e-Insight - November 2022 - Member

Question: Who is the largest wholesale broker in the known universe?

Answer: Who cares?

As wholesale brokers frantically merge with one another in a race to achieve galactic dominance, we wonder how much size really matters? No, we don’t have 2,000 employees in 50 offices representing 1,000 markets, and no we are not your best bet on a fortune 500 multi national client, but for the typical day to day E&S placement, we are your shop!

For the same reasons a locally owned independent retailer is often the best option for your clients, so too might an independent, locally owned wholesaler, focused solely on your needs, be your best option for a wholesale partner.

We have been proudly serving retail agents for 40 years now and going strong. For more information on our extensive capabilities, contact Chris Gaddis at cgaddis@gaddiscompany.com or 888 853 0071 or visit us on the web at www.gaddiscompany.com

CONVO 2022 Wrap-Up

Inside-Outside Game:

By Scott Freiday

Changes are Here - Is Your Agency

By Carey Wallace

an

By Craig Neiss and Luke Hippler

Reports That

By Kelly Donahue-Piro

By Robert Pettinicchi

IS Still a Numbers Game

John Chapin

Curtis Pearsall

Board of Directors Executive Committee

Chairman of the Board | Jay Peterson, AFIS, LUTCF (217) 935-6605 | jay@peterson.insurance

President | Kevin Lesch (630) 830-3232 | klesch@arachasgroup.com

President-Elect | Allyson Padilla (618) 393-2195 | allyson@blanksinsurance.com

Vice President | Patrick Taphorn, CIC, CSRM (309) 347-2177 | ptaphorn@unland.com

Secretary/Treasurer | Cindy Jackman, CIC, CISR (800) 878-9891 x8745 | cjackman@arlingtonroe.com

IIABA National Director | George Daly (708) 845-3311 | george.daly@thehortongroup.com

Regional Directors

Region 1 | James Sager (618) 322-9891 | james@sagerins.com

Region 2 | Ray Roentz (618) 639-2244 | ray.roentz@hwcrins.com

Region 3 | Christopher Leming (217) 321-3185 | cleming@troxellins.com

Region 4 | Bart Hartauer, CIC (815) 223-1795 | hartauer@hartauer.com

Region 5 | Noele Tatlock (309) 642-6855 | ntatlock@unland.com

Region 6 | Thomas Evans, Jr. (779) 220-6564 | tevans@crumhalsted.com

Region 7 | David Jenk, Esq. (312) 239-2717 | djenk@nwibrokers.com

Region 8 | Charles Hruska (708) 798-5700 | chas@hruskains.com

Region 9 | Lindsey Polzin (630) 513-6600 | lpolzin@presidiogrp.com

Region 10 | Mohammed Ali CS (847) 847-2126 | mali@aliminsurance.com

At-Large Director | Amiri Curry (847) 797-5700 | acurry@assuranceagency.com

At-Large Director | Jeff McMillan (815) 265-4037 | jeff@mcmillanins.com

At-Large Director | Patrick Muldowney (312) 595-7192 | patrick.muldowney@alliant.com

At-Large Director | Luke Sandrock, CIC (815) 772-2793 | lsandrock@2cornerstone.com

Committee Chairs

Budget & Finance | Cindy Jackman, CIC, CISR (800) 878-9891 x8745 | cjackman@arlingtonroe.com

Education | Lisa Lukens (618) 942-2556 | salibainsurance@gmail.com

Farm Agents Council | Steve

Government

Planning

Technology

Young

APPLIED UNDERWRITERS

Director of Information and Technology Shannon Churchill - (217) 321-3004 - schurchill@iiaofil.org

Director of Education and Agency Resources Brett Gerger, CIC - (217) 321-3006 - bgerger@iiaofil.org

Accounting & Admin Services Tami Hubbell, CIC - (217) 321-3016 - thubbell@iiaofil.org

Director of Human Resources, Board Admin Jennifer Jacobs, SHRM-CP - (217) 321-3013 - jjacobs@iiaofil.org

Sr. Vice President/Chief Financial Officer Mark Kuchar - (217) 321-3015 - mkuchar@iiaofil.org

Chief Executive Officer Phil Lackman, IOM - (217) 321-3005 - plackman@iiaofil.org

Central/Southern Marketing Representative Lori Mahorney, CISR Elite - (217) 415-7550 - lmahorney@iiaofil.org

Director of Government Relations Evan Manning - (217) 321-3002 - emanning@iiaofil.org

Office Administrator Kristi Osmond, CISR - (217) 321-3007 - kosmond@iiaofil.org

Director of Communications Rachel Romines - (217) 321-3024 - rromines@iiaofil.org

Director of Membership Services Tom Ross, CRIS, CPIA - (217) 321-3003 - tross@iiaofil.org

Products & Services Administrator Janet White, CISR - (217) 321-3010 - jwhite.indep12@insuremail.net

Director of Prof. Liability & Ins. Products Carol Wilson, CPIA - (217) 321-3011 - cwilson.indep12@insuremail.net

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Thank You!

Thank you to everyone who attended CONVO this year. I cannot thank our carriers and sponsors enough for the support and collaboration that made this year’s CONVO such a valuable event and a huge success.

I am very proud of the content and the opportunities to learn that were presented to our membership at CONVO 2022. With the abundance of changes our industry faces, whether it be technological, social, political, economic, or otherwise, our association consistently responds with relevant and meaningful content for our membership.

At CONVO, there was a slew of topics that were very relevant to the independent agent. Technology, crypto, attracting and hiring talent, and differentiating yourself in the marketplace, just to name a few. Our close-out session was a fantastic discussion about the insurance industry and an election forecast that shined a spotlight on some issues we will be facing and how the upcoming election may influence insurance legislation over the coming years.

Reflecting on that last day of CONVO should be a reminder that the IIA of Illinois advocates on our behalf as the state continuously faces a large slate of legislative and regulatory issues. I commend you for being a member of the IIA of IL, but I also urge you to support the Independent Insurance Agents Political Action Committee (IIAPAC). Your support provides our association the opportunity to build relationships with our elected representatives and senators and educate them on issues that affect our industry and the people and businesses we serve. Please go to my.iiaofil.org/donate and contribute today.

I want to thank everyone who took the TIME to invest in themselves and attend our CONVO. I know it was worth it. If you were unable to make it, you can view highlights of the event in this issue of Insight.

Unfortunately, the summary is not the same as being there in person, so get next year’s event on the calendar now, October 10-12, 2023, in Peoria, IL.

Hopefully I will get to see many of you at the next IIA event.

Again, thank you, and have a Happy Thanksgiving.

It shouldn’t take your customer’s roof disappearing in a matter of seconds to find out who you can count on.

BUT SOMETIMES IT

And that’s the Silver Lining®.

CONVO and Perpetuation

CONVO 2022 Wrap-Up – All I can say is wow. Shannon and the team pulled off another excellent CONVO experience. From educational opportunities to speakers and tradeshow to networking, this year’s CONVO did not disappoint. CONVO had a little something for everyone. The educational opportunities were almost too wideranging, diverse, and interesting. I personally wanted to see every speaker, and all topics were relevant and left me feeling that I missed out, which is a home run in my book. From the valuation session to the cyber session to the hiring session, you couldn’t miss with whatever session you chose. I just wish there were more of me. This brings me to the point that agencies should look to have multiple people attend from different areas of their agency. The educational sessions are so wide-ranging to include a little something for everyone. The amount of CE over the 2 to 3-day period, along with the unparalleled networking opportunities, make our annual CONVO invaluable. This one was one of our best, in my personal opinion, so if you missed it, shame on you. You need to clear your calendar for next year so as not to make the mistake of missing CONVO 2023, scheduled for October 10-12 in Peoria, IL.

Now let’s talk about those taboo letters and words: M & A, perpetuation, and valuation. These have been driving our industry for a while now and will continue to drive our industry into the future. Every agency has to determine what best suits them. Perpetuation may be the most challenging thing to do as it requires you, as an agency owner, to find: someone that embodies your vision for your agency, somebody with the means, somebody with the drive, and somebody with the capabilities all within your geographical area. When you get perpetuation right, it is a wonderful thing. You need to look no further for a shining example than our 2022 Agency of the Year award winner and our 2022 Agent of the Year award winner, as the Agent of the Year recently made a deal to purchase the Agency of the Year. Hard to argue that perpetuation is not a great path when that happens. I know that perpetuation was some time in the making, but it looks like it turned out pretty well. As with any of these paths, some risks are involved, and perpetuation can be tough but may be the most rewarding as that retired seller will be able to drive by that main street agency and have pride that it is still locally owned.

Not to say that M & A isn’t a viable option as well. It would be hard to own a successful agency, and out of the blue, one day, someone comes in and offers you 75 times (extreme exaggeration) revenue and turn that offer down. As I have said before, I don’t think this model is viable in the long run, but I started saying that ten years ago, and it is still going strong today. The problem I see with this model is that you typically lose that local feeling of comfort even though the principles stay on for 2 – 5 years. Many times personal lines move to call centers in another town. I still think that people want to deal with actual people that they know and not a call center. If they wanted that experience, they would merely purchase direct online.

2Sense Brett’s

Finally, the best thing to do is find out what your agency is worth through the many tools that you have available through the association, like IA valuations (www.iiaofil. org/Valuation-Webinars). Once you know your worth, you can begin the process of perpetuating or any other method of selling. Perpetuation is clearly the best way to preserve the independent channel of selling insurance, and it keeps things local and helps community members serve their community.

If you must sell for 75x revenue , I get that as well, as it may open up markets you never had access to, which may help you better serve your customers. It is a nice problem to have where you build your agency up to where it is perpetuable or attractive enough for someone to purchase for a premium. The key to perpetuation is starting the journey earlier rather than later to find the most desirable candidate.

Should you have any questions regarding this issue, do not hesitate to reach out to me directly.

As always, this is just Brett’s 2 Sense, and I hope it was helpful. If you need any clarification or have any suggestions for future articles, please email me at bgerger@iiaofil.org.

of

Director of Education

Surplus Line Market Breaking Records

By Ashley Elfawal

The Illinois surplus line insurance market segment had a record-breaking year in 2021 and the trend is continuing through the current year. The Illinois experience is in line with national trends.

Growth in 2021

According to the Surplus Line Association of Illinois (SLAI), surplus line premium for Illinois was up 40% to just under $3 billion in 2021. Premium rose in the overwhelming majority of lines of coverage. The top five performing categories were:

2021 Illinois Surplus Line Premium (in $000’s)

5 Growth Categories

Coverage

Excess GL 414,173

Property 725,790 588,139

Cyber 208,672 78,305

23%

167%

E&O 373,745 269,786 103,959 39%

CGL 310,341 241,490 68,851 29%

Continued Strength in the Current Year

has been no slowdown this year,” said David Ocasek, CEO of the SLAI. “Through the first three quarters of 2022, Illinois surplus line premium is up 36% over prior year with many of the same lines that were strong in 2021 showing substantial gains.” According to the Association, the lines of coverage driving the increases this year are:

2022 Illinois Surplus Line Premium (in $000’s)

Growth

Coverage

Cyber

Property

Com

Excess

The Illinois surplus line industry is also coming off of a record-breaking month in August 2022, with premiums totaling over $591 million. This is the highest volume of premiums filed in Illinois in a single month since the Association began tracking data in 1985.

Across the U.S. The strong growth in Illinois mirrors what is happening on

basis. The recently released AM Best’s Annual

Lines Market Segment Report for 2021 showed

record-breaking year for the U.S. surplus lines industry in 2021. The report is commissioned by the Wholesale

Specialty Insurance Association (WSIA) Education

and points out that, across all surplus line

“total US surplus lines direct premiums written rose to a record $82 billion-plus in 2021, with the largest year-over-year premium growth since 2003.”

recent WSIA survey of states with stamping offices in

U.S. showed current year premiums for these 15 key states increasing 28% to $42 billion through August of 2022. States with stamping offices accounted for 62% of all U.S. surplus lines premium volume in 2021 so their data provide a valuable indicator of the direction of the total U.S. surplus lines market for the current year. State stamping and service offices are nongovernmental entities that play a vital role in the surplus lines industry by facilitating compliance with surplus line insurance regulations and tax filing requirements, as well as providing additional services for their respective memberships.

Market Forces Driving Growth

There are, of course, specific reasons why certain lines are showing strength. More remote workers, increased threats and a rise in data breach litigation push cyber rates up. Catastrophes and natural disasters drive property higher. Flight to higher rates of return drives capital to other markets and that scarcity nudges rates up across all lines.

For the surplus line market, in particular, growth is spurred by several factors. As the overall market hardens and the licensed companies tighten their underwriting, more risks flow to the surplus line market. In this way, surplus line companies are fulfilling their purpose of being the backstop to the licensed market and providing needed insurance when admitted companies cannot or will not.

“The additional risks coming in from the licensed and the overall hardening of rates combine to create a compound effect on surplus line premium volume,” said Rich Dunlap, Director of Finance & Administration for the Surplus Line Association of Illinois. “That combination is what gives us the significant increases we’ve seen over the past couple of years.”

New Illinois Stamping Fee Effective January 1, 2023

Recently, the SLAI announced that it is lowering its stamping fee rate. “The rate will decrease from 0.075% to 0.04% for all policies effective January 1, 2023 and later,” said Ashley Elfawal, Membership Engagement Coordinator at the Association. “For policies that were effective prior to that date, and any endorsements to those policies, the

rate will continue to be 0.075%.” She also pointed out that there are different rules applicable to renewal certificates, policy extension endorsements, multi-year policies and policies effective prior to January 2019. Producers should look at the stamping fee section of the SLAI website at www.slai.org/stfee for further information. “We are now one of three stamping offices with the lowest rates in the country, along with Minnesota and Nevada,” Elfawal added.

Dedicated Professionals in a Strong, Stable, Specialty Market

The surplus line industry, in Illinois and across the country, has experienced strong premium growth across a broad

cross section of coverages for the past several years. As the safety-valve for the market, surplus line professionals are able to provide insurance to insureds that wouldn’t otherwise be able to obtain it. These dedicated surplus line producers play a key role in the Illinois economy by facilitating insurance coverage for emerging, unique, difficult and specialty risks. Their role is especially important during times, like now, when the licensed market is writing fewer of these types of policies.

Ashley Elfawal lives in Chicago and works at the Surplus Line Association of Illinois. She is a graduate of Michigan State University and has experience reporting on the insurance industry and legislative issues.

Groovy, Awesome, Rad, Cool, Far Out, Happening, Dope, Bussin’

By Shannon Churchill

As our theme was “The Evolution of Insurance,” it only seems fitting to use a variety of terms to share the success we felt from this year’s event. The lineup of over 21 speakers, presenting during 15 different education sessions, provided attendees great opportunities to customize their learning on topics from selling with video, bitcoin, solar, E&O and ethics to agency operations and procedures, just to name a few. The first of the keynote sessions was “The Evolution of Insurance,” with Steve Anderson of Catalyit and a panel of insurance professionals. This session gave everyone insights into industry issues, including technology, finding and retaining talent, procedures, remote work, and more. The closing keynote session, “Industry and Election Forecast,” featured Amy Walter of the Cook Political Report with Amy Walter and Charles Symington, Executive Vice President of Big “I.” They had an insightful discussion on the upcoming elections, the impact on small businesses, and an overall outlook on the political landscape. Hannah Meisel, with NPR of Illinois, and Phil Lackman, CEO of IIA of IL, shared similar state-level insights, discussed the new district remapping, and analyzed the upcoming elections. IL Department of Insurance (DOI) Director Dana Popish Severinghaus gave an update on the DOI staff’s focus, goals, and challenges.

In addition to learning, the six social events created great opportunities for networking among attendees and exhibitors. The 120 exhibitors brought a variety of services and products to benefit independent agencies. We raised $3,075 for Make-A-Wish and collected $3,500 for IIAPAC.

As I said, I think we had a really successful event, but you don’t have to take my word for it. In the post-event survey, the common theme in the feedback was “CONVO is worth the investment of time and money!” Read on to see additional feedback we have received. Take time to review the pictures in this magazine issue and on our Facebook page at www.facebook.com/iiaofil. A picture is worth a thousand words, after all. If you want to share your thoughts or learn more about CONVO, please reach out to me at schurchill@iiaofil.org.

We are already working on CONVO 2023. Make sure you hold the dates on your calendar now, October 10-12, in Peoria, IL. If you have thoughts about what you want to see, let me know.

I loved the convention. Very informative.

- First Time Attendee

I had a great time at the CONVO and I really enjoyed the breakout sessions, especially the Cyber 101. The final day panel of guests were also very interesting.

- First Time Attendee

I thought the convention was great and I was very happy I attended. I do not have a license (no need for CE credit) and am relatively new to the industry, so it was great for me to soak up a lot of knowledge and meet an awful lot of people. The breakout sessions were fantastic and I only wish they were spread out more so I hade a chance to attend more where I had to make a choice between topics presented at the same time.

I think the offering of an education session day one for those not golfing was a great option, and I was glad to have the opportunity to hear Nicole [Broch] speak that afternoon. The session with Steve Anderson was great, the food trucks gave everyone multiple options and a variety of foods was fantastic. I’d have to say it was a very well done event and I look forward to next year.

- First Time Attendee

I thought the event was very well organized and extremely informative! Look forward to more.

- First Time Attendee

What a great time! The breakout sessions were wonderful, excellent options to attend. The entertainment was great. Wonderful experience overall!!

- First Time Attendee

Great event, tradeshow was great. Always good to catch up with my peers in person and form new friendships.

- Anonymous

Award Recipients

Agent of the Year Ray Roentz Agency of the Year (Less than 10 Employees) Heneghan, White, Cutting, & Roentz Insurance Agency

Agency of the

(10+ Employees) J.Krug

Young

Cartwright Merit Award

INSIDE-OUTSIDE GAME

Is an Internal Offer Really Worth Less Than an External?

By Scott Freiday

Independent agency sale transactions are continuing at a strong pace in 2022. Organic growth rates and profitability are booming, according to Reagan Consulting. Those financial drivers continue to steer agency merger-andacquisition prices upward.

In this environment, some agency principals are looking for a game plan to sell their firm, whether to an outside buyer (such as a strategic investor or a private-equity investor) or an inside buyer (through an agency perpetuationcontinuing the independent agency as it exists but with new leadership).

Agency principals may perceive an outside sale as more lucrative than a perpetuation. But is an internal offer really worth less than an external? An internal offer to perpetuate an agency can be as appealing as an external sale or even more so. Here’s a look at why.

While the financial terms of the sale are always a top consideration, the price tag is only one of the key considerations for an agency owner. Some of the others typically are:

• The selling owner’s role in the agency after the sale.

• The timeline for the transaction (especially for the selling owner).

Start With Goals

Agency owners looking to sell who look at the price tags of other merger-and-acquisition transactions in the marketplace are in essence starting at the finish line. Instead of doing that, it’s productive to start by looking at goals for 1) the owner and 2) the future of the agency.

Those aspirations provide a guiding light through the sometimes-complicated process of deciding upon an agency sale or perpetuation transaction. Questions to ask include: Do I want to continue working or retire outright? What responsibility if any do I want to take after I sell to a third party or perpetuate my agency to an internal buyer?

Understand How Inside & Outside Buyers Can Differ

While any potential buyer covets the potential growth and profitability of a target agency, a handy way to categorize agency buyers is to divide them into inside buyers and outside buyers.

Internal buyers are those already working within an agency, and usually become owners through the principal’s

decision to perpetuate. Commonly, inside buyers are family members and/or producers or other key employees working at the agency.

External buyers come in a couple variations. First is the private equity (“PE”) buyer, who is not necessarily familiar to an agency owner but is attracted by the agency’s financial performance, growth prospects, and/or market share. Some PE buyers acquire an agency to merge its operations into another. In fact, some sellers perceive that PE buyers are making “book of business purchases.” It’s often true, though, that PE buyers want the seller involved after the sale to run that book of business, continue to manage results, or take on a sales role.

A second type of outside buyer is the strategic buyer. Possibly already known to the owner, he or she might be a peer from a nearby geographic area or even the same city. Like a perpetuation buyer, a strategic buyer is likely to carry on an acquired agency’s operations as they are. However, it’s also possible the strategic buyer might want to change the name of the agency, consolidate operations, or make other changes. Strategic buyers might be less likely to want a selling owner to remain on, since these buyers are involved in the agency business already and might not need the support that a perpetuation buyer might want.

Look at Non-Financial Factors Driving Value

A sale to a third-party buyer may seem to have the highest number at first look. But there could be non-financial factors at play. A private-equity buyer, for example, might fold the agency into another. This may mean the agency location may close, employee arrangements may change, agency branding may shift, and so on. An external buyer also might feel less obliged to continue the agency’s community involvement. A selling principal needs to consider those factors in light of the goals he or she has set.

Examine the Earnout Component

An issue with outside buyers, often with PE deals, is the “earnout component” in the sale. These earnouts are payments triggered if the seller helps the agency hit financial targets after the sale.

Those targets can be ambitious to hit. So while PE deals might sound initially like big-dollar transactions, an outside observer might not really know how that earnout affects the price the seller gets. (Keep in mind that any agency merger-and-acquisition information available through word of mouth is usually incomplete.)

Recognize Post-Sale Role in Perpetuation

For owners thinking about an agency perpetuation, it’s vital to discuss those ambitions with potential buyers as early as possible. This can help uncover how much interest they have in being future agency owners. Having those conversations can clarify what’s possible.

Perpetuation deals, as with any transaction, also involve a transition for the selling owner. Both the seller’s role and the transaction timeline are important here. The selling owner might take a role as a mentor, produce business, work as a consultant, and/or take other responsibilities while the new owners work into to their new roles. That transition role likely would be specified in the purchase agreement.

Staged perpetuations (those that take place over several years through two or more steps) can be appealing to owners who want to get out of the agency gradually. They can result in prices equivalent to or even more than an external sale by cashing in on a portion of ownership now and building shareholder value as the agency grows. Those shares could be worth more down the road and the principal continues to benefit from the agency’s cash flow while remaining a partial owner.

But owners who want to exit the business quickly might be more amenable to selling to a third party with no involvement after the sale. However, owners who make an outside sale without setting a plan for their career after selling their agency sometimes want to get back into the agency business after a couple of years - having experienced “seller’s remorse.”

For any agency sale, it can help to think of the owner’s role in terms of his or her “runway”: The principal may be taking off by selling the agency, but if they haven’t decided fully on a destination they might not be satisfied with where they land.

Think About Tax Treatment

One other consideration for any agency owner is the tax treatment of the sale. For instance, a staged perpetuation can allow the owner to receive sale proceeds staggered over a period of years, which can be attractive not just for tax reasons but also financial reasons.

Whatever thoughts an agency owner has today about a future sale or perpetuation, the strongest advice I give to anyone is to take a broad view of the three factors: financial terms, the selling owner’s role after the sale, and the transaction timeline.

This article originally appeared on the Insurance Journal website at www.insurancejournal.com/news/ national/2022/08/03/678569.htm.

Scott Freiday is senior vice president and division director of InsurBanc, a division of Connecticut Community Bank, N.A. An expert on agency mergers and acquisitions, agency perpetuation and financing, he has presented at numerous venues nationwide.

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Great Changes

Hereare

Is Your Agency Prepared?

By Carey Wallace

There are a million names for the unprecedented trend we are experiencing in the current employment market. Many people are calling it the Great Resignation, the Great Shuffle, the Great Recognition, or even the Great Questioning. Whatever name you want to use for it, one thing for sure, it is without question GREAT. Over 40 million people voluntarily quit their jobs last year and this is leaving a lot of businesses – including independent insurance agencies – in a tough spot. In fact, many agencies that I have worked with over the past several months cite challenges with turnover and staffing as the reason they are considering selling. And these are primarily agencies that have never considered that possibility before.

In addition to the changes in the employment market, we are experiencing a hardening insurance market, rising interest rates and a possible recession in the next several months. The experts are predicting that the 30-year fixed rate mortgage will vary between 5-7% by the end of 2022 and that we are headed towards a recession.

This has led many agency owners to ask themselves what does all of this mean for me, my agency, my staff, and my future? Is the M&A activity going to slow down? What will this do to the value of my agency? And maybe the most important question of all is “What can I do to best prepare for these changes?”

Will M&A Slow Down?

Over the past six years we have experienced recordbreaking M&A activity with no slowdown in sight. Many are thinking this might be the start of the slowdown, but I disagree. In my opinion, these factors are widening the gap between agencies that will acquire and those that will be acquired – but the overall rate of M&A will not slow down; in fact, it may continue to accelerate. The core reasons that make independent insurance agencies an attractive investment have not changed, and these economic factors will not significantly change them either. Agencies will continue to have predictable performance, the hardening insurance marketplace will cause revenue to increase, and the need for insurance is not going away.

It is true that rising interest rates make the cost of borrowing money increase. However, it is important to remember that the market for agencies is still hot. There are many buyers making the demand for agencies stronger than ever. Rising interest rates may impact the ability for some buyers to be competitive in the marketplace but, overall, the impact will be minimal because the demand is expected to remain high.

In many cases, independent agencies have performed well in times of economic down turns, some even claim that they are recession proof. M&A and PE buyers are interested in independent insurance agencies because they are profitable, have very predictable income streams, and they provide something that everyone needs, which is why many consider independent insurance agencies to be “recession proof”.

What Will This Do to the Value of My Agency?

Now that we have established that M&A will not slow down, I predict that nothing in the independent agency market will change. For agencies that are focused on growth; investing in their people; developing strong niches; and creating scale by investing in technology, relationships, and a strong infrastructure – this is your time! Your value is strong and will remain strong through these uncertain times. As the market for acquisitions continues to be hot, your agency is poised for growth and wellpositioned to acquire those agencies that have not made these investments. As agencies acquire and grow their volume, the demand will continue to increase – making the value of the agencies that remain INCREASE.

How Can I Prepare for These Changes?

Assess your level of energy and appetite for change. You need to be honest with yourself, take a good look at your agency and your appetite for change. Investing in change is hard work and takes a lot of time and energy. If investing to adapt with the changing marketplace is not something you are interested in taking on, then it might be time to take a step back and consider your options. Agencies that wait too long to transition their ownership end up selling for a discount. There are far more buyers than sellers as well as many different types of buyers and deal structures for you to consider. Get educated and give yourself as many options as possible to make sure that you find the right fit for you, your customers, your staff, and your family.

Positioning Your Agency for the Future

Position your agency for growth, scale, and a strong future. Take a step back and ask yourself if you are investing in the areas that will position your agency to have a competitive advantage. There are many things you can do right now to position your agency for the future.

Invest in technology and data

Identify the pain points in your agency and assess the technology solutions that can increase your efficiency, profitability, and overall performance. This is a cultural change that will take time, but the payoff for those that invest and implement effectively will be significant.

Consider Joining a Network

Over 72% of independent insurance agencies are part of a network, aggregator, cluster, or alliance. These groups can make a huge impact on your agency by providing markets, increased commission rates, aggregation to maximize contingencies, access to services and strong networking opportunities. Not all networks, alliances, and aggregators are created equal making it critical to thoroughly review the cost, benefits, and terms of these agreements. There is no question that these groups can help agencies grow and scale through access to markets, higher negotiated commission rates, aggregation to achieve higher contingencies, access to resources, services, and networking.

Make Your Agency Attractive for Talent

Ask yourself: “Do I have an agency that is attracting talent or driving talent away?” Be sure you are investing time, technology, partnerships, resources and education to empower your team and set them up for success. You will need to have a strong onboarding and training program, invest in ongoing training and create a communication loop to make sure that you are staying in touch with the challenges that may need to be addressed.

Explore utilizing virtual assistants, remote workers like WAHVE or other creative resources to create capacity on your current team and give them the support needed to continue to grow and scale. Redefining the roles and responsibilities can create capacity on your staff and make a big impact.

Be willing to provide a flexible work environment so you can maximize your ability to recruit talent. In addition, consider offering the most valuable members of your team a career path or pathway to ownership. Lastly, be sure that you are communicating your plans for the agency’s future with your staff. With the amount of transition and M&A activity in the insurance industry, silence can create unnecessary uncertainty for those that are depending on you and the agency to build their future. Put their minds at ease.

The current job market is filled with companies with great benefits, preferred work culture, and opportunities to grow. Make sure your agency is competitive and attractive for top talent. This means you should have an onboarding and training program, flexible and adaptable work schedules, support through technology, and data investments to set your strongest talent up for success. Make space in your agency for your employees to learn new skills and develop their interests.

Through these unpredictable times, those who are investing in their agencies are going to be very well positioned now and in the future. The demand for agencies that are growing, profitable, and have volume will continue to rise for the foreseeable future. The best place to invest now is right inside your agency.

Carey Wallace is the founder of AgencyFocus, an independent insurance agency consulting organization. She has worked in the insurance industry for the last 12 years and with entrepreneurial small businesses for her entire career. During that time, she developed key business consulting services to ensure that agencies have the information and support they need to plan for their agency and successfully perpetuate to the next generation. Find out more at agency-focus.com.

You need to be honest with yourself, take a good look at your agency and your appetite for change. Investing in change is hard work and takes a lot of time and energy.

Using an Agency Valuation

Why Agency Owners Should Utilize an Agency

In today’s business climate, agency owners can no longer afford to use revenue multiples to understand agency value. The exact calculation of agency value requires a much deeper dive into the numbers, employees, and operation to get an accurate assessment of an agency. Understanding agency value is essential for M&A opportunities, perpetuation (both internal and external), business planning, and the overall health and well-being of your agency.

If you are putting off getting an agency valuation, you should understand that the longer you wait, your agency could potentially decline in value until it is time to sell or make an important business decision. A valuation allows you to gain a comprehensive understanding of your agency’s value and make the appropriate decisions to continue to grow.

According to the Big I Best Practices, there are multiple ways in which an agency can create value, which includes:

• Strong leadership and management

• Top performing producers, sales process, and sales leadership

• Gaining competitive advantages (better employees and culture, better reputation, innovation)

• Effective operations, efficient processes, and customer service

• Superior ownership, perpetuation, and a sustainability model

• Successful acquisition strategies

In order to achieve any of these listed above, an agency looking to create value should begin with a valuation. A valuation will allow you to build on your strengths, address your weaknesses, identify operational inefficiencies, and make decisions on potential investments for the future.

What better way to becoming a superior agency in the insurance industry than knowing exactly what you are worth in the market? It is a critical piece of knowledge enabling you to create value and grow.

Next, getting a valuation early and often will have significant long-term benefits for agency owners. The average age of an owner getting a valuation for their agency is 58.7 years of age. At that point, the agencies could have lost significant value because the older the owner, the lower the value of the agency.

Our data shows that owners in their 40’s have the best potential for a higher EBITDA multiple, and as a result, the best potential for a higher value on their agency. The statistics tell us that younger agency owners who use the valuation as part of their business planning, will see a significant increase in value versus their older peers.

Additionally, agencies that use valuations as business planning tools, see a greater return on investment. From the valuations we have done in the past, we see that agencies that have business planning in mind, have higher revenue growth. These agencies with a business planning mindset have enjoyed an average two-year growth rate at 10.2%.

If you are putting off getting an agency valuation, you should understand that the longer you wait, your agency could potentially decline in value until it is time to sell or make an important business decision.

Valuation as a Roadmap for Growth

Agency Valuation as a Business Planning Tool

By Craig Niess, MBA, CVA and Luke Hippler, MBA

As you can see, agencies that use valuations for business planning have a higher multiple than agencies that use valuations for other reasons. Using a valuation for business planning has multiple benefits and provides the most potential for higher valuations.

In conclusion, we recommend that agency owners receive a valuation well before they approach retirement age. By understanding their value and knowing the factors that can be tweaked to increase value over time, agency owners will position themselves for the best possible exit when it is time to transition the business.

To learn more about an agency valuation, please contact Craig Niess at Craig@iavaluations.com or Luke Hippler at Luke@iavaluations.com.

As you can see from the graphs, not only does the owner age play a factor, but using your valuation to drive growth can also play a significant role in increasing your agency’s value.

To illustrate the benefit of using a valuation as part of your business planning, consider this example: There are two agencies: the Miller Agency and the Johnson Agency. Both agencies have revenues in the range of $600,000, have EBIDTA profitability at the industry average of 25%, and both are looking to get a valuation of their agency. The Miller Agency is getting a valuation with the purpose of business planning, while the Johnson Agency is getting a valuation with a sale (external) in mind. Although they bring in nearly identical revenue and have the same EBIDTA profitability, there is nearly a $60,000 difference between the two agencies due to the EBIDTA multiplier.

About IA Valuations – Founded in 2017, the IA Valuations team has performed over 200 valuations to independent insurance agencies across the U.S. Our advisors have 25+ years of experience guiding agency owners on maximizing their agency value, planning, and legal needs for ownership transition. In addition, IA Valuations has provided perpetuation planning, financial modeling and business planning for independent insurance agencies. Finally, IA Valuations has advised dozens of agency owners on selling their agencies through our Agency Link process. To learn more about IA Valuations, please visit IAValuations.com or contact@iavaluations.com.

The information provided in these documents is general in nature and shall not be construed as personal legal, tax or financial advice for your situation. Please contact@ iavaluations.com to discuss your personal situation. Copyright ©2022 by IA Valuations and Ohio Insurance Agents Association (OIA). All rights reserved. No portion of this document may be reproduced in any manner without the prior written consent of IA Valuations or OIA. In addition, this document may not be posted as a link on any public or private website without the prior written consent of IA Valuations or OIA.

Agency Reports That Make Your Bottom Line Sing

Introduction to Insurance Agency Reports

Do insurance agency reports make you nuts? If it does, you are not alone. For many insurance agency owners, reporting is a bit overwhelming and frustrating. For this reason, many agency owners shy away from using reports from their agency management systems. What this means is, owners either require their team to duplicate entries and use a spreadsheet, or they operate the agency based mainly on feelings. Both strategies are band aids for embracing the suck of getting your agency management system reports accurate!

In this article, we will break down the common reasons your reports are not accurate as well as the top six reports we always look at in our agency assessment process.

Common Reasons Your Agency Management System Reports Are Inaccurate

You have probably been in this situation. You want to see a metric on your agency. So you pull up your agency management system and run insurance report. When you see the result, you know it’s not right, you get frustrated and move on to something else that makes way more sense. Ever been in that position?

If you have been there, welcome to the club. Most insurance agency owners have had this experience!

Where we all get it wrong is the giving up part. Instead, we need to embrace the suck and figure out how to make it right. What’s the alternative? Keep duplicating efforts, or run the business without reporting? I think not!

4 Reasons Management System Reports Are Inaccurate

Let’s dish! Here are the top four common challenges we see with insurance reports and how to fix it.

• Data Entry: When everyone on the team is doing a different process or procedure, you can bet your reports are inaccurate. For many agencies, personal lines and commercial lines can follow wildly different processes. This will also make reporting more difficult. While the teams have different processes, they can follow some basic similar workflows. The solution: document your processes and audit them to ensure data integrity!

• Download: We are big supporters of both personal and commercial downloads (yes, commercial too! But that is a topic for a whole different blog). However, every company and system handles downloads differently. You have to understand each company and how the download works and then build your workflows accordingly.

• Reporting Setup: When you are building reports, it’s important to understand how delicate reporting really is. You need to be intentional on how you set up the date range, fields, and intent of the report. When running reports, it is critical you understand how the report is built. We recommend that you always review reporting documentation. Something to consider is making sure you are grabbing the correct fields. For example, there is a big difference between premium and annualized premium.

• Understanding the Report Intent: From time to time, we see confusion on what the report is asking for. A great example of this is the book of business report. This report is often misunderstood as it is a picture of the agency at that time - it changes every moment! You will never get the report the same way a second time.

So now that we have the common challenges, let’s dive into what to do about it!

By Kelly Donahue-Piro

Poor data management can lead to overpaid commissions, poor time management, employee stress, unsuccessful marketing campaigns and failed third-party integrations. Accurate data leads to successful agency planning. Knowing where the client and policy came from will allow for better target marketing. Proper assignment of clients and policies will show the book size managed by each CSR. Verifying phone numbers and emails, then assigning them to the correct client will ensure that you can get ahold of them in the event of an urgent matter and that third-party integrations connect correctly. Start small and build from there. Create a weekly or monthly schedule to review your data for accuracy, then stick to it.

- Stephen Harrington, The Diva of Insurance

How to Embrace Your Insurance Reports

We know the importance of getting your insurance correct. Let’s discuss some ways to help you along in the process!

• Join Your Management System User Group: For a relatively small investment, your agency can join your management system’s user group. This is a great resource to network with other users and ask questions. They also have specialized content for members. In addition, they have product upgrades that your agency can use to stay current.

• Use Support, Knowledge Bases, and Other Resources: You will need to stay current on your management systems. Use their support line to ask questions and read and/or watch videos to understand how to best utilize your management system.

• Find a Management System Trainer: Many systems have trainers who work for the management system or they own their own training firm. This is the fastest and best way to get your reporting accurate. While this can be an expensive investment, having access to the data will always pay you dividends in making sound business decisions.

• Agency School: Our agency school has management system guides (step-by-step PDFs and videos) for Applied Epic, Vertafore AMS360, and Hawksoft. This is a great solution if you need some guidance but are happy to do it yourself.

Activity Insurance Report

The activity report is rich with information! This insurance report (when everyone is logging activities uniformly) can tell you what everyone is doing, if they are logging accurately, and where time is going. The activity report is usually run for the last week and when you export it to Excel, you can see a clear picture of what your team has been doing. Here is how we use the activity report: • Total Weekly Activities: Are they up or down? (use this to predict burnout)

• Activities by Person: This will show you who hustled and who slacked.

• Top Activity Code: This will show you if your team is following their job descriptions and handling the work that they should be! (Most systems have a way to label or code the activity)

• Top Client Activities: You can filter to find which clients are being worked the most. You may notice your team over-servicing lower-level accounts!

This report is so valuable, and when displayed routinely, you can really show your team areas for improvement. Showing them the data makes it not personal but instead about the facts. We have a saying, “If it’s not in the management system, it didn’t happen!” Installing that belief in your agency will help ensure your data is on track.

Overdue Activity Report

Once you get your team using your agency management system uniformly, this insurance report is certainly very helpful. This report will show you the current backlog for each team member. We love this insurance report as part of our Agency Efficiency program. At APP, we define overdue as anything that had a due date of yesterday. We know some agencies give a grace period, but we preach that the team has to become comfortable raising their hand if they are backlogged, and most importantly, accept help from agency leadership as it’s offered. Too often, agency team members don’t feel comfortable asking for help or only want help in a very narrow and specific way. In order to thrive, every team member needs to embrace the idea that asking for help is a sign of courage, not weakness.

From the overdue activity report, we can get the following information:

• Overdue Activities by Team Member: This will show you who is backlogged and who needs help. Once everyone is using activities uniformly, leadership can see clearly who needs help. We can also see those who are not great at managing their activities to provide some extra training (or retraining).

• Overdue Activities by Code: From this report, we can see which activities we are consistently deprioritizing. Unfortunately, many of these activities can be the most valuable. It’s frequent that quote follow-ups, renewal reviews, and processing are first to get deprioritized.

• Average Backlog: This one may take some Excel handywork, but if you are skilled, you can calculate the average number of days the team is backlogged. It’s not uncommon that we see teams backlogged for 30+ days. What this means is that the average task is 30 days overdue. This indicates that the team is not using your system as intended. It’s also a great thing to celebrate when they get that metric down to under two days!

The overdue activity report is a great warning signal for leadership to address any backlog before it gets too crazy.

Lost Policy Report

Quite a lot can be learned by looking at why your clients are leaving and where they are going. When the team is instructed on how to use lost policy reasons, you, as the owner, can launch strategies designed to save at-risk accounts. When you share the lost policy report publicly, you start to see the team really fighting to save clients who are on the cusp of leaving.

When it comes to the lost policy report, here is what we look at during the agency assessment process:

• Total Policies, Premiums, and Revenue Lost: We want to see what is leaving the agency.

• List of lost policies with customer name and premium: It’s pretty powerful when every month you are looking at a list of clients leaving your agency and the premium it represents. Rather than just look at numbers, it’s valuable to look at the name of each client.

• Lost Policies by Carrier: We review this by premium, count, and revenue. This will clearly show you where your book is shrinking with some carriers.

• Lost Policy by Type: Certain types of policies may have higher churn. For example, auto tends to be the most volatile. This will help your agency identify which policies need cross selling for longevity.

• Lost Policy Reason: Now some of you may think your team won’t code these accurately, but you may be wrong. Also, if they are coding everything inaccurately, you have a culture - not a reporting - problem. When we set up agencies with lost policy reasons, we take off “price.” We do have a “price with a remarketing” or “price no remarket.” Price is often the thing that clients present as the reason, but very often, it’s relationship. Also, you may find that “non-payment” or “peopleselling” is your top reason. This allows you to hyperfocus on the right strategy to keep retention high.

One note on the lost policy report, this report and your agency’s new business report must be accurate in order to establish a true retention report. Any discrepancies in these two reports will impact retention. This is why it is also critical your team is aware of how to code remarkets and that you audit that process based on your management system.

New Business Report

Everyone loves new business, right? But too many insurance agencies use the side hustle spreadsheet to track new business rather than work to make sure the management system is accurate. With new business, here are the metrics we like to review as part of our agency assessment.

• New Policy Count, Premiums, and Revenue: This is a great general report just to see how much you are selling. It’s great to compare against the lost policy report. You always want to be selling more policies, premiums, and revenue than you are losing.

• New Business by Sales Agent: You will want to show this by count, premiums, and revenue. We recommend that you actually rank the producers so it’s clear who is succeeding and who is not. Remember, numbers do not have feelings, in sales, the facts are the facts!

• New Business by Source: Knowing how your team is getting opportunities is critical. When it comes to spending your marketing money, you want to track your new business sources to fuel future success.

• New Business Carriers: Every agency should have a core carrier list that you should be actively trying to place business with. This report is a great way to catch when your team starts placing business with non-core carriers.

Retention Report

This report is probably the trickiest to get right. It requires the rest of these reports to be spot on. However, it is worth it to get it right. Retention is where the money is. You want to be able to track retention.

We like to look at retention with the following filters:

• Policy Count

• Premium

• Revenue

• Department

• Account Manager

• Producer

• Policy Type

• Carrier

What you will find with retention is that each number will give you a clue to look into more detail. Many agencies can get frustrated and don’t trust retention metrics. We actually recommend you work on these reports in the order provided, easiest to hardest. With each report you will clean up reports and processes as part of the process.

Conclusion

Reporting is hard but necessary. It’s a good thing we can do hard things! We recommend you partner up to help get your agency reports accurate. The only way reports will make an impact on your agency is if you consistently review them both with leadership and the team.

When you roll out new metrics to the team, it will take them a few months to understand the data. Don’t be surprised if the team pushes back for a few weeks, they are just learning the data! In a few weeks you will start to see behaviors change for the better.

Kelly Donahue-Piro, founder and president of Agency Performance Partners, is a no-nonsense effectiveness expert who has helped hundreds of insurance agencies identify and capitalize on sustainable improvement opportunities. Her specialties include agency culture assessment and change; management and supervisory coaching and benchmarking; customer retention strategy development; digital marketing strategy, planning and implementation; and sales planning, management and skill-building. Kelly is an engaging speaker who is available to conduct in-person and online agency success presentations that complement her firm’s one-on-one on-site and virtual consulting practice. Connect with her on social platforms, via email at kelly@agencyperformancepartners.com, or by phone at 401-415-6205.

Reasons ESOPs5 Succession Planning are an for

Excellent Option

Independent agency principals have a lot on their plates. Besides navigating uncertain times, the need to grow, recruit and retain talent and plan an exit strategy are constants. Therefore, agency owners should consider a vehicle to meet these challenges. Step forward: an employee stock ownership plan (ESOP).

An ESOP is an employee benefit plan in which the owners sell some or all their shares to a trust at fair market value. The owner receives cash for their shares, and each employee receives a financial interest in the stock held and owned by the trust.

Be aware that ESOPs are not for agency principals looking for a quick exit or to extract the last dime. They’re for wellrun firms with at least 20 employees and a principal who understands the unique benefit of the ESOP.

If this sounds like you, here are five reasons an ESOP is advantageous for independent agency principals:

1. Retain control.

As principals sell stock to the ESOP, employees gain a sense of ownership. But simultaneously, principals can retain control of their firms because they’re not required to sell all of their stock, all at once. This provides flexibility to decide whether and how they want to stage this process. They can even use the ESOP as a vehicle to acquire another agency.

2. Friendly perpetuation.

ESOPs are a structured, tax-favored way to sell a portion or all of the agency to a “friendly buyer” - the ESOP trust. In fact, the tax code encourages ESOPs with a generous tax break. Studies show that employee-owned firms enjoy productivity gains, success and employee retention. That’s important, especially these days when private equity buyers are seeking to hire an agency’s best talent but don’t offer ownership.

3. Tax treatment.

Agency owners can elect to defer the gain on their stock sale to the ESOP if certain rules are met. This allows them to maximize their post-sale, after-tax proceeds. On an aftertax basis, selling to an ESOP can approach the prices paid by the big acquirers.

By Robert Pettinicchi

ESOPs usually borrow money to purchase shares. The agency repays the loan by contributions to the plan with funds that are not taxed.

4. Staged perpetuation.

ESOPs aren’t for principals in a hurry. Rather, they’re a terrific vehicle to create and manage a staged exit strategy. Agency principals can relinquish ownership over the course of some years, allowing time for rising stars to flourish in their new or expanded roles. At the same time, they are handed the opportunity to increase the agency’s value.

5. Preserve a legacy.

Agency principals often express “seller’s remorse” after they’ve sold to an external buyer. Sure, they may have been paid well, but now they’re removed from a business they’ve built up over decades. Ultimately, ESOPs make sense for independent agency principals who remember how they gained ownership and want to reward family members and employees who subsequently helped them build their business.

While not always a panacea, ESOPs are an attractive option that should be strongly considered to boost productivity and employee retention while meeting an agency’s perpetuation needs.

Robert Pettinicchi is executive vice president and chief lending officer for InsurBanc, a division of Connecticut Community Bank, N.A. He developed InsurBanc’s loan products for independent agents. An expert on agency mergers and acquisitions, agency perpetuation and financing, he has presented at numerous venues nationally.

An ESOP is an employee benefit plan in which the owners sell some or all their shares to a trust at fair market value. The owner receives cash for their shares, and each employee receives a financial interest in the stock held and owned by the trust.

Sales IS Still a Numbers Game

By John Chapin

These days a lot of sales ‘gurus’ try to refute the fact that sales is still a numbers game. They say things like, “It’s not about the numbers, it’s about the relationships.” Well, they’re right on the latter part of that statement, it is about the relationships but, in order to get the number of relationships you need, you have to be out talking to a lot of people. It’s simple, the more people you talk to, the more business you will do; even a blind pig finds corn. Now granted, you have to have quality behind the numbers, but assuming you’re talking to the right people the right way, it’s all about the numbers. That said, there is also a second way that sales is a numbers game. You can also use numbers to guide and predict success. Here are six ways to do that.

6 Ways to Make the Sales Numbers Work For You

1) Set results and activity goals. Start by setting an annual sales goal. How much do you want to sell, or how much money do you want to make? Once you know this number, you can back into the other numbers. So, based upon your annual goal, calculate your monthly and weekly sales goals. From there, calculate your daily activity. So, if your annual income goal is $200,000 and your average sale pays you $5,000, then you need 40 sales for the year. You can then divide those by 12 and 50 to get monthly and weekly goals, assuming you take some vacation. But ultimately how many proposals does it take to get a sale, how many appointments to get a proposal, how many people do you have to talk to in order to get an appointment, and how many calls do you have to make to talk to someone? That will give you your daily activity which you will then time block each day.

If you’re not sure of the numbers you need in each area, talk to your manager and other salespeople, or take an educated guess. Just start somewhere.

2) Track your numbers. Have a sheet of paper, use an excel spreadsheet, just have something to track your calls, number of people spoken to, meetings, proposals, sales, and size of sale.

3) Keep track of what happens on each call.

For example, if you made ten cold calls, perhaps two weren’t there, two you didn’t get in to see, two weren’t qualified, two weren’t interested, and you got two leads.

4) Get some reasons behind the numbers.

When will the two people be there? Why didn’t you get in to see the two prospects? Why didn’t the two qualify? Why weren’t the two interested? Why were the two leads you did get interested?

5) Analyze the information.

From the above pieces of information, you will start to recognize patterns and areas of the sales process that need work. For example, are you making your cold calls at the right time of day? Are you effectively handling the gatekeeper? Are you calling a qualified list? Are you building sufficient interest? What are you doing right on the leads you do get?

What about your presentations or sales calls? What happened on each call? Did you close the sale? Did you lose the sale because the person got cold feet or didn’t qualify for financing? Did you get an objection you couldn’t overcome?

What does that information tell you? Did you not build enough rapport? Enough urgency? Was the person not really an interested lead? Did you fail to properly qualify the prospect? What are you doing right and what do you need to work on?

Save these numbers in a logbook so you can come back to them later to review and look for trends. This will give you some ideas as to what you need to improve in order to make more sales. Also, take the results to your manager and the top salespeople in your company, get their feedback, and then work on your weak areas.

6) Adjust the numbers if necessary. If you find you are not reaching your sales goals, adjust your numbers accordingly. Continue to tweak the numbers until you’re where you want to be.

Finally, just make sure your sales plan includes massive ‘call’ activity. Again, at the end of the day it’s all going to come down to calling on lots of the right people. Hopefully you’re able to figure out your numbers and come up with a plan but when it doubt, just go knock on doors and ring lots of phones. While you can’t always control what happens on your calls, the one element you have complete control over is your activity: the number of people you call on and reach out to on a daily basis.

John Chapin is a motivational sales speaker, coach, and trainer. For his free eBook: 30 Ideas to Double Sales and monthly article, or to have him speak at your next event, go to www.completeselling.com John has over 35 years of sales experience as a number one sales rep and is the author of the 2010 sales book of the year: Sales Encyclopedia (Axiom Book Awards). He can be reached at johnchapin@completeselling.com.

At Least One-Third of E&O Claims Result from an Agency Moving Coverage to a New Carrier

by Curtis M. Pearsall, CPCU, AIAF, CPIA President – Pearsall Associates, Inc. and Consultant to the Utica National E&O Program

Moving an account to a new carrier at renewal time happens frequently. Most E&O carriers identify this issue as one of the biggest trends in Agents’ E&O. It is estimated that at least one-third of all E&O claims involve scenarios where an agency moves coverage to a new carrier and the replacement coverage is not as broad as the expiring coverage. It is vital for agencies to have a procedure to address this.

Do an in-depth comparison when proposing a new carrier at renewal.

1. Review coverage differences with the client. Create a side-by-side spreadsheet noting the key coverage issues and listing how each carrier addresses them.

2. Note coverage issues in your proposal. Many agents do this, pointing out differences – especially reductions and what’s uncovered. Coverage differences could include sub-limits, the definition of who is an insured, what’s covered and what’s excluded, and more.

3. Advise the policyholder when there is a reduction and note that they agreed to change to the new carrier. Without this analysis and notification, the client could have grounds to bring an E&O action against the agency if the client had a loss that would have been covered by the expiring carrier, but not by the current one.

In other situations, it could extremely difficult or even impossible to do a full comparison. When moving coverage to a new carrier, bring reductions to the client’s attention in writing and get the client’s acknowledgment in writing if they are agreeable to the reductions. To help in the agency’s defense if a problem occurs, a suggested approach is to include standard wording such as the following in your proposals:

In proposing the moving of coverage for _______________________ to a different insurance company, we have reviewed and noted in this proposal some of the coverage differences between your expiring coverage (policy) and the possible replacement coverage. It is important to note that during the review of the coverage differences, there may be other additional coverage differences that have not been noted in this proposal. We encourage you to read the policy completely and contact us with any questions.

associate news

Marisue Elias-Newman Elected NWCRA Chairperson

Marisue Elias-Newman, Esq. was recently elected Chairperson for the National Workers’ Compensation Reinsurance Association (NWCRA) Board of Directors at its 2022 annual meeting. The NWCRA is a contractual reinsurance pooling mechanism among participating carriers that provides an arrangement to comply with the state statutes and the Workers’ Compensation insurance plans for assigned risk business.

Elias-Newman, who was elected to the NWCRA board in 2019, is the Assistant Vice President of Regulatory Affairs at Berkshire Hathaway GUARD Insurance Companies, where she oversees the company’s residual market activities, licensing, and governmental relations. She is the past chair and current member of the New Jersey Compensation Rating and Inspection Bureau (NJCRIB), the past chair and current member of the Delaware Compensation Rating Bureau (DCRB), and a member of the North Carolina Workers’ Compensation Bureau (NCRB) Workers’ Compensation Committee.

Elias-Newman earned a BA, summa cum laude, from King’s College and a JD from the Dickinson School of Law.

SECURA Insurance Announces Promotions

SECURA Insurance promoted Mary Gronbach to Vice President – Investments effective October 17, 2022. Gronbach joined SECURA in 2013 as Director of Investments where she was responsible for managing SECURA’s investment portfolio and leading the treasury, billing, and accounts payable functions.

In the Vice President – Investments role, Gronbach will continue to lead financial services functions that directly and significantly influence the revenue, profitability, and financial status of SECURA by managing the company’s investment portfolio. In addition, Gronbach will assist the finance team in setting financial plans, tax and risk management, and capital modeling. Gronbach has a master’s degree in accounting and financial management, is a CPA, and has completed Advanced Level Leadership with Leadership Fox Cities.

SECURA Insurance promoted Kevin Klestinski to Chief Underwriting Officer effective Oct. 3, 2022.

Klestinski joined SECURA in 2015 as Vice President –Specialty Lines Underwriting where he was responsible for the profitability of the carrier’s Specialty Lines property and casualty insurance products.

Prior to this, Klestinski worked as Vice President of Property and Casualty Underwriting at CapSpecialty Insurance where he led both their Admitted and E&S divisions, and he also held various commercial underwriting roles at Acuity Insurance. Klestinski holds a Bachelor of Business Administration Degree from St. Norbert College in De Pere, Wis., and has the CPCU, CIC, CPIA, ASLI, AU, and AIS designations.

SECURA Insurance Named on RISE Elite 50 Internships List

SECURA Insurance was named on the Rising Insurance Star Executives (RISE) 2022 Elite 50 Internships list, which recognizes the 50 best internship programs in the insurance industry across the U.S. RISE recognizes internship programs with high intern satisfaction, opportunities for interns to network with peers and executives, as well as meaningful diversity, equity, and inclusion efforts.

The SECURA internship program is structured to provide interns opportunities to network and work with other interns, full-time associates, and executive team members. The program offers job shadows to help interns find their best fit at the company, and 98% of interns say they would like to stay at SECURA for a full-time position after graduation. SECURA invests in its interns. Company leaders engage with the interns to give them autonomy in their workload, so interns can gain experience in areas where they want to grow.

The internship program encourages interns to get to know each other through company-hosted intern events, such as mini golf and ice cream, pick-up basketball games, corn hole games, and more. The program also partners with SECURA’s Young Professionals Network to offer opportunities to network and advance their careers with other young professionals.

To learn more about SECURA’s internship program, visit secura.net/careers/internships.

SECURA Insurance Promotes Kevin Klestinski to Chief Underwriting Officer

SECURA Insurance promoted Kevin Klestinski to Chief Underwriting Officer effective Oct. 3, 2022.

Klestinski joined SECURA in 2015 as Vice President –Specialty Lines Underwriting where he was responsible for the profitability of the carrier’s Specialty Lines property and casualty insurance products.

Prior to this, Klestinski worked as Vice President of Property and Casualty Underwriting at CapSpecialty Insurance where he led both their Admitted and E&S divisions, and he also held various commercial underwriting roles at Acuity Insurance. Klestinski holds a Bachelor of Business Administration Degree from St. Norbert College in De Pere, Wis., and has the CPCU, CIC, CPIA, ASLI, AU, and AIS designations.

West Bend Mutual Insurance Announces Jacques Promotion to President

West Bend Mutual Insurance Company announced the promotion of Rob Jacques to president. Jacques has been with the company for 22 years and is a senior officer leading West Bend’s Commercial Enterprise. As president, he will continue to support the company’s corporate strategies and operating principles.

Jacques also serves as a director on the boards of the West Bend Area Chamber of Commerce, Feeding America Eastern Wisconsin, and the Kettle Moraine YMCA.

Kevin Steiner, current president and CEO, will remain as CEO.

West Bend Mutual Insurance Announces Buss Promotion to Director of Sales

West Bend Mutual Insurance Company has announced the promotion of Dan Buss to director of sales effective September 25. Buss will oversee West Bend’s sales efforts in Illinois, Minnesota, Iowa, Missouri, Nebraska, and Kansas. Buss’s experience with West Bend over the past 18 years makes him uniquely qualified for this role. He’s spent time as a commercial underwriter and agency automation representative and was a regional sales manager for seven years. Buss excelled as a state sales manager for five years, allowing him to work closely with agency partners to promote profitable growth.

Buss’s promotion reflects West Bend’s growth and the need to position the Sales team to meet their independent agents’ needs as West Bend continues their state expansion plans. Buss graduated from UW Milwaukee with a bachelor’s degree in business and marketing and has earned CIC and AINS designations.

Rockford Mutual Insurance Company

Named in Business Insurance’s 2022 Best Places to Work in Insurance

Rockford Mutual Insurance Company (RMIC) has earned a place on the annual Best Places to Work in Insurance program for a second year in a row. This program recognizes employers nationwide for their outstanding performance in establishing workplaces where associates can thrive, enjoy their work and help their company grow.

RMIC’s mission is to help families, individuals and businesses today and during their time of need by providing exceptional service, innovation, security, ease of doing business and paying claims promptly and fairly. They carry out their mission by hiring the best associates, cultivating their talents, and living their core values while leveraging technology.

RMIC is proud to provide a friendly atmosphere, benefits package, education and training programs for professional development, give back days, and more.

Best Places to Work in Insurance is an annual sponsored content feature presented by the Custom Publishing unit of Business Insurance and Best Companies Group that lists the agents, brokers, insurance companies and other providers with the highest levels of employee engagement and satisfaction. Harrisburg, Pa.-based Best Companies Group identifies the leading employers in the insurance industry by conducting a free two-part assessment of each company. The first part is a questionnaire completed by the employer about company policies, practices and demographics. The second part is a confidential employee survey on engagement and satisfaction.

The program divides employers into the categories of small, 25-249 employees; medium, 250-999 employees; and large, 1,000 or more employees. This year’s report features 100 companies of various sizes, from 25 employees to more than 4,000.

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But don’t take our word for it. Check out BOP-Pro products from UFG today. No crystal ball required.

Diamond Level

Platinum Level Progressive

Surplus Line Association of Illinois

Gold Level

AAA Insurance

Arlington/Roe

BlueCross/Blue Shield of IL

Grinnell Mutual Reinsurance Company

Keystone Insurance Group, Inc.

Pekin Insurance

Silver Level

Imperial PFS

IMT Insurance

West Bend Mutual Insurance Co.

Bronze Level

A. J. Wayne & Associates

AMERISAFE

AmTrust North America

Auto-Owners Insurance Co.

Badger Mutual Insurance Company

Berkley Management Protection

Berkshire Hathaway Guard Insurance Companies

BluSky Restoration Contractors

Central Illinois Mutual Insurance Company

Chubb

ClickVSC

Columbia Insurance Group Continental Western Group

Cornerstone National Insurance Company

Cowbell Cyber CRC Group

CRDN of Chicago (formerly Restoronics)

Donald Gaddis Company, Inc.

Donegal Insurance Group

EMC Insurance

Encova Insurance

Family Financial Solutions Group

Forreston Mutual Insurance Company

Frankenmuth Insurance

Grange Insurance

Homeowners of America Insurance Company

Illinois Mine Subsidence Ins. Fund

Illinois Public Risk Fund

Indiana Farmers Insurance Insurance Program Managers Group

J M Wilson

Liberty Mutual/Safeco Insurance Madison Mutual Insurance Company

Main Street America Insurance Marble Box MarshBerry

Maximum Independent Brokerage, LLC Mercury Insurance Group Method Workers Comp Midwest Insurance Company

Nationwide

NHRMA Mutual Workers’ Compensation

Pouch Insurance

Previsor Insurance & Missouri Employers Mutual PuroClean Emergency Restoration Services

Rockford Mutual Insurance Company

RT Specialty - Naperville

Sensa, Inc. ServiceMaster DSI Society Insurance

SPRISKA - Specialty Risk of America Synergy Select

The McGowan Companies Travelers

UFG Insurance

UIG - The Agent Agency

Utica National Insurance Group

W. A. Schickedanz Agency, Inc./Interstate Risk Placement

Western National Insurance Westfield

Independent, Authorized General Agent for An Independent Licensee of the Blue Shield Association

Education Classes

Pre-Licensing-Property & Casualty Springfield & Virtual

Ethics: Essentials for the Insurance Producer Webinar

E&O Roadmap to Personal Auto Webinar

E&O-Roadmap to Homeowners Endorsements Webinar

CISR-Commercial Casualty 2 Springfield & Virtual

CIC-Commercial Property Springfield & Virtual

E&O Roadmap To Cyber & Privacy Insurance Webinar

Pre-Licensing-Life & Health Virtual

E&O: Identity Theft, Red Flags, and Money Laundering Webinar

E&O: Defenses, Preventions for the Ins. Professional Webinar

CIC-JK Ruble Graduate Seminar Virtual

NCR Insurance Group Palatine, IL

Peachey Living, LLC Elmhurst, IL

Stateline Insurance Agency, Inc. Hebron, IL

TWH Services, Inc. Bloomington, IL

For information regarding IIA of IL membership or company sponsorship, contact Tom Ross, Director of Membership Services, at (217) 321-3003, tross@iiaofil.org.

E&O: Duties, Best Practices, Operations, Certificates Webinar

Pre-Licensing-Property & Casualty Virtual

E&O: Identity Theft, Red Flags, and Money Laundering Webinar

Flood Insurance, FEMA, and the NFIP Webinar

Pre-Licensing-Life & Health Virtual

E&O Roadmap to Personal Auto Webinar

Deep Dive Into Agency Ethics Webinar

CISR-Insuring Commercial Property Virtual Class

E&O Roadmap To Cyber & Privacy Insurance Webinar

E&O-Roadmap to Homeowners Endorsements Webinar

Central Illinois Mutual Insurance Company

Grove, IL

Branch Insurance Columbus, OH

Paul Davis Restoration of North Chicago Chicago, IL

for the insurance professional by the insurance professional

INDEPENDENT INSURANCE AGENCIES WANTED

17. We are an Independent family-owned agency located in the Chicago area. We are looking to expand through growth and acquisition. If you have a small to medium sized agency and are looking to sell, call or send us a message. We are strictly looking for Personal Lines and Small Commercial accounts with preferred companies.

GALO Insurance Agency, Inc (847) 832-0888 steve@galoagency.com

AGENCY/AGENTS/PRODUCERS WANTED

02. Forest Park/Oak Park agency for over 60 years, will meet your needs by providing space, markets, marketing & sales support, automation, merging with or purchasing your agency. Perpetuation/ Succession Plans, BuySell Agreements also available. We have experienced, educated and dedicated staff for you and your clients. Have access to our numerous companies, office services and many other resources. Retain ownership in your book with contingency. Please look closely at us- we are an agency you want to do business with! We’ve done it before, we know how- we make it easy! Visit our website at forestagency.com/agents.html, or call for a confidential discussion and a list of Agency benefits.

Dan Browne will provide an agency evaluation/appraisal at little cost to you. Please call:

Dan Browne or Cathy Hall Forest Insurance (708) 383-9000

www.forestinsured.com/mergers-acquisitions

AGENCY WANTED

20. Since 2004, Central Illinois Agents Group LLC has been providing independent agents with a variety of markets with contingency opportunities. Agents have availability to several markets that they may not be able to sustain or maintain on their own. We have markets for personal, commercial, agricultural and crop insurance lines. Let us help you get to the next level.

Visit www.ciagonline.com for contact information.

OPPORTUNITIES/SPACE AVAILABLE/RETAIN OWNERSHIP

13. We are a 100 year old Northbrook agency looking to discuss any mutually beneficial opportunity. Our producers, mergers, clusters and agency purchases receive 50% commissions on new and renewal business without any expenses. We can provide: office space, phones, agency management system, service renewals and changes. The companies we represent are: Badger Mutual, Employers Mutual, General Casualty, Guide One, Hartford, Kemper, Progressive, Rockford Mutual, Safeco, State Auto, Travelers and Met Life. Contact:

Nancy Solomon Martini, Miller & Schloss, Inc. (847) 291-1313 Ron@martini-miller.com

We Make Hiring Easier +

CareerPlug’s hiring software helps agents attract more qualified candidates, identify the right candidates with confidence, and improve hiring results.

CareerPlug will provide IIA of IL members access to a free account that can be used to post jobs, manage applicants, and improve the organizations’ employment brand. Association members can also access a “Pro” version of CareerPlug for a special rate to take hiring to the next level.

Learn more about CareerPlug and check out the brand new IIA of IL job board at www.iiaofil.org

SECURA’s team of insurance experts is making insurance genuine. They are here to support you and your clients. Our underwriting teams are quick to reply, open-minded, and know their stuff. Plus they are backed by our caring claims group who will get your clients back on their feet.

Tricia B. Personal Lines Underwriter

Mike K. Agribusiness Lines Underwriter

Kelly L. Commercial Lines Underwriter

Jamie V. Specialty Lines Underwriter

Matthew B. Illinois

Manager