perpetuation plan. 9. PIA Legislative Proposal – Jeff Albright PIA has requested that IIABL support legislation to increase agency fees by $100 per license to fund risk and insurance programs in Louisiana public universities. The board discussed a number of concerns about the cost to member agencies, state education funding, and whether the plan would really improve workforce development. On a motion by Robert Riviere, with a second by Don Stiel, the Board agreed to oppose such legislation without objection.
Continued page 11
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10. IIABL Liaisons & Committee Appointments – Richard Jenkins
Are You Missing Out on Free Money?
11. IIABL Board of Directors Disclosures – Jeff Albright
You could be getting more bang for your buck with Trusted Choice!
12. President Report – Richard Jenkins
In order to help you deliver the brand experience to your customers consistent with Trusted Choice, your agency can be reimbursed a portion of expenses incurred in 2016 for co-branding your advertising and marketing materials, and creating and/or updating your agency's digital presence. Be sure that your agency isn't leaving FREE MONEY on the table in 2016 and apply for the Trusted Choice Marketing Reimbursement Program (MRP.)
A. Thank you for your participation B. Next meeting will be January 19-20, 2017 Windsor Court 13. IASC Board Meeting, October 4, 2016 – Jeff Mohr A. Selective flood insurance contract has changed. B. Discussion about strategy for future education seminars C. Independent Market Solutions ran a deficit in the first year startup, but has developed a budget to resolve the deficit in the second year. ADJOURNMENT
Receive Up to $500 for Using Freedom Campaign Materials The MRP will reimburse your agency up to $500 for use of any of the Freedom Campaign advertising materials provided here. Not only are these nationally-recognized
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ads proven to be successful with today's consumers, they can be customized with your agency's information for FREE. So when you need an ad for your local paper or high school yearbook, use one of the Freedom ads! Never Used the Marketing Reimbursement Program Before? Get Up to an Additional $250! New members and first time MRP users can be reimbursed up to an additional $250 to cobrand the Trusted Choice logo on any consumer-focused item. The next time you're ordering promotional items, business cards, stationery, signs, etc., make sure to add the Trusted Choice logo. Earn Up to $500 for a Digital Update Agencies can be reimbursed up to $500 for a digital upgrade using a web developer/vendor. This includes updates to or building websites, mobile apps and social media platforms. Does your agency's digital presence include the Trusted Choice logo, the Trusted Choice Pledge of Performance and a link to the Trusted Choice website? If so, you may be eligible! And if you're looking for a great vendor for a website refresh or mobile app, check out our 24/7 Agency Solutions Program. If any of these items described your agency in 2016 and you haven't submitted your MRP application yet, you're leaving FREE MONEY on the table! Applications for all 2016 expenses must be submitted to Trusted Choice no later than February 2017.
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Commissioner’s Corner
Long-Term Care Insurance Challenges & Market Outlook At its core insurance is about protecting people from risks and yet one risk that many of us fail to talk about, let alone plan adequately for, is the potential need for care as we reach advanced age. Long-term care insurance helps policyholders prepare for the events that can impact a lifetime of saving. The cost of nursing home care increases by 4.5 percent annually, nearly twice the rate of inflation and it’s projected that the average cost of a one-year stay in a nursing home will increase from $81,000 today to $146,000 in 2030, according to the American Council of Life Insurers. Without this important coverage there can be devastating effects on retirement income and financial security for the person who is ill and also for their surviving spouse or any family caregivers. While the amount of time that a person may need care is often limited, some people will need a lot of care for a lengthy amount of time. According to the Department of Health and Human Services, just over half (52 percent) of individuals turning 65 will have a high need for long-term care over their lifetimes with the average need running two years. But for a quarter of seniors, the need will run longer.
ly) in 2011. By 2014, this figure had dropped to only a dozen companies selling at least 2,500 individual policies and five selling group policies. There is no question as to how important these policies are but the pricing has reached crisis proportions. One major player in the LTC insurance market both nationally and in Louisiana is requesting a 60 percent premium rate increase due to shortfalls in underpriced long-term care products that were purchased by policyholders over the years. Other insurers are experiencing similar operating losses and regulators across the country are facing the issue of equity in increases among the accurately priced new policies and the old policies that severely miscalculated increases in life expectancy
Just as health care has experienced significant changes over the last 30 years, so has long-term care (LTC) insurance. A National Association of Insurance Commissioners (NAIC) report published earlier this year states that fewer than 20 insurers had significant business (more than 2,500 individual or group policies annualLouisiana Agent 14
and cost of care.
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As insurers have gained more experience and insight into how the polices are utilized, premiums have increased which is a hard pill for consumers to swallow. As products have become more costly, buyers are coming from groups with higher than average median incomes and assets. According to the NAIC Center for Insurance Policy and Research (CIPR), most purchasers of long term care insurance are married, college-educated and employed at the time of purchase. Insurers are responding by creating hybrid products, combining long-term care benefits with life insurance and annuities. Policymakers have also worked to expand the private insurance market by creating state partnership programs. These programs are a partnership between state Medicaid programs and the private insurance industry and Louisiana is one of that majority of states that have implemented such a program. The Louisiana Long-Term Care Partnership Program helps protect residents from being forced to exhaust their assets to become Medicaid eligible if they are faced with requiring long-term care. The Louisiana Department of Insurance maintains a list of companies licensed to sell Long-Term Care Partnership policies and it is available on our website. Louisiana has established reciprocity with the majority of other states so that partnership program policies purchased in other states are transferable to Louisiana and vice versa. Agents who are interested in selling long-term care partnership policies must complete eight hours of training required by the state and be able to demonstrate an understanding of partnership policies. Long-term care insurance is an important tool which helps people to live out their golden years in dignity and without fear of being able to afford care when they most need it. The CIPR reports privately insured individuals receive between 30-35 percent more total hours of care than do those without insurance. These hours can be vital to someone recovering from surgery or dealing with an illness contracted later in life and the benefits of long-term care policies have more far-reaching positives than just for the policyholders. Families and communities benefit when plans are put in place when people are of sound mind and body. The industry benefits when the public is educated and willing to purchase financially sound policies that help the market grow. We all benefit when our families and neighbors have peace of mind.
What to Expect in Commercial Insurance Pricing in 2017 The marketplace for commercial insurance will continue to favor insurance buyers in 2017, particularly those with strategic risk management and risk transfer strategies, according to Willis Towers Watson’s 2017 Marketplace Realities report. The report points to strong marketplace capacity as a key driver in market conditions and contends that this ample capacity will likely allow insurers to absorb any natural catastrophe losses in 2016, including those from Hurricane Matthew and the Atlantic hurricane season. Overall, buyers’ individual risk profiles will determine their fate at the negotiating table, according to the report. But in general, downward or stable pricing will continue for most property and generally liability risks, while certain lines such as cyber, auto liability and health insurance will see rate increases. Read more here.
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IIABL Director of Education, Mike Edwards is your source for technical questions. Contact Mike at medwards65@aol.com or 678.513.4390
Subject: Is Collision with a Deer Covered Under “Collision”? (Hint: Read the coverage form before you respond.)
Q.
I am dealing with a relatively minor claim that may cause me to lose a really nice commercial account. Two weeks ago, one of my insured’s employees was returning late at night from a job site in a remote area. Three deer suddenly bolted from the underbrush into the roadway. Unfortunately, he hit one, which caused a lot of front-end damage to the brand new company truck. Physical damage coverage on the truck is Collision and Specified Causes of Loss. The insurer has said that the damage from hitting a bird or animal is covered only under Comprehensive. What I don’t understand is why it isn’t considered a “collision.” The CGL and BAP are written with the same insurer, which I know is almost always a good idea. This might be an exception. Two months ago, the insured got into a squabble with the insurer over a CGL audit, which is still unresolved. So if the damage to the pickup truck is denied, the insured has told me that he is moving his entire account.
A.
The damage is clearly covered under Collision in the Business Auto Policy (BAP) of ISO (Insurance Services Office). See coverage form excerpts and comments below, along with additional resources at the end. Business Auto Coverage Form
"auto" or its equipment under: a. Comprehensive Coverage From any cause except: (1) The covered "auto's" collision with another object; or (2) The covered "auto's" overturn. b. Specified Causes Of Loss Coverage Caused by: (1) Fire, lightning or explosion; (2) Theft; (3) Windstorm, hail or earthquake; (4) Flood; (5) Mischief or vandalism; or (6) The sinking, burning, collision or derailment of any conveyance transporting the covered "auto". c. Collision Coverage Caused by: (1) The covered "auto's" collision with another object; or
(2) The covered "auto's" overturn. 3. Glass Breakage - Hitting A Bird Or Animal - Falling Objects Or Missiles
A. Coverage
If you carry Comprehensive Coverage for the damaged covered "auto", we will pay for the following under Comprehensive Coverage:
1. We will pay for "loss" to a covered
a. Glass breakage;
CA 00 01 10 13 Section III – Physical Damage
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b. "Loss" caused by hitting a bird or animal; and However, you have the option of having glass breakage caused by a covered "auto's" collision c. "Loss" caused by falling objects or missiles. or overturn considered a "loss" under Collision Coverage. Comments: (1) Under Collision [A.1.c.(1)], coverage applies for the auto’s collision with another object. (2) It is clear and unambiguous that when the truck hit the deer, it was a Collision claim under the BAP. (3) Comprehensive coverage [A.1.a.] applies for “any cause,” but since your insured did not purchase that coverage, there is nothing in [A.1.a.] that applies to this loss. (4) Under Specified Causes of Loss [A.1.b.], none of the six causes of loss would apply to the loss. (5) The widely-held misunderstanding that hitting a bird or animal is covered only under Comprehensive comes from [A.3.b], which provides
that Comprehensive coverage applies for “b. Loss caused by hitting a bird or animal.” However, the complete statement of this provision in [A.3.] must include the introduction: If you carry Comprehensive Coverage… Loss caused by hitting a bird or animal is covered. (6) Bottom line. Under the ISO BAP, coverage for hitting a bird or animal can be provided under the following coverage combinations: (a) If both Collision and Comprehensive are written, Comprehensive applies.
(b) If Collision only is written, Collision applies. (c) If Collision and Specified Causes of Loss is written, Collision applies. (7) For context, it is important to note that paragraph [A.3.] is intended to benefit the insured, not restrict or reduce coverage. For example, windshield glass can break from extreme heat or cold, and such claims would be covered under Comprehensive [A.3.a.]. Continued page 22
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But glass breakage that occurs during a collision raises the possibility of two deductibles, which is why the exception is provided in the last sentence of [A.3.]. (8) At the same time, while glass breakage may or may not be caused by a collision, “hitting a bird or animal” [A.3.b.] is obviously a form of a “collision.” But since such occurrences are not due to driver error or negligence, by allowing the damage to be considered Comprehensive, it usually avoids any accident charges/points being assigned, plus in the BAP, Comprehensive deductibles are often lower than those for Collision. Recall, however, that this benefit only applies if the insured has Comprehensive coverage. If the insured only carried Collision, then the claim is paid under Collision.
Your Auto
Insuring Agreement B. "Collision" means the upset of "your covered auto" or a "non-owned auto" or their impact with another vehicle or object. Loss caused by the following is considered other than "collision": 1. Missiles or falling objects; 2. Fire;
3. Theft or larceny; 4. Explosion or earthquake; 5. Windstorm; 6. Hail, water or flood;
Personal Auto (PAP). The ISO PAP also distinguishes between collision and noncollision losses, but in a somewhat different way than the BAP. Personal Auto Policy 00 01 01 05
Part D – Coverage for Damage to
7. Malicious mischief or vandalism; 8. Riot or civil commotion; 9. Contact with bird or animal; or 10. Breakage of glass. If breakage of glass is caused by a Continued page 23
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"collision", you may elect to have it considered a loss caused by "collision". Comments: (1) Non-collision losses are referred to as “other than collision” (“OTC”), while the BAP still uses the older term “Comprehensive.” However, while the BAP considers Comprehensive to be any cause except collision or overturn, the PAP offers a list of 10 specific perils. This causes inevitable confusion for some, who incorrectly assume that these are the only causes of loss covered by OTC. (2) Insurance texts and authoritative sources describe the intent of OTC as “allrisk,” meaning every type of physical damage loss is covered by OTC unless it is a collision, or otherwise excluded, such as nuclear events, war, wear and tear, etc. The statement describing OTC that the 10 perils are “considered other than collision” hardly rises to the level of an exclusive or limited list of covered causes of loss. Many insurance texts use the term “descriptive” or “illustrative” to explain the purpose of the listing of 10 perils. (3) The common thread between all 10 perils is that they are generally beyond the in-
sured’s control, and, like in the BAP, while some could be the result of a collision, allowing them to be covered under OTC avoids two deductibles, and the charging of accident points against the insured. (4) “Contact with a bird or animal” [#9] therefore does not imply that this loss is solely covered under OTC. The BAP uses the phrase “hitting a bird or animal,” but “hitting” and “contacting” are certainly forms of colliding. Therefore, if the insured only carries Collision, striking a deer would be a covered claim under Collision. And if the insured carries only OTC, the claim would be covered under OTC. Lastly, if the insured’s PAP has both Collision and OTC, the claim goes to OTC, which benefits the insured. Non-ISO PAP. There is a wide variety of proprietary forms in the personal auto marketplace today. Below are some excerpts from several non-ISO PAP coverage forms. Company A. Comprehensive. We will pay loss except loss by Collision to your car…Loss due to hitting a Continued page 24
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bird or animal is payable under this coverage.
Collision. We will pay for the loss to your car…caused by Collision. Collision means your car…upset or hit, or was hit by a vehicle or other object. Loss caused by Collision does not include loss due to: [6 named perils, with no reference to hitting a bird or animal]. Company B. Collision means loss caused by upset of the covered auto or its collision with another object. Comprehensive means loss caused by other than Collision and includes the following causes:…Colliding with a bird or animal.
Comprehensive means loss, other than Collision, to your covered auto. Losses caused by the following are not Collision losses but are Comprehensive losses: ….Contact with a bird or animal. Company D. Collision means the impact with an object and includes upset of a vehicle. Loss caused by the following is covered under Comprehensive Coverage and is not considered Collision:….Contact with a bird or animal.
Comprehensive Coverage (excluding Collision): We will pay for loss caused by other than Collision to your covered auto. [No list of named perils for descriptive or illustrative purposes, which tracks the ISO BAP Comprehensive language.]
Company C. Collision means the upset of your covered auto or its impact with another vehicle or object.
Comments: Proprietary forms are like snowflakes. Each is unique and must be read carefully. For example, in the Company A excerpt, loss due to hitting a bird or animal is “payable” under Comprehen-
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sive. Under Collision, there are 6 perils that are not considered Collision, but contact with a bird or animal is not listed, which means that it could be paid under Collision. Another important factor in the coverage analysis is that Collision and Comprehensive/OTC are separate coverages, and listed separately on the Declarations page, which makes a strong argument that each stands alone, and any ambiguity between the two would be resolved in favor of the insured. Lastly, since the majority of physical damage coverage written in personal auto probably includes both Collision and Comprehensive/OTC, the only area dispute would be the deductible. Additional information. “Contact with Animal NOT a Collision?” These materials are intended for educational purposes only and should not be relied upon as legal advice. Please consult a qualified attorney for legal advice.
What Your Agency Can Learn From Bourbon No matter the industry, trends always evolve. But what happens when businesses refuse to adapt, or wait until it’s too late? The liquor industry is a prime example. According to the Distilled Spirits Council of the United States, beer now makes up half of the U.S. alcohol market—marking a 56% decline over the past 17 years. Liquor sales, on the other hand, increased from 28% to 35% within the same timeframe. Bourbon in particular has enjoyed a recent surge in popularity. On the surface, the spike in sales is great news– but because it takes many years to make bourbon, distillers have a hard time fulfilling orders, which has created a shortage. Read more from this IA magazine article by clicking here.
Continued page 28
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Webcasts E&O Risk Management December 6, December 15
Ethics December 6, December 16, January 17th
Flood December 13, January 20
IIA of Ouachita Quarterly Meeting—12nn Genusa’s Restaurant Contact: lyoung @iiabl.com Lisa Young-Crooks
Insurance Industry Cocktail Party 12/20/2016 Eastridge CC Contact: lyoung@iiabl.com Lisa Young-Crooks
CSR Training: The Customer Service Representative is key employee in every agency and is a difficult commodity to find.
Environmental Strategists (eS) Becoming a certified environmental Strategist™ (eS) will equip you with the knowledge to identify, manage and transfer environmental exposures impacting everyday business.
Commercial & Personal Lines Courses Click above title for courses & dates for 2016
Seminars Flood Seminars 2017 dates coming soon
Events IIAGNO Past President Luncheon—12/8/2016 Metairie Country Club
On-Demand Webcasts Masters Series: The Master Series are unique agency management courses from industry experts. in the Masters Series.
Cyber Risk Manager (cyRM) Completion of the Cyber Exposures & Insurance – Training for Agents & Brokers course qualifies you to register for the cyRM certification for FREE.
Pre-Licensing Online prelicensing 3 optional study packages available Click here for additional information Louisiana Agent 26
Company
Coverage Type
National Liability & Fire Ins
19-Commercial Auto
Allstate P&C Insurance Co
19 – Private Passenger Auto
Overall % Impact:
Overall $ Impact:
Number of Policyholders:
Changes
+12.310%
$1,889,262
1211
New: 12/6/2016 Renewal: 1/6/2017
+7.1%
$303,076
13448
New: 01/04/2017 Renewal: 01/04/2017
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By: Steve Anderson
Agency-Carrier Connectivity: The Agency View A few months ago I asked you to participate in a research study conducted by Strategy Meets Action (SMA) regarding agency carrier communication issues, options, and future trends. The survey is designed to uncover strategies, pain points, usage, priorities, and investment plans from both insurance companies and agencies. As an incentive to complete the survey, every respondent was entered into a drawing for a $500 Amazon gift card. I am pleased to tell you that Julie Jennings from LMC Insurance & Risk Management — a TechTips reader — was the lucky winner of the Amazon Gift Card. (Congrats, Julie!) A total of 210 individuals from agencies completed the survey representing multiple roles within the organization. Included below are some of the initial results of the survey along with comments from SMA. Figure 1. Business Drivers for Investments in Agency – Carrier Connectivity
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Highlights from SMA
Respondents indicated that keeping customers is a huge driver of investment, but small agencies are in a more defensive mode than the general agency population: for smaller agencies, “customer retention,” “new business,” “improving customer experience,” and “revenue growth” are all higher drivers than they are for the general agency demographic.
The defensive position is so strong that profitability is taking a backseat, even more so for smaller agencies.
“Cost reduction” is not a significant driver of investment, particularly for smaller agencies, which is positive. The more strategic drivers are winning out, most notably, customer experience, at least perceptually.
Continued page 30
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Despite the fact that agents indicate their number one priority is keeping the customer they have today, much of the investment is around new customer acquisition. Agents, regardless of which side of the house they are on, still have not circled to technology adoption for customer retention. On the commercial line side, the role of the agency management system is clearly important. Upgrading or acquiring entirely new agency management systems are spend areas. That activity will positively align with “real time upload — quote” “except policy download.”
Hopefully, this information will help you understand how other agencies are approaching communication options between agencies, clients and carriers. Adopting new communication options based on customer preferences should be an important part of your customer experience strategy going forward. What is your agency strategic focus regarding connectivity between carriers, prospects, and clients? Let me know.
InsurTech Companies Are Not Competing On Price, They’re Competing On… A few weeks ago, I wrote an article that listed every single insurtech investment that had been made in the last 2 years. See: How $2.9 Billion In InsurTech Investments Is Transforming Our Industry It was a monster article. I honestly didn’t expect most people to read the whole thing. But I was hoping readers would be shocked at how long it took them to find the end. 2.9 billion dollars of heavily tech-focused activity has been injected into our industry in 2 years. 40 incredibly progressive, online businesses are playing in our space. Even if that doesn’t change our lives tomorrow (which, let’s be real, it probably won’t affect us that soon), we need to be aware of it. Here are 3 reasons why:
1) An End-To-End Solution Many of the companies I listed are simply online lead-generators for agencies, brokerages and carriers. They occupy some online real estate, have found a way to attract online traffic to it and know how to effectively convert that traffic into “leads” which they distribute for a fee. Ok – that doesn’t seem too harmless. But as I began reading press releases and articles, I realized that their current position in the industry is not the vision. The vision for many of these companies is to become an end-to-end solution. Being a lead-generator is just their first step, not their end goal. What does that mean? That means they won’t need agencies, brokers and carriers. That means they are 100% ok with cutting us out. Trov provides on-demand insurance for your stuff (meaning you only insure it when you need the insurance).
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Here’s what a recent article wrote about their vision: Some startups are getting rid of brokerages entirely. Trov is building a cloud-based, end-toend mobile insurance platform, scheduled to launch later in 2016. Cover helps you find coverage after you send them a picture of what you need insured through their app. Here’s what a recent article wrote about their vision: “The app currently routes customers to a broker, but Cover will be licensed in the next few months to provide an end-to-end in-app solution. It’s a compelling solution that lets consumers interact with insurance in a very different way.” The better we get at digital marketing (both individually as agencies and collectively as a channel), the more we challenge startups like Trov and Cover. We aren’t putting up as much of a fight in the online world right now as we could be – which means we’re making their job wayyyyy too easy. Let’s make it a little harder for ‘em. Not sure where to get started in digital market-
ing? Check out the first flagship course in Agency Nation University, Zero To Sales! Click here to learn more.
2) Targeting really niche (and ignored) markets Ok – this is where these startups are getting sneaky. Many of them are targeting very niche audiences, not your average auto/home/small, low-risk business crowd. Figo Pet Insurance is a one-stop-shop for pet care. Policy Genius is offering long-term disability coverage online. Ladder Financial is betting on one product: term life insurance. Bunker is helping freelancers. Quilt can hook any post-college grad up with a simple renters policy. Clover Health appeals to the older generation who uses Medicaid (talk getting granular in the health care industry). Slice Labs fills in the on-demand home-share (AirBnB ) and ride-share (Uber/Lyft) insurance gap. What does that mean? It means they are flying under our radar; they’re getting bigger and stronger right under our noses…..….by appealing to audiences we don’t typically love to serve. I mean – I haven’t met many agents
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who like to write pet insurance and auto insurance for Uber drivers. (If you’ve seen one of these unicorn agents, please message me on LinkedIn asap with a picture.) There’s less competition for insurtech startups in these market segments, which provides them a smoother initial foray into the industry. And here’s the vision we should all be aware of: this is just the start. Once these companies have a solid foot in the door, they’ll just keep opening it wider and wider. Once a successful and profitable online insurtech business model has been established, it can (and will) be replicated – either by the same 40 players or by new, hungry players who are paying attention. So, what do we about it? We dominate our own niches online. I’ve attended 40+ conferences and had conversations with hundreds of agents. I always ask them what their niche is. More often than not, I hear “Anything, really. We’ll do it all.” ?!?!72!!??4×3!?(^^^no that wasn’t my roommate’s dog jumping on my keyboard) Sometimes I wonder if “Anything, really. We’ll do it all.” is code for ‘I’ve got solid renewal income so I can be picky and write the easier, less-nichey, more-average stuff. Hey, maybe I’m wrong. I sure hope I am. But regardless, being a general lines agency online is a tough, tough road. Digital marketing isn’t for the generalist. It’s for the specialist. Let me repeat that, you cannot be a successful digital marketer if you try to please everyone. (Unless you’re Geico and you have a $6 billion annual advertising budget.) If you specialize in a particular insurance product, understand the audience who needs that product inside and out, then you have the perfect platform from which to launch a badass digital marketing strategy and capture some serious online attention.
3) InsurTech companies are not competing on price The first insurance companies to really make a splash in the online world were direct and captive carriers, like Geico, State Farm, All State and Progressive.
They immediately used this new world to beat us all over the head with cost-saving advertisements. They began to turn insurance into a commodity. In response, the independent agency channel dug in its heels and said “No. Insurance isn’t a commodity and competing on price alone doesn’t provide your clients with enough value.” We perceived their advertisements as cheapening our product. I know we all know this – but I’m reiterating it to point out that our online competition is now much bigger than these direct and captive carriers. And not only do we now have more competition, we have very different competition. Unlike the Geicos and State Farms, insurtech companies do not compete on price. They compete on customer experience. Listen to what these insurtech CEOs are saying… “Today’s brokers are not suited for mobilesourced customers who expect instantaneous results from interaction: namely quotes and the ability to convert.” That was Karn Saroya, the CEO of Cover, in this TechCrunch article ‘We heard a lot of, “This is great, exactly how I wanted to do my insurance shopping, love the modern user experience, that you guys use friendly conversational plain English to talk about my insurance needs.” They liked the advice approach rather than a salesy one. We got a lot of, “when are you going to do this for health?”’ That was Jennifer Fitzgerald, the CEO of Policy Genius, in this Insurance Innovation Reporter article. “Also critically important is the fact that no one’s happy with the industry. Insurance is not a respected sector. Insurance brands have not succeeded in convincing consumers that they’re trustworthy. Most consumers consider insurance to be a necessary evil. As far as entrepreneurs are concerned, that’s a huge opportunity. It’s an industry that’s just begging for a makeover.” That was Daniel Schreiber, the CEO of Lemonade, in this Life Health Pro article. A makeover. A….makeover. Not only does Lemonade want you to be able to buy insurance quickly, easily, whenever you want, however you want, at an affordable price. They want you to feel good about it. That is a drastically different value proposi-
tion than “we’ll give it to ya cheap.” But don’t just listen to what they’re saying, look at their businesses. Figo doesn’t just help you with pet insurance; they give you a tool that helps you manage your pet’s health over their entire lifetime. Embroker isn’t just quoting P&C coverage for small businesses; they have a full-fledged dashboard that allows you to request certificates (and track their service status), pull up insurance information in a jiff on your phone, pay bills online quickly and more. Policy Genius has created a free “insurance checkup” that focuses 110% on the customer’s needs, instead of the insurance product. (seriously – go do the check up for yourself and see how cool it is) Unlike Geicos and State Farms, these companies are not cheapening our product. They’re actually making it better. Without us. So, what can we do about this? First, we need to stop thinking that good customer service sets any of us apart – either from each other or other businesses in the industry. It doesn’t set anyone apart – good customer service is a barrier to entry.
Secondly, we need to stop talking about customer service as if it’s the end-all-be-all. Customer service is a part of the customer experience. Customer service starts when one of your employees picks up the phone and ends when the call is over; it starts when one of your employees receives an email and ends when they hit send. Customer experience starts when a consumer (not your client) starts looking for a product you offer and ends….well….never….because hopefully, they’re your client for a long, long time. I challenge you to sit down and literally write down every single step you think one of your typical clients takes from when they start looking for you (and need to find you) all the way up until they stop doing business with you. Then ask your employees to look at it and find the gaps. Then start listening to your clients about their experiences with your agency and match it up to your roadmap. Now look at your roadmap as a whole and figure out how to make it better for your customers.
GOLD LEVEL
SILVER LEVEL
BRONZE LEVEL AMERISAFE
AMERICAS INSURANCE
AMTRUST GROUP
BANKERS INSURANCE
CNA INSURANCE
EMC INSURANCE
FOREST INSURANCE
GULFSTREAM P&C
HOMEBUILDERS SIF
LANE & ASSOCIATES
MAISON INSURANCE
MARKEL FIRST COMP
RPS COVINGTON
SUMMIT CONSULTING
ASI
LUBA WORKERS’ COMP NATIONAL FLOOD SERVICES
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IIABL 2016—2017 BOARD OF DIRECTORS & OFFICERS Richard D. Jenkins President Moore & Jenkins Insurance—Franklinton Neil Record President Elect Record Agency, Inc.—Clinton
John L. Beckmann, III Secretary/Treasurer J. Everett Eaves—New Orleans H. Lee Schilling, Jr. National Director Schilling & Reid Insurance—Amite David Dethloff Past President Dethloff & Associates—Shreveport Derek Canchola Young Agent Representative Blumberg & Associates—Baton Rouge Byram H. Carpenter, III Moreman, Moore & Co—Shreveport Brenda Case Lowry-Dunham, Case & Vivien—Slidell Joseph Cunningham, Jr. Cunningham Agency—Natchitoches Donna DiCarlo Riverlands Insurance Services—LaPlace Morris Funderburg Reeves, Coon & Funderburg—Monroe
Ross Henry Henry Insurance Service—Baton Rouge Bret Hughes Hughes Insurance Services—Gonzales Philip McMahon Paul’s Agency—Morgan City Joe King Montgomery Thomas & Farr Agency—Monroe Joseph A. O’Connor, III The O’Connor Insurance Group—Metairie Paul Owen John Hendry Insurance Agency-Zachary Martin Perret Quality Plus—Lafayette David T. Perry Arthur J. Gallagher RMS—Baton Rouge Robert Riviere Riviere Insurance Agency—Thibodaux
Armond Schwing Schwing Insurance Agency—New Iberia Michael D. Scriber Scriber Insurance Services—Ruston Donelson P. Stiel David H. Stiel, Jr. Agency—Franklin
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