wisconsin INDEPENDENT AGENT JUNE 2022
2022
SALES & LEADERSHIP
SUMMIT
AUGUST 23-24 NEENAH, WI REGISTER: bit.ly/SalesLeadershipSummit This issue was brought to you by our Exclusive Supporting Company Member:
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ufginsurance.com/online-appetite © 2022 United Fire & Casualty Company. All rights reserved.
CONTENTS
wisconsin INDEPENDENT AGENT
COVER STORY: 2022 Sales & Leadership Summit Join us on August 23-24 in Neenah, WI for our 2022 Sales & Leadership Summit, an IIAW and MarshBerry partnership.
PAGES:
6-7
INDEPENDENT INSURANCE AGENTS OF WISCONSIN 725 John Nolen Drive Madison, Wisconsin 53713 Phone: (608) 256-4429 Fax: (608) 256-0170 www.iiaw.com
2021-2022 EXECUTIVE COMMITTEE President:
Marc Petersen | American Advantage - Petersen Group, New Berlin
President-Elect:
Nick Arnoldy | Marshfield Insurance Agency, Inc., Marshfield
Secretary-Treasurer:
Michael Ansay | Ansay & Associates, Port Washington
Chairman of the Board:
INSURANCE BARTENDER.........................................................8 The Value of IMS to Any Size Agency
RISKY BUSINESS.............................................................................12
Darrel Zaleski | Spectrum Insurance Group, Eau Claire
State National Director:
Steve Leitch | Leitch Insurance, River Falls
When It Isn't Fun, It's Called Work.
2021-2022 BOARD OF DIRECTORS
PERSONAL LINES............................................................................14-15
Matt Frank | Robertson Ryan & Associates, Milwaukee
NFT Insurance: Understanding the Challenges and Solutions
Mike Harrison | R&R Insurance Services, Inc., Waukesha
AGENCY OPERATIONS................................................................18
Dan Lau | Robertson Ryan & Associates, Milwaukee
In Markets Like These, It's Time to Get Creative
COMMERCIAL LINES....................................................................22-23
Aaron Marsh | Marsh Insurance Services, Inc., Rice Lake Andrea Nelson | Unisource Insurance Associates, LLC, Wauwatosa Brad Reitzner | M3 Insurance Solutions, Madison
Is 'Permanently Installed' Equipment Covered Under Building or Property?
Joanne Lukas Szymaszek | Johnson Insurance Services, LLC, Racine
MEMBERS IN THE NEWS..............................................................26
IIAW Staff
MARKETING...................................................................................29-30 Creating Content for Questions People Are Actually Asking
Matt Banaszynski | Chief Executive Officer 608.256.4429 • matt@iiaw.com
AGENCY MANAGEMENT...........................................................32-33
Mallory Cornell | Vice President and Director of Risk Management 608.210.2975 • mallory@iiaw.com
COMMENTARY FROM COUNSEL...........................................34
Kim Kramp | Accounting Supervisor 608.210.2976 • kim@iiaw.com
FOOD FOR THOUGHT..................................................................35
Trisha Ours | Director of Insurance Services 608.210.2973 • trisha@iiaw.com
Questions to Consider When Buying An Agency - Part 1
Wisconsin Adopts New Annuity Sales "Best Interest" Standard
Evan Leitch | Agency Solutions Advisor 608.210.2971 • evan@iiaw.com
ADVERTISERS INDEX
Kaylyn Staudt | Marketing and Communications Coordinator 608.210.2977 • kaylyn@iiaw.com
Arlington/Roe.................................................31 Berkshire Hathaway GUARD...................13 Erickson Larsen..............................................15 IMT.......................................................................36 Johnson Financial Group............................23 Penn National..................................................19 Robertson Ryan & Associates..................35 UFG......................................................................2 Vizance...............................................................27 West Bend.........................................................25 Western National...........................................16
Andrea Michelz | Education & Membership Engagement Coordinator 608.210.2972 • andrea@iiaw.com
Jeff Thiel | Director of Agency Success 608.256.4429 • jeff@iiaw.com
Diana Banaszynski | Events Coordinator and HR Advisor 608.256.4429 • diana@iiaw.com Tyler Wheeler | Agency Accounting Specialist 608.256.4429 • tyler@iiaw.com Wisconsin Independent Agent is the official magazine of the Independent Insurance Agents of Wisconsin (IIAW) and is published monthly by IIAW 725 John Nolen Drive, Madison WI 53713. Phone: 608.256-4429. IIAW does not necessarily endorse any of the companies advertising in publication or the views of the writers. IIAW reserves the right, in its sole discretion, to reject advertising that does not meet IIAW qualifications or which may detract from its business, professional or ethical standards. © 2022 For information on advertising, contact Kaylyn Staudt, 608.210.2977 or kaylyn@iiaw.com. wisconsin INDEPENDENT AGENT
| JUNE 2022 | 3
it’s all in the details TRIED-AND-TRUE RESTAURANT & BAR COVERAGE WITH NO SURPRISES. SMALL DETAILS. BIG DIFFERENCE. Long-standing industry expertise means that nobody understands the unique challenges of protecting your hospitality business better than Society Insurance. Offering tried-and-true specialized programs, we are proud to provide comprehensive coverage for restaurants and bars.
Find an agent & request a quote at societyinsurance.com
4 | JUNE 2022 |
wisconsin INDEPENDENT AGENT
Company Spotlight
COMPANY PROFILE
6 FACTORS THAT CAN DRIVE UP INSURANCE 6 Factors That CanRESTAURANT Drive Up Restaurant InsuranceCOSTS Costs Have you ever caught yourself wondering why your business’ premium changes over time? Odds are you understand why your auto insurance premium changes: as you age and become a less risky driver, your insurer is exposed to less risk and your rates drop as a result. But what drives premiums for bars and restaurants isn’t quite so simple as predictable factors like age or gender. So, what are these risks and why do they impact premium rates? Read these 6 common drivers of restaurant insurance costs. 1. Catastrophes & Storms In 2020 alone, weather and climate-related disaster events across the U.S. cost $95 billion. As these weather and climate-related events become increasingly common, it comes as no surprise that premiums have risen as insurance companies pay out large claims. Insurers need to increase their premiums as they face increased liabilities and risks from storms and other weather-related phenomena. 2. Reinsurance Reinsurance, to put it simply, is insurance for insurers. Insurers spread the risk through reinsurance. By collaborating in this way, no company is left alone to bear the burden of disasters. However, as we’ve seen the regularity of weather events increase, the cost of reinsurance has increased as well, and that trend doesn’t seem to be changing particularly soon. This increased cost for insurance companies results in increased policy premiums. 3. Cost of Building Replacement & Inflation Rising construction rates have led buildings to cost more and more. In fact, the cost of the most common building materials has seen double-digit percentage increases over the last year. As a result, if your restaurant is severely damaged in a storm or fire, the cost to replace the building will be higher. While the rise in construction prices has many confounding factors, it does illustrate how inflation impacts insurance costs. As inflation raises prices, insurers must raise premiums to adequately cover those higher costs, whether they’re construction costs or costs for other products your business uses. If you’re underinsured, you might only be covered for a portion of the building replacement cost, which would be notably higher due to shortages and strains on the supply chain. 4. Supply Chain Strain Strains on the supply chain drive insurance prices. Because some manufacturers and industries had to slow, reduce or stop production during the pandemic, a bottleneck effect was created. This strained supply chains and drove costs up. Car manufacturers have seen this issue with microchips, builders have seen it with raw materials, and you’ve likely witnessed the impact on your bar or restaurant.
The global disruptions to the supply chain may have also caused your business (like so many others) to quickly pivot to new vendors or adopt more locally accessible ingredients. A delay in receiving products in a timely manner or the inability to access them altogether make choosing the right insurance coverage for your livelihood all the more important. 5. Social Unrest Social unrest can truly have an impact on businesses and insurers alike. Claims from social unrest in 2020 cost insurers $1-2 billion, making it the costliest instance of civil unrest for insurers in the country’s history. The impact social unrest can have on insurance costs can manifest in a similar form as supply chain strains or storms—or both. If social unrest becomes more common, the risk to your property can increase, or your restaurant may be unable to operate as intended. Both scenarios can lead to risks for your business and to increased premiums. 6. Social Inflation Social inflation is the least concrete driver of insurance costs. It’s a newer phenomenon that’s more difficult to predict, prepare for and protect against. As the country sees more and more lawsuits yielding higher awards to plaintiffs, the costs surrounding this extensive litigation have become a greater burden. Like catastrophes and storms, the massive settlements reached in courts can affect insurance premiums. As insurers face the increasingly common-yet-unpredictable risk of social inflation, they’re forced to raise premiums. Control what you can. Explore our risk management library at societyinsurance.com for ways to keep your restaurant safe and profitable. The Right Insurance Coverage for Your Business While restaurant insurance costs are impacted by countless factors, our team of insurance experts can assist you every step of the way, developing a customized policy that best suits your needs. Get in touch with your local independent agent today for answers to all your business insurance questions. This information is provided as a convenience for informational purposes only. This information does not constitute legal or professional advice. It is provided to assist you in recognizing potential unsafe work problems or conditions and not to establish compliance with any law, rule or regulation. This is not a statement of contract. All coverages and limits are subject to the terms, definitions, exclusions and conditions in the policy. This information does not amend, modify or supplement any insurance policy. Consult the actual policy or your agent for details regarding available coverages.
2022
SALES & LEADERSHIP
SUMMIT
ABOUT MARSHBERRY
IIAW & MarshBerry Partnership
MarshBerry is a nationally recognized advisory firm and top growth consultant for insurance agents, brokers & carriers.
EVENING FUN 1.5-DAY SUMMIT
On Tuesday night, join the IIAW at the Timber Rattlers’ Home Run Porch. Tickets & food included in Summit registration.
MarshBerry instructors, Zach Pittman and Frank Cox, will deliver an action-packed 1.5-day summit filled with fantastic topics you won’t want to miss! Summit Topics include: • State of the Insurance Industry • Foundational Selling Techniques • Effective Sales Huddles • Goal Setting & Accountability • Personality Types • Building Trust • Handling Conflict • Culture Creation
LIMITED SPACE AVAILABLE Registration is $249 per person and registration includes your ticket & dinner for the Timber Rattlers game. We have limited space available for the event and encourage everyone to sign up early to secure your spot.
REGISTER: bit.ly/SalesLeadershipSummit
AUGUST 23-24 NEENAH, WI
UPCOMING EVENT
REGISTER FOR THE 2022 SALES & LEADERSHIP SUMMIT IIAW strives to offer new and exciting training and learning opportunities. If you haven’t heard the IIAW in partnership with MarshBerry will be offering a fantastic 1.5-day Sales & Leadership Summit running August 23-34 in Neenah, WI. As part of your Summit registration, we will also enjoy an evening at the ballpark watching the Timber Rattlers. Space is limited, so make sure you register now at bit.ly/SalesLeadershipSummit. Check out the outline below of topic areas you can expect to learn more about. The 2022 Sales & Leadership Summit has a great lineup of topics you can expect to learn more about: State of the Insurance Industry
5. Resolving Prospect Concerns: Value Proposition, Overcoming Indifference, Acknowledge Concerns, Gain Agreement 6. Advancing the Opportunity: BAMFAM – Book a Meeting from a Meeting Effective Sales Huddles GPACK: Get, Prep, Advance, Close, Keep 1. Get more first appointments, triage pipelines, and renew top clients. Goal Setting and Accountability Building Trust & Understanding Personality Types
During this interactive session, MarshBerry discusses the challenges and opportunities facing independently owned agents and brokers in the upcoming year including the trends, benchmarking, and industry-specific data to support growth objectives.
1. Building Trust: Develop the right strategy to build internal and external trust through more effective communication and conflict resolution. 2. Understanding Personality Types: Learn the four behavioral dimensions of DISC theory and how you can best communicate with others of different behavioral types.
Foundational Selling Techniques
Handling Conflict
This session covers selling techniques using six key areas to allow producers to create a customized approach for re-engaging current clients and driving conversations with prospects. 1. PSIC: Problem, Solution, Impact, Case Study. 2. Collaboration & Communication Techniques: Acknowledge, Pivot, Recap & Verify. 3. How to Open a Meeting Strong: Purpose and Meeting Expectations, The Value of an Agenda; Gaining Agreement 4. Creating Awareness of Unrealized Needs: Using PSIC to uncover business and/or insurance related problems that your prospects face and why your firm is uniquely suited to help.
1. How to identify and react to conflict to obtain positive results Culture Creation 1. Believe It, Sell It, Demand It You won't want to miss this event. Register now as space is limited: bit.ly/SalesLeadershipSummit
> Diana Banaszynski Events Coordinator & HR Advisor, IIAW
INSURANCE BARTENDER
THE VALUE OF IMS TO ANY SIZE AGENCY Whether your agency is big or small, the more markets you have access to, the better chance you have to write more business. Wisconsin has made market access an integral part of your membership through our investment in the Independent Market Solutions (IMS) program, a market access solution for any size agency.
Personal Lines:
For new or smaller agencies with few or no direct appointments, IMS can help you gain new carrier appointments as IMS subproducers. As an IMS subproducer, you’ll start building relationships directly with carriers, earn standard commissions, and, once minimum premium thresholds and performance standards are met, gain the opportunity to “graduate” to a direct appointment. Agents can also participate in any earned contingencies as an IMS subproducer.
Commercial Lines:
If you manage a mid- to large-sized agency, there are likely times when you’re presented with niche pieces of business. You’ve worked hard to earn your clients’ business, so why turn away a request on a risk that your agency doesn’t currently write? Our IMS program can help satisfy your clients’ needs without taking on additional minimums or referring them elsewhere due to the lack of available markets.
No matter the size of your agency, the IMS menu is constantly evolving to include new carriers intended to expand your strike zone. Visit imsaccess.com/ states/wisconsin to see which carrier partners might be the right fit for your agency.
IMS-Wisconsin currently partners with the following companies, and the list keeps growing:
Peach Margarita
> Matt Banaszynski,
Matt’s Mixology
Summer is here and it's the perfect time for refreshing cocktails!
Ingredients • • • • • •
Directions
1 small peach, peeled and roughly chopped 1. Tajin, for the rim of the glass 2 oz. tequila 1/2 oz. peach schnapps 1 oz. lime juice 2. Lime wheels or peach slices, for garnish
Recipe & Photo Courtesy of Delish.com. 8 | JUNE 2022 |
wisconsin INDEPENDENT AGENT
3.
Add chopped peach into a food processor or blender. Blend completely until liquidy. Rub the outer rim of a rocks glass with a lime and rim with tajin. In a cocktail shaker combine tequila, peach schnapps, lime juice and 1 oz. of peach puree. Add ice and shake. Strain into the glass and top with ice. Add garnish.
CEO, IIAW
MEMBERSHIP MEANS MARKET ACCESS Let’s face it – Independent agents need good markets to be competitive. Greater access means more opportunities for success. WE’RE HERE TO HELP. Independent Market Solutions creates company relationships for agents who may be unable to secure appointments on their own. Through association membership, agents can access multiple insurance carriers and grow their business into long-term, direct appointments.
imsaccess.com/states/wisconsin
THANK YOU FOR ATTENDING
NETWORKING & BOWLING
Thank you to everyone who attended InsurCon2022! This year's event was filled with an exciting networking & bowling event, a strong lineup of engaging speakers, two exhibitor showcases and evening entertainment honoring Dave Gross on his retirement as SECURA CEO and our keynote speaker, Bill Walton. Stay tuned as we'll be releasing more info about InsurCon2023!
IIAW BOARD MEETING EXHIBITOR SHOWCASES
SPEAKERS
CHRIS CALVELLI & MICHAEL ANTONELLI
AWARD WINNERS
STEVE ANDERSON
CHARLES FRANKLIN
KELLY DONAHUE-PIRO
BRIAN KILEY
KEVIN BONG
MISHA LEE, GOV. AFFAIRS ADVOCATE OF THE YEAR
DARREL ZALESKI, RAYMOND "SKIP" HANSEN AWARD
MATT FRANK,EMERGING LEADER OF THE YEAR & SILVER EAGLE AWARD
MARC PETERSEN, PRESIDENT'S AWARD
JOANNE SZYMASZEK, SILVER EAGLE AWARD
DONNA ROWE, CSR OF THE YEAR AWARD
JOHN TRIBBLE, INDUSTRY PARTNER OF THE YEAR
CHAD TISONIK, SILVER EAGLE AWARD
EVENING ENTERTAINMENT MIKE ANSAY & DAVE GROSS
DAVE GROSS, E.J. TAPPING LIFETIME ACHIEVEMENT AWARD
KEYNOTE SPEAKER: BILL WALTON BASKETBALL LEGEND
RISKY BUSINESS
WHEN IT ISN'T FUN, IT'S CALLED WORK. "There is little success where there is little laughter." Andrew Carnegie Exhale and smile. You’re doing it right. As I reminisce about a wonderful InsurCon event last month, I am energized by the conversations I overhead and those I was able to be a part of. Wisconsin is the place to be, and the insurance industry is doing it right. Every day we are presented with personal and professional challenges, but what I see in our company and agency members is an excitement and passion for the work they do. I also see this passion among the diverse team at the IIAW. The ideas and plans for collaboration that have flooded our conversations, inboxes and social media platforms all have one thing in common: support and grow the independent agency channel. What tools do we need? Where is there a gap in education? How do we succeed in a difficult market and leverage relationships in creative ways? While many of our individual opportunities are unique to situations, many are common goals or needs that are shared among us. For this reason, I thought I would highlight the most common conversation I have. Sound familiar? “Do you have any resources for finding good talent?” While we don’t have a list of Wisconsinbased insurance professionals out looking for a new employer, we do have a few options to start thinking outside the box. We have heard great stories from employers who have casted a broader net on the type of employee they are looking for. Specific insurance experience may not be at the top of your list. Identify a few industries that require the skills you need. We can teach insurance (IIAW has pre-licensing classes!) but it is more difficult to teach good customer service and strong work ethics. Sometimes you do not have the resources to onboard someone new to the industry, then you may want to 12 | JUNE 2022 |
wisconsin INDEPENDENT AGENT
consider a remote employee through an organization like WAHVE (Work At Home Vintage Experts). Check out the great article by Rick Morgan in this month’s magazine! Just in the last month, we have had several requests for this service and the response has been energizing and positive. It is definitely not a siloed decision, however. It also requires and employee to feel comfortable and confident in their agency workflows and procedures so that the process is positive for everyone involved. I also enjoyed a conversation with an individual who was focused on building his personal brand as well as that of his agency. Just as he relied on references from his clients to grow his business, he was also emphasizing the importance of references from his employees to attract strong talent. Conversations like this are what drive the IIAW staff to ask “what else can we do?”. We want to do more because it is our passion, and these conversations are our definition of “fun”. Our team is comprised of a variety of backgrounds: commercial lines, personal lines, agency accounting, agency operations, risk management, policy making, technology, marketing and more. When we can “work” on your behalf, it is not a job…it is fun. Our goal is to be the goto resource in Wisconsin for agency support, brainstorming and solutions. Want to have some fun with us? Follow us on Facebook and LinkedIn and make sure you subscribe to our email list. We have some great events in the pipeline, and we want you all to be there. "People rarely succeed unless they have fun in what they are doing." Dale Carnegie
> Mallory Cornell, Vice President, IIAW
AmGUARD • EastGUARD • NorGUARD • WestGUARD
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APPLY TO BE AN AGENT: WWW.GUARD.COM/APPLY/ Not all Berkshire Hathaway GUARD Insurance Companies provide the products described herein nor are they available in all states. Visit www.guard.com/states/ to see our current product suite and operating area.
PERSONAL LINES
NFT INSURANCE: UNDERSTANDING THE CHALLENGES AND SOLUTIONS Non-fungible tokens (NFTs) hit the mainstream in 2021, driven in large part by a $40 billion NFT art market that included a record sale of Beeple's “Everydays: The First 5000 Days" for $69.3 million. With so much money being invested in NFTs, owners are looking for ways to protect their investments.
By allowing for authentication and ownership of digital assets, NFTs also allow for digital assets to be valued and sold, which creates the need for NFT insurance.
If NFT art was like other fine art, obtaining insurance to protect against damage or theft would be an easy proposition with plenty of precedent. However, NFT art is not like other fine art. And the task of establishing a way to insure it in the traditional sense has proven to be insurmountable.
The unique nature of NFTs becomes evident as one tries to apply normal insurance protocols. Standard homeowner policies focus on covering physical damage to assets. Normally, NFTs do not exist in the physical world. They are intangibles. They can be expressed physically, such as with a printout of a digital graphic, but the physical expression is not what is owned. In addition, NFTs exist on blockchain, which is public. Therefore, NFTs cannot be damaged or lost.
To understand the challenge of insuring NFTs, it is helpful to understand how they work. NFTs revolutionized the world of digital assets by allowing digital creations to be authenticated. Prior to NFTs, a copy of a digital file was identical to the original. Because NFTs are built on blockchain technology, they are connected to a decentralized historical record that allows for the provenance of a digital file to be established.
While NFTs are considered by some to fall under the umbrella of fine art, insurance policies covering fine art rely on determining a value for art that is based on an established market. The NFT market is brand new and highly volatile. Setting a value for an NFT is a risky proposition. In addition, fine art insurance also addresses the risk of something being physically damaged, which does not apply.
Ownership of an NFT is established and authenticated by immutable blocks of data on the blockchain. As a result, the original is nonfungible, or not interchangeable with any copies that might be made.
The task of insuring NFTs is further complicated by the fact that the NFT and the art that they represent are not one and the same. In essence, the NFT is a token that provides a unique digital signature of the digital asset and a link to the file, along with any other data associated with the ownership of the file.
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wisconsin INDEPENDENT AGENT
The artwork that is associated with the NFT exists somewhere separate from the NFT. Cyber insurance policies may provide a model for developing NFT policies, as they address a loss that occurs when digital networks fail. NFT marketplaces provide a place for NFTs to be bought and sold. In some cases, NFTs are stored on networks managed by marketplaces. When marketplace networks are compromised, NFTs can be stolen or lost. For the most part, however, cyber insurance policies would address the marketplace's liability, rather than covering losses that might be experienced by individuals with marketplace accounts. An insurance-like product known as a discretionary mutual fund is being explored by a growing number of companies as an alternative to traditional insurance that could apply to NFTs. This model allows for the creation of decentralized insurance pools that can cover losses experienced by those operating in the decentralized economy.
However, the application is limited to a loss that happens as a result of failures or flaws in the smart contracts that are programmed into the NFT and that govern their exchange, rather than loss as a result of outside circumstances such as theft. Progress toward the development of NFT insurance is being made but the timeline remains undefined. In the interim, the best advice for those seeking to secure their NFTs may be to rely on self-insurance and cyber safety. The NFT thefts that typically are reported result from the failure by owners to take the necessary precautions to secure them with available safeguards like offline storage and multi-factor authentication. If such precautions are not employed, NFT insurance, when it appears, may not provide coverage anyway. This article was originally published on iamagazine.com in March.
> Nick Donarski, Founder and Key Technical Expert, ORE System
wisconsin INDEPENDENT AGENT
| JUNE 2022 | 15
nice
makes you smile.
At Western National Insurance, nice is what’s guided us for over 100 years. And we’re just getting started. Western National Insurance. The power of nice. www.wnins.com
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wisconsin INDEPENDENT AGENT
REAL QUESTIONS. REAL ANSWERS. YOUR INSURANCE TECHNICAL SOLUTION. Our experts explore and explain real issues and policy coverage questions in four areas: commercial lines, personal lines, life/health and agency management. Users can also access state specific information, dive into talent recruitment, get tips for starting an agency, coronavirus, and much more.
LIVE AND ON-DEMAND EDUCATION. YOUR AGENT TRAINING SOLUTION. The Big “I” Virtual University offers a wide range of live and on-demand education developed specifically for independent agents. No matter what your need, time or level of experience, the VU has it covered.
LIVE WEBINARS
EXCEED LEARNING
Learn from diversified topics, with CE available in some states
Amazing, clear content and smartly explained modules
BASICS & BEYOND BASIC An excellent source for newer agents who want to expand knowledge
TRIPLE PLAY DAYS Earn up to 6 continuing education credits in just a day
RISK & REALITY REPORTS Read, print, highlight, and share to understand complex issues
ON-DEMAND WEBINARS Drill down in twelve different subject matter areas
CAN’T FIND WHAT YOU’RE LOOKING FOR? ASK AN EXPERT AND GET AN ANSWER!
GET THE BIG I'S ONLY TECHNICAL COVERAGE PUBLICATION SUBSCRIBE TO INSURANCE ILLUSTRATED Delivered right to your inbox every Friday, Insurance Illustrated features multiple articles organized in specific categories to help you easily navigate to the content most important and relevant and stay on top of the latest news.
Find all this and more in the Big “I” Virtual University virtualuniversity@iiaba.net
If you can’t find an answer to your insurance query in the more than 18,000 pages of content in our extensive online library, just use our MEMBERS ONLY “Ask an Expert” service. Our faculty, comprised of more than 50 industry experts, will review your query and respond with a personalized answer.
W W W. I N D E P E N D E N TAG E N T. C O M / V U
AGENCY OPERATIONS
IN MARKETS LIKE THESE, IT'S TIME TO GET CREATIVE From the ongoing COVID-19 pandemic to slowing economic growth to supply-chain issues to heightened geopolitical tensions, 2022 has been a tough year already. And it’s only June! It’s unsurprising that many investors are warning of an economic recession on the horizon. While not ideal, a down market actually carries a silver lining for smart business leaders. Why? It’s at times like these when companies can take cold, hard looks at their processes and procedures and rethink how their business is done in order to improve efficiency and drive growth. In other words, it’s at times like these that we should go back to the drawing board—and innovate. American Express’s CEO, Ken Chenault, said this during the 2008 market crash: “A difficult economic environment argues for the need to innovate more, not to pull back.” According to a June 2020 survey by McKinsey, roughly 75% of executives in knowledge economies expected Covid to be one of the biggest opportunities for growth. The report noted that in crisis, such as during the pandemic, we are presented with a choice: to fall back and hunker down, or to forge ahead—and, potentially, to thrive. “Prioritizing innovation today is the key to unlocking postcrisis growth,” McKinsey said. That’s why I think it’s a mistake to refer to our next phase of post-pandemic life as a simple “return to the office.”
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wisconsin INDEPENDENT AGENT
There is no “return” because the work life we knew in 2019 has changed—and changed forever. Clocking in and 9 a.m. and clocking out at 5 p.m., five days a week, in a shared office space? No longer the norm. We are headed in a new direction, and the “way we’ve always done things” won’t cut it. We need to take a deep dive into our processes and procedures and figure out if what we’re doing is the best possible thing for our customers, our operations and our people. For example, just because we’ve always delivered products this way doesn’t mean it’s the best (or only) option. Maybe there’s a new solution. Maybe there’s even a new product! In my experience, one of the best ways to innovate is to communicate with your stakeholders—your customers, your employees and your leaders—to understand what’s working, what’s not, and what additional needs they might have. Now’s the time to be nimble, creative and, above all else, willing to pivot in new directions to soar higher than before. What are some ways you’ve altered your business model or opened yourself up to new approaches recently? What are some ways you might doing that going forward?
In 1919, A group of Pennsylvania farmers founded Penn National Insurance to provide affordable workers’ compensation insurance. Today, Penn National Insurance sells property-casualty insurance in 11 states by partnering with more than 1,200 independent agency operations. In 2012, we affiliated with Wisconsin-based, Partners Mutual Insurance Company. As one company, we bring the personal attention and local focus of a regional carrier, along with the quality of products and services of national carriers. Interested in partnering with a thriving insurance carrier with superior customer experience? We are looking for select commercial-lines agencies in Wisconsin. Contact: Vicki Lentz 262-432-3420 vlentz@pnat.com
Contact: Clayton Zogata 715-383-5454 czogata@pnat.com
We help people feel secure and make life better when bad things happen
• Strong financial performance and A.M. Best Financial Strength Rating of A• Expanded Commercial Lines products and services with competitive pricing and comprehensive coverages to help our agents grow profitably • Comprehensive Personal Lines product offerings, including Homeowners Equipment Breakdown and additional protection plans • State-of-the-art quoting, processing and self-service tools, making it easier and faster to meet your customers’ needs • Local, experienced underwriting, claims and management staff
An Equal Employment Opportunity/Affirmative Action Employer ©2021 Penn National Insurance
Policies issued for domiciled businesses and individuals in Wisconsin and Iowa are underwritten under our affiliate, Partners Mutual Insurance Company.
wisconsin INDEPENDENT AGENT
| JUNE 2022 | 19
IIAW PRELICENSING CLASSES Since 1993, more than 20,000 students have graduated from our in-classroom prelicensing school. The IIAW in-classroom prelicensing school has some of the highest passing ratios in the state for the last 25+ years! “Overall the class went very well and I felt included as if I was in the room.” -Former Online Student
IIAW PRELICENSING CLASSES:
• Now offering classes in-classroom and broadcasting online* in real-time • Located at IIAW Headquarters • Fulfills the study requirements for life, health, property and casualty • Designed to help you pass your state licensing examination • Taught by an experienced insurance professional * Just select the online (virtual class) option when registering.
2022 CLASS SCHEDULE: PROPERTY & CASUALTY • July 11-14 • September 19-22 • November 7-10
LIFE & HEALTH • June 6-9 • August 8-11 • October 3-6
IIAW.COM/EDUCATION
REGISTER AT IIAW.COM/EDUCATION To register, click the Education tab on IIAW.com.
IIAW Member Pricing: $374* Non-Member Pricing $399* The course fee includes all class materials. Materials are distributed on the first day of class. You receive: • Life & Accident/Health or Property & Casualty Insurance Study Manual • The Intermediary’s Guide to Wisconsin Insurance Law • The State of Wisconsin Ins. Licensing Candidate Handbook (This provides all the information to obtain a license) • Exam Simulator - A computer program designed to help you pass your prelicensing exam on the first try For any questions please contact andrea@iiaw.com. *Pricing given for full class registration. You may also take individual classes. * If taking the course online, the IIAW will mail the study manual to your preferred address.
MEET OUR INSTRUCTOR Gabrielle O’Brien, MBA, has been active in the insurance industry for more than 25 years, developing continuing education classes in related fields such as Ethics and Errors and Omissions. As the lead instructor of the Independent Insurance Agents of Wisconsin’s Property & Casualty and Life & Health Prelicensing Schools, she has guided thousands of students to successfully passing the insurance intermediary’s exam. O’Brien has participated in many other aspects of the industry as an underwriter, manager, and field representative. O’Brien’s received her Master of Business Administration from Loyola University and her Bachelor of Arts from Saint Mary's College.
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IS 'PERMANENTLY INSTALLED' EQUIPMENT COVERED UNDER BUILDING OR PROPERTY? Q: Is bolted-down equipment covered as part of the building on the business owners policy? A laundromat had a fire claim which included significant building and business personal property damage. We have always insured the washing machines and dryers as building coverage, since most of them are permanently bolted down. The carrier is contending that all washing machines and dryers are considered personal property. The client has $569,000 of building coverage and $50,000 of business personal property coverage, so this is a big problem.
A lesson to be learned: In cases like this, claims people frequently make this mistake. If you rely on this policy language to allocate values, it's a great idea to mention it to the underwriter in a memo when you write the coverage. Waving that memo at the adjuster at the time of a loss will keep the problem from developing. Response 2: I would argue that the underwriter knew what kind of business this was and you clearly would have increased the business personal property limit if these machines were considered business personal property.
The policy says "permanently installed I'd also argue that these machines are used to machinery and equipment" are considered service the building: part of the building. This is an undefined term and should be interpreted in a very broad Section 1 – Property way. A. Coverage Response 1: You've already nailed it. If they're permanently attached, they qualify (5) Personal property owned by you as "building" or if they are laundering that is used to maintain or service the equipment, they're also considered building. buildings or structures or the premises, The language in both cases is a little loose, including: but I don't think a judge would waste too much time with an insurance company's (a) Fire extinguishing equipment; argument that they aren't "building" items. Press the claim department for a specific (b) Outdoor furniture; ruling on these two points and I think the problem will disappear. (c) Floor coverings; and 22 | JUNE 2022 |
wisconsin INDEPENDENT AGENT
(d) Appliances used for refrigerating, ventilating, cooking, dishwashing or laundering; I know ISO has a commercial property endorsement that enables you to declare certain property as building property. I can't recall if they have a similar endorsement in their BOP program, but I would pursue that in the future. Response 3: This is a common misconception held by many insurance professionals. You are correct that the policy does not define what permanently attached means. Court decisions are divided. If the bolts are removed, the machines can be moved. That doesn't necessarily make them permanent. There are business types that may make the property used to service the building. That said, I think the carrier is correct in their interpretation. I highly recommend you contact your errors & omissions carrier and notify them of this potential claim.
they cannot be readily moved elsewhere, I would say that they are “permanently installed". Evidence, if required, might include the duration of their residency at the insured location, and whether the insured has ever previously moved such equipment from one location to another. This question was originally submitted by an agent through the Big “I" Virtual University's (VU) Ask an Expert service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information. This article is intended for general informational purposes only, and any opinions expressed are solely those of the author(s). The article is provided “as is" with no warranties or representations of any kind, and any liability is disclaimed that is in any way connected to reliance on or use of the information contained therein. The article is not intended to constitute and should not be considered legal or other professional advice, nor shall it serve as a substitute for obtaining such advice. If specific expert advice is required or desired, the services of an appropriate, competent professional, such as an attorney or accountant, should be sought. This article was originally published on
Response 4: You have stated your position iamagazine.com in May. well and I doubt anyone here can bolster your argument to the carrier. This is why sharing your thoughts up front with the underwriter > Big "I" Virtual University Faculty and documenting it is so important. Had that been done, the claim settlement would have been much simpler. If the building limit We’re invested in the long-term success is sufficient for the building and the washers and of our associates, clients and communities dryers, you can show those If you’re looking to join an organization who is truly invested in your long-term calculations, which should success, visit johnsonfinancialgroup.com/join-insurance to learn more. help your case. Response 5: If the washers and dryers are bolted to the building structure so that
Products and services offered by these Johnson Financial Group Companies: Johnson Bank, Johnson Insurance Services, LLC. and Johnson Wealth Inc.
wisconsin INDEPENDENT AGENT
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IIAW CONTINUING EDUCATION
2022 ONLINE EDUCATION & CE CLASSES
JUNE & JULY SCHEDULE DATE
TIME
COURSE
6/15
12PM-2PM
Contracts Agents Should Read
6/16
8AM-10AM
Insight on Modern Day Cyber Exposures & Risk Mitigation
6/17
9AM-12PM
E&O - Commercial Property Gaps & How to Fill Them
6/20
9AM-12PM
E&O - Roadmap to Homeowners Insurance
6/21
8AM-9AM
Claims-Made Policies - The Most Dangerous Insurance Policies
6/23
8AM-10AM
Builders Risk and Contractors Equipment
6/23
11AM-2PM
E&O Risk Management: Agency E&O Exposures and Defenses
6/23
12PM-3PM
Agency Management Based E&O and Ethics
6/24
8AM-10AM
Business Auto Claims That Cause Problems
6/28
12PM-1PM
Setting Business Income Limits: It’s Easier Than You Think!
6/30
8AM-10AM
Contracts Agents Should Read
7/1
9AM-12PM
E&O - Roadmap to Homeowners Insurance
7/5
12PM-2PM
Contracts Agents Should Read
7/5
12PM-2PM
Embracing Directors & Officers Liability Insurance
7/5
12PM-2PM
Embracing Directors & Officers Liability Insurance
7/6
1PM-2PM
7/7
9AM-12PM
E&O - Commercial Property Coverage Gaps & How to Fill Them
7/11
12PM-1PM
Claims-Made Policies - The Most Dangerous Insurance Policies
7/12
12PM-3PM
Understanding the Largest Government Benefits: Social Security
JUNE
JULY
E&O Exposures: Websites & Social Media
SEE OUR FULL COURSE SCHEDULE AND REGISTER FOR THESE CLASSES AT IIAW.COM/EDUCATION 24 | JUNE 2022 |
wisconsin INDEPENDENT AGENT
20 Years and Counting Unlike many other carriers, West Bend believes in the value of long-term relationships. That’s why many of our personal lines underwriters, like Sarah, have worked with their agents for so long. Sarah’s agents trust her knowledge, making it easier for them to do business with West Bend. And that makes the relationships that much stronger.
News
ENCOVA INSURANCE INTERNSHIPS MOVE BACK TO THE OFFICE
Members in the
WEST BEND MUTUAL INSURANCE COMPANY REMAINS A TOP PLACE TO WORK
West Bend, WI (5/4/22) - West Bend Mutual Insurance Company received second place for Top Workplaces in Southeastern Wisconsin in the large employer category. It is the eleventh consecutive year West Bend ranked in the top four on a prestigious list of 150 outstanding businesses identified by the Milwaukee Journal Sentinel. Top Workplace companies are measured on company leadership, career opportunities, workplace flexibility, compensation, benefits, and the impact company policies have on innovation and morale. West Bend received a special accommodation for Communication, based on the survey question “I feel well-informed about important decisions at West Bend Mutual Insurance Company.” "The recognition we receive as a top workplace is significant," says Kevin Steiner, president and CEO. "It helps us attract and retain talented individuals who want to be part of our company. Congratulations to all our 1,400 plus associates who work every day to make West Bend a special place."
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wisconsin INDEPENDENT AGENT
Columbus, WI (5/23/22) - After two years of virtual programs, Encova Insurance will host this year’s summer interns in their offices. Many interns have already started, and the remainder will start in late May and June. Though many companies were forced to cancel their internship programs due to the COVID-19 pandemic, Encova’s 100% virtual internship program was a great success. After two years of building a virtual program, Encova is using their adaptations to shape the internship program moving forward. The summer interns for this year will work either hybrid or entirely in the office. “We were happy to be able to successfully continue our internship program virtually the past two summers, but we very much look forward to seeing our summer 2022 interns in the Columbus and Charleston offices,” Human Resources Business Partner Shelby Paxton said. This year, 14 universities are represented among 26 students who will work in 13 different departments, including Commercial Lines, Safety and Loss Control, Human Resources, Accounting, Information Technology and Claims. ABOUT ENCOVA INSURANCE A super-regional carrier ranked in the top 20 mutual insurance companies in the United States, Encova includes nearly 1,200 associates writing in 28 states and the District of Columbia, premiums in excess of $1 billion, a surplus in excess of $1.96 billion and assets in excess of $4.8 billion. The group markets insurance solutions through more than 2,000 independent agencies in the Midwest, Northeast and South.
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Find out why agency owners choose us! • • • • • • • •
Broad Leadership Team that is 100% focused on the insurance business Flexible deal structures including the ability to retain some ownership Strong focus on culture, associate engagement, and client satisfaction Proven ability to drive double-digit organic growth Recruiting & mentoring program to develop those new to the industry Shareholder program for top performers Ability to maintain leadership with regional and practice group support Committed to serving our communities
Call us for a confidential conversation Tom Schaetz 419.450.0317
Highlight What Makes Your Agency Unique – You! Trusted Choice’s FREE Resources Can Help You Strengthen Your Brand in as Little as 1 Hour a Week Learn how we can help you showcase the customer service and local knowledge you bring to the table. TrustedChoice.IndepdendentAgent.com
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wisconsin INDEPENDENT AGENT
MARKETING
CREATING CONTENT FOR QUESTIONS PEOPLE ARE ACTUALLY ASKING Search engine optimization (SEO) is the process of improving your website’s visibility on Google. Maybe you’ve already gotten started on basic strategies to launch a strong SEO foundation, but the next step toward upping your agency website’s SEO game is to develop your content around what potential customers are searching for.
The customer is usually higher up in the marketing funnel when searching these types of keywords. This includes searches like, “do I need motorcycle insurance?” “examples of business insurance claims” or “best home insurance in Maryland.” The searcher is still in the research phase and needs more information before they are ready to buy.
Most businesses have a general idea of the message they want to communicate to potential customers, including their services and industry knowledge. While this is a great starting point, most businesses forget to ask themselves the most important question: “Who cares?”
3) Transactional. Transactional searches are queries that indicate a person is ready to make a purchase, which is much further down the marketing funnel. This may include things like, “car insurance quotes” or “get home insurance.” These customers generally understand the benefits of the product or service they are looking for and need less high-level education.
As a business, you know your value—but if you don’t provide this information in the context of a customer’s search, it may not be found. Plus, if you don’t do proper keyword research, you may miss valuable opportunities to weigh in on important topics. So how do you know what people are searching for? First, it is important to understand the three main types of searches. These search categories will help you determine what is commonly referred to as search intent. Search intent helps define the customer’s frame of mind when searching for information and generally assesses where a customer is in the marketing funnel. The three main types of searches are: 1) Navigational. Searches that occur when a person is looking for specific information. These customers usually have a specific brand or website in mind. An example of this is “Agency ABC contact info.” 2) Informational. These searches are high-level queries about a topic.
Get Started with Keyword Research Before you jump into researching specific keywords, make a list of all the topics you think are relevant to your business. This can include your main product lines, FAQs from your current customers and industry trends you are discussing internally. This will give you a starting point when you begin your research using a tool. SEO keyword research tools will help you assess the average monthly search volume of a specific keyword, determine any seasonality, and discover related keywords. Some more advanced tools may even give you specific content ideas or tell you the current results appearing for that keyword. One of the easiest ways to get started for free is to search for topics on Answer the Public. This tool allows you to search for high-level topics like “home insurance” or “business insurance.” Based on these high-level topics, it will give you popular questions around these keywords. wisconsin INDEPENDENT AGENT
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For example, two results for “home insurance” include “why home insurance is important” and “what home insurance covers.” This gives you a specific question your content could potentially answer. More specific keyword research that includes monthly keyword volume and level of difficulty may require a paid tool. Some of these tools include SEMRush, Moz Keyword Explorer, or Ahrefs. When using a tool like these, one of the most important data points will be the average monthly searches for each keyword. A keyword with high monthly searches means more potential customers are searching for that term. However, this can also increase the level of difficulty for your pages to appear for this word. It is also important to keep in mind that phrases with three words—”long-tail keywords”—may have lower search volume. However, long-tail keywords are more specific and often result in higher click-through rates. You will want to choose a mix of long-tail keywords and more competitive, high volume terms.
Assess the Competition Once you have your keyword list, search for each keyword on Google to see what types of content are currently appearing. Make sure to search in incognito mode or a private window so that your past browser history doesn’t affect your results. Rank your keywords in order from the ones that result in the weakest search results to the strongest search results. An example of strong search results would be three or more blogs or pages that fully address the search query. You want to look out for opportunities where you can create a better piece of content that more fully answers a search query. Keywords that do not have strong results may be easier to rank for. This can help you prioritize the keywords you want to focus on and thus your content creation efforts. This doesn’t mean you should not go after competitive keywords, but it will help you set priorities and expectations. This article was originally published on trustedchoice. independentagent.com/blog.
It is also important to watch seasonal trends. For example, keywords related to boat insurance may be more popular in summer than in winter.
> Trusted Choice
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Specialty teams to piece each risk puzzle together for you. Our knowledgeable underwriters and brokers coordinate among specialty teams to meet the needs of multi-faceted risk opportunities. Our specialties extend beyond commercial lines into personal lines, farm and ranch, bonds, cannabis and more. We have a dedicated medical malpractice team and one of the strongest aviation teams in the Midwest. Our goal is to provide one-stop solutions for our independent producers’ local and nationwide insurance coverage needs.
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AGENCY MANAGEMENT
QUESTIONS TO CONSIDER WHEN BUYING AN AGENCY - PART 1 The best place to start in evaluating a potential acquisition is with you and your own agency. If you are clear on what you are looking for in an acquisition the process of evaluating opportunities becomes much more efficient and effective. Ask yourself these important questions: • What are your current agency goals? • How does this acquisition help you achieve those goals? It is always best to pause and consider what you are trying to accomplish to ensure that you are able to maintain focus. An acquisition is a big undertaking, so if it is not aligned with your overall goals, it can impact your ability to achieve what you are trying to accomplish. Here are some questions to consider before you get too deep into the process of evaluating another agency. I believe these will help you determine if the acquisition opportunity has the potential to be fit for you and your agency. • • • • • •
What is your current growth plan? What would strengthen it? Are you trying to grow into a new geographical location? Niche? Line of Business? Are you looking to add a particular carrier or gain access to certain markets? Are you looking to expand your team and expertise? Which roles? What expertise? Are you looking to gain and develop future owners of your agency? Are there specific relationships that you are
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•
trying to develop and build? Are you looking to expand within your current footprint or into a new or complimentary niche?
We all know that acquisition add premium volume and revenue to your agency, but not all revenue is created equal. It is important to consider how a potential acquisition will fit into your overall plan. Once you have an idea if this potential acquisition fits into your overall plan, spend some time considering how it aligns with you and your agency. You will need to look at it from several perspectives including, geographic location, carrier and markets, current relationships and contracts, expertise, performance, customer type and behavior and most importantly culture. Book of Business Alignment What is the makeup of their book of business? What is the average size of their accounts? Are there any large accounts, specialized accounts, or accounts that would be at risk in a transition due to personal relationship with the current owner? Is the book heavy in personal lines, commercial lines, Life & Heath? If it is heavy personal lines, what percentage is home, auto, monoline? If it is heavy commercial lines, what is their focus, and do you have the right expertise to facilitate a seamless transition of their accounts? Are there opportunities to expand and cross-sell?
Customer Alignment What type of customers does the agency attract? Gather data on their average account size, average policies per customer, where customers they located, and how long have they been with the agency. In addition, be sure to ask questions that help you understand the customers expectations and behaviors like: How often do you talk to your customers? What percentage of your customers come into the office for appointments? To make payments? What percentage pay online? Utilize your app or website? Expect to pay in cash? What percentage of your customers have minimum limits or are monoline customers? Asking questions like these will help you understand the fit and alignment with your agency and your practices, the gap in expectations, the need for cultural change and ultimately help you determine the risk that may exist in retaining the business. Carrier Alignment This is an area where alignment can make a huge impact and misalignment can do the same. What is the current carrier overlap? What will this purchase do to your volume, loss ratios, commission rates, potential contingencies, and overall revenue? For those carriers that both agencies have access to, be sure to consider how each of the agencies are accessing the carrier. Do both agencies have direct appointments or is their access through a network or aggregator? Do not assume that the shared carrier will automatically move all of the business to be written under the direct appointment, based on your volume and performance the carrier may decide otherwise. For the carrier appointments that differ, it is exciting to consider the potential impact that gaining access can have on your agency. It may open up an opportunity to cross-sell and expand your book, but do not overlook the process you need to go through to gain access to that carrier. You will need to consider the approval process that the carrier has in appointing new agencies.
You should not assume that the carrier will appoint you automatically upon the purchase of an agency. This consideration often times happens too late in the process and agencies are faced with rewriting books which is both time consuming and laborious on top of the integration activities that they are already facing. Geographic Alignment There is no question that our world is getting smaller, but many agencies still have large concentration of their business within a close radius of their location. It is important to consider where the agency is located, and how much of their business is local. This will help you determine the need to maintain multiple locations, the potential commute time, and how easy will it be for the team to work together and the potential synergies that may exist if this merger occurs. You will also need to consider how you will logistically manage the integration in the short-term and what the management of multiple locations will look like in the future. The above factors are just a piece of the bigger puzzle that you should analyze during your vetting process. In part two of this article, we’ll discuss some of the more “internal” factors to consider as you weigh your decision on agency acquisition. For more information visit www.agency-focus.com or contact Carey at carey@agency-focus.com
> Carey Wallace, Business Consultant, AgencyFocus
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COMMENTARY FROM COUNSEL
WISCONSIN ADOPTS NEW ANNUITY SALES "BEST INTEREST" STANDARD Under current law, insurance agents selling annuities must reasonably believe the product is suitable for the buyer, based on a host of factors. Wisconsin’s suitability requirements, coupled with ever-evolving and often complex annuity products, have led to countless complaints, investigations and administrative actions. Now, thanks to a new bill signed into law by Governor Tony Evers on April 15, 2022, Wisconsin’s suitability requirement is giving way to a more expansive “best interest of consumer” framework. While unlikely to diminish the amount of regulatory and enforcement activity around annuity sales, the new standard does raise the bar higher than the current suitability standard. The new law, based on a model act developed by the National Association of Insurance Commissioners (NAIC) adopted in some form in over 20 states, unanimously passed both chambers of the legislature and requires agents to act in the best interests of the consumer, without placing the financial interest of the agent or insurer ahead of the consumer's interest. To ensure agents comply with this directive, the law sets out obligations for agents in four categories: care, disclosure, conflict of interest, and documentation. To satisfy the law’s care obligation, agents must exercise reasonable diligence and skill in making a recommendation. Per the statute, acting with care, diligence, and skill includes learning about the customer’s financial station, insurance needs, and financial objectives and adequately communicating the basis of the recommendation to the customer. The law also requires the agent have a reasonable basis to believe the annuity’s features will benefit the customer, considering all the annuity products the agent is licensed or authorized to recommend or sell. The law’s disclosure obligation requires agents, prior to any recommendation or sale, to prominently disclose to the customer an explanation of the agent’s relationship with the customer and role in the transaction. Agents must also issue several statements to their customers in advance of an annuity transaction: (1) a statement on whether the agent is licensed and authorized to sell annuities; (2) a statement listing the insurers for which the agent is authorized to sell products; (3) a statement on the cash and noncash compensation to be received by 34 | JUNE 2022 |
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the agent; and (4) a notice of the customer’s right to request more details on cash compensation. Finally, the law requires agents to have a reasonable basis to believe that the customer has been informed of the features of the annuity prior to a recommendation or sale taking place. The law’s conflict of interest obligation is simple: an agent must identify and avoid or reasonably manage and disclose conflicts of interest, including those conflicts related to an ownership interest. Obtaining proper documentation at the time of sale or recommendation of an annuity is also required by the new law. If an annuity is recommended, the agent must make a written record of the basis for that recommendation. If an annuity is not recommended, the agent must obtain a signed statement from the customer acknowledging an annuity transaction is not recommended and, if the customer decides to enter the annuity transaction anyway, that decision is not based on the agent’s recommendation. Finally, if the customer refuses to provide relevant profile information, the agent must obtain a signed statement from the customer documenting the refusal and the customer’s knowledge of the ramifications of providing insufficient profile information. While the new regulations are undoubtedly more burdensome on agents, the general consensus is that the new provisions enhance consumer protection. Additionally, market experts estimate consumers in “best interest” states will see considerable savings when compared to jurisdictions with “fiduciary-only” regulatory schemes. The recently signed law does not take effect until October, but if your agency sells annuities covered by the new best interests law, it is time to start preparing and rolling out compliant practices. To ensure you understand all the requirements of the new statutes, including those not described here, be sure to stay in close contact with legal counsel.
>J osh Johanningmeier IIAW General Counsel
FOOD FOR THOUGHT
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PRSRT STD US POSTAGE PAID MADISON WI PERMIT NO. 549
