July 2016 Wisconsin Independent Agent by Independent Insurance Agents of Wisconsin

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INDEPENDENT AGENT JULY 2016

THE FUTURE STARTS TODAY

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BUSINESS West Bend’s insurance professionals know a lot about business. And not-for-profit organizations are one of our specialties. As an Official Supplier of the Silver Lining®, our products are backed by your knowledge and expertise. Let’s work together to provide the best coverages for your client’s operations.

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INDEPENDENT AGENT JULY 2016 Eric Schwartz, Editor

Open Door Policy Evolution: Is It Time to Restructure the Committee System? . . . . . . . . . . . . . . . . . . 5 Government Affairs IIAW Joins Grassroots Coalition to Repeal Personal Property Tax . . . . . . . . . . . . . . 7 Cyber Liability Minimum Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2016-17 IIAW Committee Request Information . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Virtual University The ABCs of EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Technology Google Alerts: Your Personal Virtual Research Assistant . . . . . . . . . . . . . . . . . . . . . 15 Marketing 5 Warning Signs That Your Marketing Will Not Work . . . . . . . . . . . . . . . . . . . . . . . . . 16 Sales It’s All About You . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Members in the News . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Errors & Omissions Is Your Agency’s Marketing Leading to a Shattering E&O Claim? . . . . . . . . . . . . . 25 Commentary From Counsel Giveaways, Free Contests & Illegal Lotteries? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Independent Insurance Agents of Wisconsin 725 John Nolen Drive, Madison, Wisconsin 53713 Phone: (608) 256-4429 or (800) 362-7441 ■ Fax: (608) 256-0170 ■ Web: www.iiaw.com Executive Vice President - Matt Banaszynski 2015-2016 Executive Committee President......................................................... Steve Leitch P.O. Box 85, River Falls, WI 54022 President-elect .............................................. Matt Weimer 100 North Corporate Dr., #100, Brookfield, WI 53045 Secretary-Treasurer .......................... Lise Meyer Kobussen P.O. Box 633, Sauk City, WI 53583

Jack Riesch P.O. Box 1610, Waukesha, WI 53187-1610 Michael Walston P.O. Box 236, Kewaunee, WI 54216-0236 Darrel Zaleski 4233 Southtowne Drive, Eau Claire, WI 54701 2015-2016 Committee Chairs

Chairman of the Board ............................. John Wickhem P.O. Box 1500, Janesville, WI 53547-15

Agency Operations....................................... Kim Dandrea N19 W24200 Riverwood Dr., Waukesha, WI 53188

State National Director ................................ Linda Steiner 555 Main Street #320, Racine, WI 53403

Automation/Technology ............... Cathleen Christensen P.O. Box 949, Fond du Lac, WI 54936-0949

2015-2016 Board of Directors

Emerging Leaders ...........................................Jack Demski 101 East Grand Ave. #11, Port Washington, WI 53074

Mike Ansay 101 East Grand Ave. #11, Port Washington, WI 53704 Mark Behrens 555 Main Street #320, Racine, WI 53403 Jason Bott 330 East Kilbourn Avenue, Milwaukee, WI 53202 Cindy Burns 500 South Central Ave., Marshfield, WI 54449 Gerald Couri 379 West Main Street, Waukesha, WI 53186 Mike Farrell 1300 S. Green Bay Rd., Racine, WI 53406 Chris Hanson 5601 Grande Market Drive, Appleton, WI 54913 Brian McClone 505 North Westfield Street, Oshkosh, WI 54902

WISCONSIN INDEPENDENT AGENT

Employee Benefits.......................................... Mike Farrell 1300 South Green Bay Rd., Racine, WI 53406 Finance & Compensation ............... Lise Meyer Kobussen P.O Box 633, Sauk City, WI 53583 Government Affairs .......................................Skip Hansen 100 North Corporate Drive #100 Brookfield, WI 53045 Industry Relations ....................................... Kevin Murray 525 Junction Road, Madison, WI 53717 Marketing & Membership Development ........... Jeff Thiel P.O. Box 1610, Waukesha, WI 53187-1610 Smaller Agencies .................................... Michael Walston P.O. Box 236, Kewaunee, WI 54216-0236 Technical ................................................... Mark Truyman P.O. Box 6, Seymour, WI 54165 Technical ...............................................Timothy Kakuska P.O. Box 547, La Crosse, WI 54602-0547

On The Cover…

We work hard to provide quality member resources and services (and conventions!) but our biggest asset is YOU. You volunteer your valuable time and talents to serve on Association committees and initiate great ideas that keep the IIAW moving toward a bright future. We can’t say this enough – THANK YOU for your membership. Renew your membership online at IIAW.com.

> ADVERTISERS & INFORMATION AAA Wisconsin ................................................ 30 ACUITY Insurance ............................................ 31 Amerisafe....................................................... 20 Arlington/Roe ................................................ 28 Badger Mutual .................................................. 7 Berkshire Hathaway/Guard .............................. 9 Burns & Wilcox ................................................. 6 Erickson-Larsen, Inc....................................... 20 IIAW Continuing Education .............................. 14 IIAW Prelicensing Schedule ............................ 29 Insurance Associates of America ....................18 JM Wilson ........................................................ 13 InVEST ...............................................Back Cover Pekin Insurance............................................... 17 Robertson Ryan & Associates......................... 24 SECURA Insurance ........................................... 19 The IMT Group ................................................ 27 West Bend ........................................................ 2 Western National ............................................. 4 JULY 2016 | 3

OPEN DOOR POLICY

EVOLUTION: IS IT TIME TO

RESTRUCTURE THE COMMITTEE SYSTEM? Committees have traditionally served to support the work of the board of directors either by handling responsibility for a specific Association initiative or serving as a sounding board or vetting system.

Committees are the lifeblood of this organization and the source of future board members and officers. They utilize talent from the membership and focus their time and attention on Association objectives to help the board and IIAW staff execute their strategic vision for the Association.

filter we use to evaluate our environment. It’s especially true when we’re asked to participate in some sort of change.”

With that being said, let me ask this question: Is the current Association committee structure still an effective and efficient use of time for the volunteers who serve? Well, that’s a loaded question with as many answers as we have members.

“Change is not what troubles most people. What gives them the greatest heartburn is the transition from the present to the future. Change is situational: the new team roles, the new manager, the new procedure, and the new way of operating. Transition is the psychological rite of passage during which people come to terms with the new situation (the change). Your challenge is to validate the journey. Every change begins with an ending. People look at the present and try to compare it to the future by asking countless questions: What am I losing? Where are we headed? What will be the expectations for my contribution? What performance metrics will be used? In other words, What’s In It For Me (WIIFM)?”

It’s my opinion that we should evaluate the value of our committee system and find out if it’s working effectively or if the system is antiquated. The question is not whether it’s valuable to the Association, but rather if it’s of value to the committee member and/or the membership. While many who serve on committees are well intentioned, committees can become stagnant due to a lack of clarity and understanding about what is necessary to build a successful committee. As the Association’s EVP, nothing pains me more than to see committees spin their wheels for months trying to figure out what they are supposed to do and how to do it. Much of this frustration starts and stops with the Association as opposed to the volunteers. Guidance from Association leadership and staff is key to success, but how can we all do a better job to ensure a better end result? All organizations must continue to evolve to remain relevant. It’s time for the IIAW to do just that with our committees. We must EVOLVE while taking into consideration our members’ perspectives. When confronted with change, most people think about “What’s In It For Me” or WIIFM. It’s not that most people are egotistical. As Rodger Dean Duncan stated, “It’s simply a fact that personal context is usually the first WISCONSIN INDEPENDENT AGENT

Duncan is a noted business consultant who focuses on leadership and strategically managing change. He said:

Keep this question and its underlying purpose and meaning in mind as we look to improve the Association’s committee structure (purpose) so it provides a greater return on investment (ROI) for a committee member’s time. Committee members are the content experts that bring insight and expertise to the organization. We need to do a better job of extracting that and putting it to use while ensuring a positive experience. Managing the committee and its outcome requires an entirely different skill, focus and time commitment best suited for the committee chair supported by a staff member. Let me propose the following as a means to start a conversation. All eight committees will continue to exist and focus on specific issues. For those committees with additional responsibilities, such as planning a convention seminar or conference,

your core purpose and focus may not change. That is entirely up to the committee. But, in an effort to provide a better committee member experience and enhanced ROI of your time, I propose that each committee focus on one or two topics relevant to the committee. The committee will work to identify speakers they can bring in to learn about these topics. Following the speech the committee will identify key takeaways and articulate the relevant points to the membership. Perhaps a new member product or service will be the end result or maybe a magazine article or whitepaper. This is simply a suggestion and not set in stone. We will certainly discuss this restructuring more at Fall Planning on September 22nd. If you are currently not serving on a committee, please consider it. You could get in on the ground floor of a new way of executing Association business. You could learn something new that could benefit the entire membership and be applied to your agency or company. Those of you who graciously serve on committees — Thank You. You are the reason for the evolution of our business model. It’s important that you share your ideas about how we can repurpose our committee structure. My commitment to you is simple. The committee structure and purpose will evolve in a manner conducive to your needs while taking into consideration your very valuable time. We’re Independent… Together!

> Matt Banaszynski is the Executive Vice President of the Independent Insurance Agents of Wisconsin. Contact him at matt@ iiaw.com.

JULY 2016 | 5

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WILCOX

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GOVERNMENT AFFAIRS

IIAW JOINS GRASSROOTS COALITION TO REPEAL PERSONAL PROPERTY TAX Most know by now that the Legislature has adjourned until January 2017 as state lawmakers focus on their re-election campaigns. But the ongoing policy debate over the personal property tax is already heating up in preparation for next session and hopefully for inclusion in the Governor’s proposed biennial state budget bill. Supporters of an effort to repeal Wisconsin’s onerous personal property tax have decided to get a jumpstart on grassroots advocacy to again try and convince legislators and candidates running for public office that the 2017-18 legislative session is ripe to finally dump this unfair tax aimed at businesses. Legislation introduced last session by Senator Tom Tiffany (R-Hazelhurst) and Representative Bob Kulp (R-Stratford), unfortunately failed to generate enough legislative support to pass, primarily as a result of the large price tag. A statewide group of more than 29 organizations, which represents over 400,000 businesses and employs more than one million people, has formed to create one of the largest statewide coalitions in modern legislative history - the Coalition to Repeal Wisconsin’s Personal Property Tax. The IIAW is proud to announce its membership in the coalition’s lobbying and grassroots effort to put an end to this duplicative, outdated and unfair tax levied against our members each year as part of their property tax bills. The coalition is hopeful that the cost of repealing this unjust tax will not be an obstacle to making Wisconsin a friendlier place to run a business. For those of you unfamiliar with the personal property tax, it is a tax imposed on “tangible” personal property, consisting of that which can be touched and moved, such as equipment and furniture owned by a business. As defined under state law, businesses pay taxes on both real and personal property. Personal property taxes are assessed and collected by the state and local governments including cities, villages and towns. The majority of the personal property tax collections go toward funding local municipal budgets. Based on 2014-15 tax collections estimated by the non-partisan Legislative Fiscal Bureau (LFB), the personal property tax generated

WISCONSIN INDEPENDENT AGENT

approximately $267 million in revenues. Originally introduced in 1848, the personal property tax was instituted during a time when the state did not have an income or sales tax yet. Today, the tax is considered an outmoded and widely unfair, inequitable source of revenue. Over the years, the state Legislature has managed to chip away at the personal property tax, arbitrarily picking winners and losers by exempting some industries and more than 50 items from being subject to the tax. Some of these exemptions include: motor vehicles, household goods, computers, and businesses in the agricultural and manufacturing sectors. Meanwhile, other businesses, like independent insurance agencies and insurers, are still left paying the tax. This has created an unfair and uneven burden of taxation, particularly on smaller businesses.

The personal property tax is also viewed as a disincentive for businesses seeking to locate or even expand operations in Wisconsin. All of Wisconsin’s neighboring states have eliminated or are phasing out the tax. The personal property tax is also viewed as a disincentive for businesses seeking to locate or even expand operations in Wisconsin. All of Wisconsin’s neighboring states have eliminated or are phasing out the tax. According to the Michigan Economic Development Corporation, Michigan began phasing out the tax in 2014 in an ongoing effort to make the state a more attractive place for businesses to invest and grow. The repeal in Michigan is estimated to create 15,000 jobs and increase business investment by $450 million. Imagine the reduced tax burden and opportunities that could be generated if Wisconsin simply followed Michigan’s lead on this issue. Repealing the personal property tax would help foster a favorable business climate; employers could use those dollars to reinvest by hiring new employees, upgrading equipment, or reducing existing debt. If Wisconsin is truly “Open For Business,” then this new coalition representing a multitude of industries and interests from every corner of the state, will hopefully serve as a powerful resource to convince state lawmakers and legislative leaders that it’s time to finally do away with the personal property tax. > Misha Lee is Owner/ Refer to the Wisconsin Department of Revenue Founder of Lee 2016 Guide for Property Owners — www. Government Relations, LLC and lobbyist revenue.wi.gov/pubs/slf/pb060.pdf — for an for IIAW. Follow Lee overview on property taxes and the personal Government Relations property tax. on Twitter@mishavlee.

JULY 2016 | 7

CYBER LIABILITY

MINIMUM SECURITY Don’t count on CGL to cover cyber claims

Unless your clients only accept cash and do not receive anyone’s personal information, they need cyber insurance. Do not fall prey to the thought that a traditional CGL policy will cover a cyber event. When asked to find coverage for “cyber claims” under both the “property” and “personal injury” provisions of CGL policies, the courts have provided mixed results.

Do not fall prey to the thought that a traditional CGL policy will cover a cyber event.

In a decision handed down in 2014 in Recall Total Information Management, Inc., et al. v. Federal Insurance Co., the Connecticut Court of Appeals considered the loss of computer tapes containing employment

8 | JULY 2016

data for 500,000 IBM employees. Upon discovering that the tapes fell out of a van on a highway exit ramp, IBM was forced to spend more than $6 million taking steps to notify and protect the affected employees pursuant to a state notification statute. The transit company ultimately forced to pay that bill in turn sought coverage from its CGL carrier for the loss on the premise that the IBM employees had sustained “personal injuries.” The trial court ruled for the carrier on the grounds that there was no “publication.” The Court of Appeals agreed, concluding that, “Regardless of the precise definition of publication, we believe that access is a necessary prerequisite to the communication or disclosure of personal information. In this regard, the plaintiffs have failed to provide a factual basis that the information on the tapes was ever accessed by anyone.” No case better highlights the dangers of relying upon your CGL policy for coverage than Zurich American Insurance Co. v. Sony Corp. of America et al., which arose from

a 2011 cyber attack that stole consumers’ personal information. Ruling in favor of Zurich, which had denied any duty to defend or indemnify, the Court based its decision on “who performed the publication,” because the CGL policy “calls for the policy holder to perpetrate or commit the act.” Because third-party hackers had committed the “publication,” not Sony, the Court concluded there was no coverage under the CGL policy. That decision is now up for appeal. ISO has since stepped forward to clarify the purpose of the CGL policy and provide exclusions for data breach and cyber attacks: CG 2106 5/14, CG 2107 5/14 and CG 2108 5/14.

> Catherine Lyle, J.D., is a vice president, claims expert with Swiss Re Corporation Solutions.

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To:

IIA of Wisconsin Members and Company Partners

From: IIAW President-Elect Matt Weimer Re:

2016-2017 Association Committees Staffing

The IIAW’s strategic plan for this Association is to bring together agents and industry partners to create innovative and industry-leading member services and resources that could serve as a national model for other states to follow. Creating new professional development and networking opportunities as well as reinventing member services are the cornerstones of our plan to be your strategic business partner. I would like to personally extend to you an invitation to become part of one of the nation’s largest and finest association leadership teams. Prior to my presidency beginning on September 1, 2016, I will assemble my team comprised of current committee volunteers and other qualified members who have indicated an interest in serving. All committee members will also be granted VIP status throughout the year at specific IIAW events. Our VIP recognition this year at our annual convention granted priority access to a meet-and-greet with Green Bay Packer Donald Driver, beer tasting from Potosi Brewing Company, priority seating at key event sessions, and special recognition at the event for your service and commitment to the IIAW. We look forward to continuing to honor our committee members with this VIP status at upcoming IIAW events. It is our way of saying “thank you” for serving on a committee. You will want to be a VIP at next year’s convention, trust me! Those asked to serve will be contacted no later than August 15th and will be invited to our annual Fall Planning Session on September 22nd at Blue Harbor Resort in Sheboygan. The Association will provide both your lodging and a banquet dinner for the event. This year we will also be offering a networking/social event (TBD) in the evening following the planning session. This year we will be continuing our quick and easy online registration for committee service. The link below will take you to the IIAW website where you will be able to register to serve. If you no longer wish to serve on a committee, we ask that you please still fill out the information and choose “I no longer wish to serve” under the committee drop-down lists.

Committee Request Link: www.iiaw.com/event/COMMITTEE The following is a list of Association committees and a brief statement of their responsibilities. If you have questions regarding committee service responsibilities, please call the State Office at (608) 256-4429, or email haley@iiaw.com. Automation/Technology—Determines methods and guidelines to assist members with automation needs and assists in the planning of automation/technology forums and state convention learning sessions.

725 John Nolen Drive, Madison, WI 53713 (800) 362-7441 • (608) 256-4429 • FAX (608) 256-0170 • www.iiaw.com

Agency Services—provides member communication, employee development and marketing assistance programs to assist with agency operations, especially best practices. Recommends education and training programs in marketing, management, and services. Emerging Leaders—Assists in the planning and promoting of the annual Leadership Conference and other IIAW events. Aides in the redevelopment of the Association and its strategic plan to engage and attract younger generations. Professional development opportunities such as all-expense paid trips to IIABA leadership conferences for outstanding service and participation. Finally, committee members will be able to participate in a yearlong business coaching program presented by an industry expert that covers a variety of industry topics as well as one on one coaching. IIAW invests in its future and its future is you. Employee Benefits—Develops programs and services for who specialize in life, health, financial services and retirement planning products. Responsible for the planning of seminars and aides in the creation of regulatory and legal guidance. Interacts with regulatory and legislative officials regarding employee benefits committee. Government Affairs—Monitors legislation on state/national level, helps direct grassroots lobbying efforts, helps establish Association positions, and provides direction in fundraising efforts to support legislative activities. Members may be called upon to testify on various insurance issues before the state legislature. Works directly with the IIAW government affairs team. Ability to attend IIABA Legislative Conference in Washington D.C. Conduit participation required. Carrier Relations—Considers issues of concern to both companies and agents (such as legislation) and offers strategies to improve the industry’s image and help develop agency/company relations. Produces special publications on issues of vital interest to agencies and companies and offers suggestions for both seminar and convention planning. Marketing and Membership Development—Develops and implements plans for attracting new independent agencies, benefits agencies and supporting members to the Association. Evaluates existing and potential member benefits and services and makes recommendations for improvement. Assists in the planning and execution of IIAW’s marketing and branding strategy. Technical—Provides members with technical assistance through newsletters, magazine articles and seminars. Represents Wisconsin at Mid-America Technical Conference, recommends coverage and form changes to regulatory authorities. Monitors and works with the WCRB and ISO. PLEASE NOTE: CURRENT COMMITTEE MEMBERS STILL NEED TO COMPLETE THE ONLINE FORM INDICATING THEIR DESIRED COMMITTEE. Matt Weimer President-elect IIA of Wisconsin 725 John Nolen Drive Madison, WI 53713 (608) 256-4429, or e-mail at: haley@iiaw.com

725 John Nolen Drive, Madison, WI 53713 (800) 362-7441 • (608) 256-4429 • FAX (608) 256-0170 • www.iiaw.com

VIRTUAL UNIVERSITY

EBITDA: WHAT YOU NEED TO KNOW

Many owners who sell their agencies leave a lot of money on the table because they do not understand EBITDA - Earnings Before Interest, Taxes, Depreciation, and Amortization. To maximize the bottom line, here a few points that a seller should consider: 1. The EBITDA valuation methodology is simple, overly so as applied by many. It works like this: Agency’s EBITDA x EBITDA Multiple = Value. For example, if the EBITDA is $100,000 and the EBITDA multiple is 6, the value equals $600,000. 2. The EBITDA multiple ONLY applies to the book of business not the stock or other assets. 3. Too many sellers do not understand that EBITDA is a pro forma number. It’s not the agency’s actual EBITDA. Pro forma EBITDA is not always materially higher than actual EBITDA but it usually is. If the seller doesn’t know this, they will likely sell their agency for too little. For example, the actual EBITDA might be $80,000 but the pro forma EBITDA may be $100,000. This $20,000 difference is a $120,000 difference in price. If you think buyers will not take advantage of your ignorance, think again. 4. EBITDA is based on the BUYER’s version of the seller’s pro forma, not the seller’s version of their pro forma! This is more of a problem with small agencies. The owner thinks that, because they take their compensation below the bottom line, and their compensation may be as much as 50% of revenue, that their EBITDA is 50%. This is not true. First, a pro forma adjusts for compensation taken below the bottom line. Second, just because it appears on the seller’s income statement as though the principal works for free, the buyer has to pay someone to work at least some of the accounts. This is one of those situations in which the buyer’s pro forma EBITDA will be less than the incorrectly calculated seller’s EBITDA. A lot of seller’s create considerable frustration, damage their reputations, and even damage the value of their agencies because they do not understand this key point. On the other hand, because the buyer’s pro forma EBITDA is the one that counts, sellers will benefit themselves by calculating the economies of scale the buyer will achieve on their income statement. For example, they may not have to pay for a receptionist or a bookkeeper and they may be willing to fire the nonperforming relative. 5. EBITDA is directly related to the multiple of sales. For example, an agency with a pro forma EBITDA of 15% and a value of six times EBITDA would have a book of business value of approximately of .9

times revenue. Alternatively, an agency with a multiple of revenue value of 1.25 times and an EBITDA of 25% would have a book of business value of five times EBITDA. EBITDA just sounds more sophisticated. I hear many unsophisticated agency owners talking about EBITDA multiples and, because a buyer has approached them using this methodology, they feel good about this more “sophisticated” way to value agencies. At its heart, it’s just as simplistic as the multiple of revenue methodology. 6. EBITDA lends itself to the gambling game of Monte. What often occurs is the buyer says they will pay, for example, six times EBITDA but the earn out brings the final price to 10 times EBITDA. However, the final price is highly unlikely to ever be near 10 times EBITDA. Even the biggest buyers of agencies suggest they do not plan on making the full payment based on my analysis of the publicly traded brokers’ annual reports. Under new accounting rules, they have to estimate how much of the earn out they expect to pay and many are telling the S.E.C. they are not expecting to pay anywhere close to the full earn out. Additionally, the multiple likely stays the same throughout. It doesn’t go from six to 10. This is important. The most common goal for each year is the original multiple times that year’s EBITDA. At the end of say three years of achieving all the goals and earning all the bonuses at six times each respective year’s EBITDA, the buyer will often add all the bonuses together and then divide by the original EBITDA. Of course that EBITDA is a much smaller denominator which thereby greatly increases the EBITDA multiple. But this is apples and oranges. The denominator should be the same as that year’s bonus. For example, using a multiple of six over three years:

EBITDA

Times Annual Earn Out Multiple (6/3 years)

Earn Out Amount

Actual EBITDA Multiple

Year 1

$100,000

$200,000

Year 2

$110,000

$220,000

Year 3

$120,000

$240,000

TOTAL

$660,000

The Virtual University is a Big “I” members-only resource. Many articles are based on real-life questions received by the Ask an Expert service. This service ensures that the information is current and topical. Go to www.independentagent. com/Education/VU/. You will need to login with your IIABA username and password before using the VU. The IIABA does not assume and has no responsibility for liability or damage which may result from the use of any of this information.

12 | JULY 2016

WISCONSIN INDEPENDENT AGENT

VIRTUAL UNIVERSITY EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization.

The buyer will tell the seller they are getting a higher multiple of 6.6 ($660,000/$100,000) by using the first year’s EBITDA as the denominator. The real denominator should be each year’s EBITDA which still results in a multiple of six. More than one seller has fallen hard for this shell game of moving denominators. The EBITDA methodology is not that sophisticated but it has many more moving parts. In the hands of a skilled buyer, these moving parts can be used to convince an inadequately advised seller they are getting a good deal when they are actually getting a lousy deal. On the other hand, I see too many sellers demanding far too

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much for their agencies because they think they understand EBITDA when they don’t understand it at all. Going back to the beginning of this article, they don’t know what EBITDA really means. Some confuse earnings and revenue. Knowledge is power and money. If you’re selling, be sure to fully understand EBITDA or hire an adviser that does.

> Chris Burand is president of Burand & Associates, LLC, an insurance agency consulting firm. Readers may contact Chris at (719) 4853868, or chris@burandassociates.com

JULY 2016 | 13

CONTINUING EDUCATION

IN PERSON CLASSES

IIAW WEBINARS

Ethics: When the Impossible Happens 4 CE Credits Approved Date: August 16, 2016 Location: IIAW State Headquarters, Madison Time: 8:30 AM – 12:30 PM

Who Is An Insured? 3 CE Credits Approved Date: July 21, 2016 Location: IIAW Webinar – iiaw.com/events Time: 12:00 – 3:00 PM Condominiums 3 CE Credits Approved Date: July 22, 2016 Location: IIAW Webinar – iiaw.com/events Time: 8:00 – 11:00 AM Ethics & Agent Liability 3 CE Credits Approved Date: July 25, 2016 Location: IIAW Webinar – iiaw.com/events Time: 12:00 – 3:00 PM 10 Things Every Commercial Lines Agents Ought to Know 3 CE Credits Approved Date: July 26, 2016 Location: IIAW Webinar – iiaw.com/events Time: 12:00 – 3:00 PM Personal Auto Policy 3 CE Credits Approved Date: July 27, 2016 Location: IIAW Webinar – iiaw.com/events Time: 12:00 – 3:00 PM Farm Liability Coverages 3 CE Credits Approved Date: July 28, 2016 Location: ABEN Online – iiaw.aben.tv Time: 8:00 – 11:00 AM Commercial General Liability Coverages 3 CE Credits Approved Date: July 28, 2016 Location: ABEN Online – iiaw.aben.tv Time: 12:00 – 3:00 PM Business Auto Coverages 3 CE Credits Approved Date: August 8, 2016 Location: ABEN Online – iiaw.aben.tv Time: 12:00 – 3:00 PM

ABEN ONLINE CLASSES Affordable Care Act: Update 2016 & Beyond 3 CE Credit Approved Date: July 19, 2016 Location: ABEN Online – iiaw.aben.tv Time: 9:00 AM – 12:00 PM

Business Auto Claims That Cause Problems 2 CE Credits Approved Date: July 19, 2016 Location: ABEN Online – iiaw.aben.tv Time: 12:00 – 2:00 PM

Certificates of Insurance: Emerging Issues & Other Stuff That May Scare You 3 CE Credits Approved Date: July 15, 2016 Location: ABEN Online – iiaw.aben.tv Time: 10:00 AM – 1:00 PM

Commercial Property Endorsements That Can Make You Money 2 CE Credit Approved Date: July 21, 2016 Location: ABEN Online – iiaw.aben.tv Time: 9:00 – 11:00 AM

Rental Cars: More Than Meets the Eye 2 CE Credits Approved Date: July 21, 2016 Location: ABEN Online – iiaw.aben.tv Time: 9:00 – 10:50 AM

Annuity Basics and Where They Fit 1 CE Credit Approved Date: July 26, 2016 Location: ABEN Online – iiaw.aben.tv Time: 12:30 – 1:30 PM

FOR MORE CLASSES AND TO REGISTER, PLEASE GO TO IIAW.COM

TECHNOLOGY

GOOGLE ALERTS: YOUR PERSONAL VIRTUAL RESEARCH ASSISTANT I am surprised at how little agency staff — especially producers — use Google Alerts. Using Google Alerts is like having a personal virtual research assistant spending 100% of their time searching the web to find news, comments and articles based on keywords and phrases you select. The advantage to this personal assistant is it doesn’t get tired and it doesn’t forget to do a search! And this service will not cost you anything because it’s provided for free by the world’s most popular search engine. I use Google Alerts constantly to automatically scour the web looking for information that’s of interest to me. As you can see in the screenshot on this page, I have a large number of search phrases. Google Alerts constantly monitors the web for new instances of my search terms. It then sends me a daily email recap of the most important items for my review.

Create an Alert with the names of individuals and/or companies that are your current clients. This allows you to automatically track and monitor any information about existing clients. Setting up and using Google Alerts is easy: > Just log into your Google account and select “Alerts” from the list of Google products available. Alternatively, you can go to google.com/alerts. > Create a new Alert by typing in the search terms and/or phrases that you want it to find. > The full power of Google’s search options is available to you in Alerts. Be sure to review all the search options to narrow your search to just the information you are interested in receiving. > You do have the option of choosing the frequency (weekly or daily) of emails you receive with the search results. All of my Alert results emails are sent to me daily. > Google Alerts remembers which links were previously sent. This means that once you see an item listed in an email, you will not see it again unless the information has changed within that particular article or web page. Be aware, the email alerts for the first few days will likely contain a lot of hits. There are a number of uses for Google Alerts within an insurance agency. Here are a few suggestions: • Create an Alert with your agency name(s). This allows you to find out when your agency is mentioned online and can help you protect WISCONSIN INDEPENDENT AGENT

Google Alerts search page. You can edit what you want to search for on this screen. your agency brand. This can be especially important when any negative comments might appear. + Create an Alert with the names of individuals and/or companies that are your current clients. This allows you to automatically track and monitor any information about existing clients. For example, you could find out when an existing customer has won an industry award. This would be an excellent opportunity to engage with your client and congratulate them. + Create an Alert for topics for which you have an interest. This could be a particular industry where you have a market focus or issues affecting your clients. In the list of Alerts I have created, you will notice several around “machine learning” and “machine teaching.” This is a topic I am interested in because of the implications for the insurance industry. + Create an Alert for insurance companies you represent. Who knows what interesting and helpful information you might discover. + Create an Alert for vendors with which you have a relationship. If you have been using Google Alerts for a while, hopefully, this is a reminder to revisit your Alerts and update them as necessary. If you are brand new to Google Alerts, I hope I’ve given you some good reasons to explore this free service to see how it can streamline your ability to keep up-to-date on a variety of topics.

> Steve Anderson provides information to insurance agents about how they can use technology to increase revenue and/or reduce expenses.

JULY 2016 | 15

MARKETING

FIVE WARNING SIGNS THAT YOUR MARKETING WILL NOT WORK Fortunately, there are ways to fix the situation This article assumes you value marketing and branding in your agency. You think about marketing. You spend time and money on marketing. You understand that your business is the brand. You believe that great marketing not only provides growth, but business longevity. Unfortunately, a belief in and desire to engage in marketing does not guarantee success in executing a marketing strategy. Is there a way to forecast whether or not our marketing will work? Yes. In the paragraphs that follow, you will find five warning signs that point to ineffective marketing. These are not the only warning signs, but in my experience, occur with the most frequency and tend to consistently foreshadow negative results. 1) You Do Not Schedule “Marketing” Time on Your Calendar. Without fail, every time I speak to an audience of insurance professionals, someone will raise their hand and explain how a “lack of time” is the root cause for digital marketing failure.

a priority and will be doomed to fail before you’ve even begun. TAKEAWAY: Make one staff member accountable for marketing success. 3) Your Phone Number is Not Clearly Visible on Every Page of Your Website. Your agency phone number should be the easiest piece of information to find on your website. As a best practice your phone number should be listed in the top right hand side (in the header area) of every page on your website. You may want to increase the font size or make the font bold as well. We want to make the process of contacting our agency as easy as possible. The less friction that exists in contacting your agency the more likely a prospect on your website will contact you. Below is a perfect example from Lipstone Insurance (website by Advisor Evolved).

Now there is some truth in this argument. You ARE busy but you are not uniquely busier than any professional in the independent insurance industry. Agencies that harness the power of digital marketing simply make time for it on their calendars. This is the only way I was able to get the 100 Insurance Questions Answered Campaign done (see ryanhanley.com/results-smallbusiness-seo-experiment). Every day for 100 days in a row there was an event scheduled in my calendar for 45 minutes titled, “Answer Question Videos.” When the calendar reminder popped up on my computer I’d shut the door and get to work. TAKEAWAY: We have to make time for marketing. 2) You Do Not Have a Dedicated Marketing Staff Member. Someone in your agency must own digital marketing execution. This doesn’t mean you need to go out and hire a new employee or make one staff member’s entire job digital marketing, but someone has to be responsible. Someone has to be accountable for your agency’s digital marketing activity and the associated goals. Digital marketing must be added to someone’s job description. If it’s not, marketing will never be

16 | JULY 2016

TAKEAWAY: Make it easy for prospects to contact your agency. 4) You Have No Way to Email Your Entire Client Base. There is no greater way to get a specific group of people to take one unique action than email. Period. Email, (despite misinformation to the contrary), is still our most powerful marketing tool. Do you have an email marketing strategy? If your only method for contacting current insurance clients via email is through either your Outlook mail server or your agency management system, you DO NOT have an effective email marketing strategy. Neither of these systems provide deliverability or engagement metrics. WISCONSIN INDEPENDENT AGENT

MARKETING

Additionally, both of the systems mentioned above are run through your own website domain. This can create an incredible deliverability issue if people click the “Spam” button on your emails.

Why questions? Because questions are how consumers (of every product and service) search in Google. Additionally, answering questions is an incredibly powerful way of validating your expertise to prospects who you haven’t met yet.

Fortunately, the solution is easy. In order to implement a proper email marketing strategy we must run our mass email through a system built to manage large numbers of sent email (large numbers means anything over 10 emails). Two effective email marketing tools are MailChimp and Constant Contact.

TAKEAWAY: Start answering questions today! How Do You Know Your Marketing Isn’t Working? The phone doesn’t ring. If your phone doesn’t ring every day with new inbound prospect inquiries than your marketing isn’t working.

TAKEAWAY: Use a tool like MailChimp or Constant Contact to manage email marketing campaigns.

Phone calls? Yes. 5) You’re Not Answering Client Questions. What type of content are you creating?

In the insurance industry, digital marketing is an introduction strategy. Your content should be considered a handshake at the beginning of the conversation. But if the phone isn’t ringing, you know your content isn’t resonating with the prospects you’re looking

The most effective and straightforward form of content marketing for every independent insurance agency is answering client questions. Answer client questions over and over and over again. Every time you sit down or get on the phone with one of your clients, listen to the questions they ask and write them down. It doesn’t matter how seemingly small or simple the questions may be. Answer each question and post it on your website.

EVERY DAY. EVERY HOUR. ALWAYS.

to attract. Fixing the items above will make the phone ring more often.

> Ryan Hanley is the senior VP of marketing at TrustedChoice.com and the Managing Editor of AgencyNation.com.

Beyond the expected.

AUTO

LIFE

• Roadside Rescue • Replacement Cost Coverage • Enhanced Coverage for Rental Cars • Pet Coverage

• No Deductible on Glass Claims • Accidental Death Coverage • Tire Protection Coverage • Non-Standard Auto Program

• E-App for Most Life Products • Long Term Care Endorsement • Term Insurance Guaranteed Conversion Program

HOME

• Access to Life Insurance Planning Specialists • Children’s Single Premium Term Plan

HEALTH

• Identity Fraud Coverage with Resolution Services • Personal Injury • Pet Health Insurance • Equipment Breakdown Coverage

• Earthquake Coverage • Water Back-Up of Sewers and Drains • Water and Sewer Line Breakage

• Personal Customer Service • Extensive PPO and Transplant Facility Networks • Benefits Paid Faster than Industry Average

• Wellness Coverage • Online Access to Claim Information • TPA Services

BUSINESS • Employment Practices Liability Insurance • Employee Benefit Liability Coverage • Equipment Breakdown Coverage • Water Back-Up of Sewers and Drains

• Loss Control Services • Workers Compensation Claim Specialists • Employee Wage Expense Continuation

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2505 COURT STREET • PEKIN, ILLINOIS • 61558 • 800-322-0160, EXTENSION 2394 • WWW.PEKININSURANCE.COM

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HOME

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LIFE

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BUSINESS JULY 2016 | 17

We Are Your

Solution to INCREASED

YOU

1 0 OW 0%

MARKETS

MAI

NERS

HIP

Be A Part of It. When you become a part of the Insurance Associates of America family, your agency keeps its unique style, familiar identity, and personalized customer service. What we offer is access to over 30 carriers along with industry expertise and support to help you grow your agency. You’ll retain 100% ownership of your agency, while benefiting from the shared strength of all of our Insurance Associates of America members.

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Sell more. Make more. Stress less.

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For more information call Mike Sabourin 866-789-9712

Let’s make sure they’re safe at home.

Covering all the bases since 1900 Commercial • Personal • Farm-Ag • Specialty

When you partner with SECURA, you’re family. WISCONSIN INDEPENDENT AGENT

Watch: secura.net/partners JULY 2016 | 19

20 | JULY 2016

WISCONSIN INDEPENDENT AGENT

SALES

HOW DO YOU SELL AN INTANGIBLE PRODUCT ON SOCIAL MEDIA?

IT’S ALL ABOUT YOU I can win attention on social media by doing 5 things?! I’ll take two gallons of that Kool Aid, thank you. People love lists because they don’t have to think. All they have to do is follow directions. Someone else has already done the hard part — the thinking.

People love clicking online lists.

It’s not because they’re particularly good at it, but they have visual, tangible products. Restaurants can showcase mouth-watering culinary masterpieces. Airlines can strap six cameras onto a checked bag or stuff their CEOs into overhead bins. Ikea’s marketing makes you realize that you didn’t know you needed to remodel everything. Coffee shops show you how to make $5 lattes for like….50 cents. But how the heck do you market insurance on social media? How do you market an intangible service? On top of being intangible, it’s also something that makes people cringe a bit.

What makes you tick? What are your quirks? What are your interests? Share that on social media. It reminds me of Blue Apron meals by mail. All the painful meal planning and grocery shopping is done and all I have to do is read a three-step recipe, cut some broccoli and put it in the oven? Sold. Well, unfortunately, this article isn’t a simple, neat list of Things You Should/Shouldn’t Do On Social Media. This isn’t a quick fix but it is a way of thinking about social media that will hopefully lead you to create your own awesome lists.

A Stab at the Super Secret Social Media Formula A lot of businesses lucked out on social media. WISCONSIN INDEPENDENT AGENT

Nobody likes to just casually chat about insurance (agents don’t count). I’ve never walked into a Happy Hour and nonchalantly said to someone, “So….auto insurance, am I right??” So, how do you market the intangible that no one even wants to talk about?

Challenge: You’re Marketing the Wrong Product I remember somewhere between shredding stacks of paper and stamping envelopes, my insurance agent Dad telling me at 13 years old that insurance is a relationship driven industry. My Dad was insurance salesman but he never sold insurance. He built friendships, he gained trust and he sold himself. When you shake someone’s hand and close a big account, what are they really buying? They’re not doing business with an insurance agent; they’re doing business with you. So, you want to know what the super secret social media formula is? Sell yourself. That’s

it. Sell yourself. Who are you? What makes you tick? What are your quirks? What are your interests? Share that on social media. No, it’s not as easy as snapping a photo of beef bourguignon, slapping a gorgeous filter on it and posting it to Instagram. It takes work, consistency, practice and even some vulnerability. But I guarantee that your personality will make more of an impact than a foodie picture any day. Think about how you get referrals. Do clients tell their friends, “Oh yeah, I love the business insurance policy Joe set me up with! It’s the perfect policy for me.” Or do they say, “Joe is awesome. He knows everything about business insurance for restaurants and walked me through exactly what I needed. I can give you his number if you want.” See the difference? Even though people don’t really talk about insurance, they do talk about people — especially people they trust and who do an amazing job helping them in times of need. This is why you hear us (at both Agency Nation and TrustedChoice. com) talk about personal branding so often. Because at the end of the day – you are your product.

> Sydney Roe is the state relations coordinator at Trusted Choice.

JULY 2016 | 21

S W E N E H T N I S R E B MEM Richard Keith Named President of Partners Mutual Richard Keith has been elected president of Partners Mutual Insurance. Rich joined Penn National Insurance in 2014 and has been serving as business development manager within Field Operations. He was elected as Partners’ president by the board of directors of Partners on May 19.

business in southeastern Wisconsin,” said Ken Riesch, president and owner of R&R Insurance. R&R Insurance is celebrating over 40 years of service in southeastern Wisconsin and has been named one of the top 100 Property & Casualty agencies nationally by Insurance Journal. Locally owned and operated, R&R is committed to personal service, quick claim response, and the highest level of knowledge and expertise. For more about R&R Insurance, please visit myknowledgebroker. com.

Richard Keith

Penn National Insurance’s president and CEO, Chris Sears, said: “Rich brings diverse skills to the position, from his many years as an independent agent and agency principal, and insurance management experience on the carrier side of the business. He joins Partners at a time when the company is poised to grow its commercial lines book of business, with the launch of a new policy administration system to facilitate commercial growth. As our affiliated company doing business in Wisconsin and Iowa, Partners plays a key strategic role and offers us excellent potential for profitable growth and geographic diversification.” Before joining our company in 2014, Rich had been serving Sterner Insurance, Wyomissing, Pa., as a commercial and personal producer, and before that, from 1987 to 2011 as an account executive, partner and CEO of Dunlop Insurance (later Securus Dunlop Group), Wyomissing. Before that, he had served as a producer at Gingrich Stoudt Insurance, Lancaster, Pa., Aetna Life and Casualty, Wyomissing, as a marketing representative, and Exxon Corporation as a marketing representative. Rich earned a bachelor’s degree in marketing from the Pennsylvania State University and he has engaged in a variety of continuing professional education in the insurance industry. For more information about Partners Mutual, please visit partnersmutual. com.

R&R Insurance Services Acquires Frett Barrington Ltd. R&R Insurance Services, Inc. recently announced the acquisition of Frett Barrington Ltd, a locally owned and independent insurance broker in Pewaukee, Wisconsin. The blending of these two well-established agencies in Waukesha County allows for a greater breadth of resources to employee benefits clients. “We are excited about the partnership with R&R Insurance, and look forward to the additional resources we will have by combining our business practices,” comments Terry Frett, president of Frett Barrington. “R&R also shares our passion for customer service and giving back to the communities in which we serve. This has always been, and will continue to be, important to the associates of Frett Barrington.” “This is a tremendous opportunity for all involved and we at R&R are lucky to be in this great position. It reinforces our commitment to do

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INTEGRITY INSURANCE

Guertin Promoted to Territory Sales Manager Integrity Insurance is proud to announce the promotion of Jill Guertin to Territory Sales Manager. As a Territory Sales Manager, Guertin will be responsible for managing agency relationships with partners throughout Iowa, Minnesota and Wisconsin to achieve business mix, growth and profitability for commercial and personal lines. Jill Guertin

Sales Director Cathy Beaudin-Colón stated, “Jill is a natural fit given her insurance acumen and knowledge of our products. I’m excited to have her in this role to continue to cultivate agency relationships and grow Integrity’s book of business.” Prior to joining Integrity Insurance, Guertin spent 12 years as a licensed insurance agent in the Fox Cities. She started her career at Integrity in August 2011 as a Personal Lines Underwriter. Guertin holds a Certified Insurance Service Representative (CISR) designation.

Company Promotes Mowry to Loss Control Manager Integrity Insurance is proud to announce the promotion of Matt Mowry to Loss Control Manager. As the Loss Control Manager, Mowry will oversee a team of Loss Control Representatives throughout Matthew Mowry Iowa, Minnesota and Wisconsin. He is responsible for conducting service and survey work for Integrity’s growing Commercial Lines book. Andy Ott, Vice President-Commercial Lines, stated, “Mowry is a proven leader with a wealth of knowledge. His expertise will allow us to continue providing personalized loss control service to our agency partners and customers.” WISCONSIN INDEPENDENT AGENT

WS E N E H T N I S R E B MEM Prior to joining Integrity Insurance, Mowry spent six years conducting loss control service work for a large insurance broker in Iowa. He started his career at Integrity in December 2015 as a Loss Control Rep. Mowry graduated from UW-Platteville with a BS in Occupational Safety and received his MBA from the University of Iowa. In addition, he holds a Certified Safety Professional (CSP) and Associate in Risk Management (ARM) designations. For more about Integrity Insurance, please visit integrityinsurance. com.

J.M. Wilson Recognized as “5 Star MGA” J.M. Wilson Corporation is honored to be recognized by Insurance Business America (IBA) as being a “5 Star MGA.” Thousands of insurance producers were surveyed by IBA to rate Managing General Agencies on the importance of key aspects they look for in an MGA. Producers awarded 30 MGAs with the prestigious “5 star” status, with J.M. Wilson being one of them. Insurance Business America is an insurance publication with an independent voice for the insurance industry, encompassing news analysis, expert opinion, exclusive interviews and business strategy advice for today’s sophisticated insurance brokers, agents, and advice professionals. For more about J.M. Wilson, please visit www.jmwilson.com.

SECURA Earns Great Place to Work and WELCOA Platinum Certifications

Place to Work’s Recognition Program. “These ratings measure the company’s capacity to earn its employees’ trust and create a great workplace — critical metrics that anyone considering working for or doing business with SECURA should take into account as an indicator of high performance.” “According to our study, 96 percent of SECURA employees say it is a great workplace,” says Sarah Lewis-Kulin, Great Place to Work’s Senior Editor. Employees completed 534 surveys, resulting in a 90 percent confidence level and a margin of error of ± 1.63. A summary of the Great Place to Work ratings can be found at reviews.greatplacetowork. com/secura-insurance. One of the many reasons associates rate the company so highly is because of the health and wellness benefits it offers. In addition to the Great Place to Work certification, The Wellness Council of America (WELCOA), with local affiliate Wellness Council of Wisconsin, recently awarded SECURA with its highest level Platinum Well Workplace Award, ranking it as one of America’s Healthiest Companies. The Platinum Award recognizes an organization for its commitment to the health and well-being of its employees. The award’s initiative is driven by a rigorous set of criteria outlined in WELCOA’s seven benchmarks that include a supportive environment, evaluations, and wellness teams to foster a results-oriented Well Workplace. For more about SECURA, please visit secura.net.

Church Mutual, Insight Worldwide Partner on PreEmployment Screening Merrill, Wis.-based Church Mutual Insurance Co. announced it has partnered with Insight Worldwide to offer access to pre-employment screening for those who hire employees at senior living communities.

The independent analysts at Great Place to Work® certified SECURA Insurance as a great workplace. The company earned this credential based on extensive ratings provided by its employees in anonymous surveys.

Pre-screening applicants before employment begins helps ensure that new hires are better suited for the job and reduces employee turnover and workers’ compensation claims. Through the partnership, Church Mutual policyholders are able to access Insight Worldwide’s preemployment screening assessments at a discount.

“It’s the relationships and family atmosphere that really make the difference,” said Dave Gross, SECURA President & CEO. “While benefits like our café and free on-site health clinic, as well as our profit sharing, community involvement, wellness programs, and flexible schedules contributed to this award, a culture of caring is the foundation of all we do, and can be seen in the survey responses.”

Insight Worldwide has conducted more than 8 million preemployment assessments. Its process is Equal Employment Opportunity Commission (EEOC) and Americans with Disabilities Act (ADA) compliant, and can be used to prescreen licensed and registered nurses, CNAs and caregivers, as well as administrative and support staff. The assessments take 30 minutes and results are available immediately.

“We applaud SECURA for seeking certification and releasing its employees’ feedback,” said Kim Peters, Vice President of Great

For more information about Church, please visit churchmutual.com.

WISCONSIN INDEPENDENT AGENT

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West Bend is a Fortune “Best Workplace To Retire From” West Bend Mutual Insurance Company has been named to Fortune Magazine’s “30 Best Workplaces To Retire From,” according to a recently-released list. The list is comprised of companies that excel in providing great employee experiences and benefits for employees nearing retirement age. Out of more than 600 employers, West Bend ranked Number 30 nationwide. It also recognizes companies that create environments that retain younger employees. Fortune Magazine looked at retiree health insurance, long-term care insurance, phased retirement programs, defined benefit pension plan, retirement planning resources, 401(k) or 403(b) plan, company matching employee contribution, percentage matched up to “X” percent of employee salary, and internal promotion rate. “Our associates work hard and deserve the best,” said Debra Cahoon,

Interactive Health Recognizes Healthiest Companies in America – HNi Risk Services Inc. Makes the List 154 companies across the country are being recognized for helping their employees make significant and sometimes life-saving changes to improve their health. One those companies is New Berlin-based HNi Risk Services Inc. HNi and the other companies achieved participation rates in excess of 70 percent and a low-risk health score for their total population, based on rigorous and clinically sound health evaluations. Among these award-winning companies, 39 percent of employees in a high-risk range moved to a moderate risk or healthy range, while 41 percent of the participants who started in the moderate risk range moved to a healthy state. Other notable health achievements by the Healthiest Companies in America winners: • 1 in 4 participants that started in a pre-diabetic range moved to a healthy range • More than 80 percent of participants with elevated blood pressure improved their blood pressure • 70 percent of participants with elevated LDL cholesterol successfully lowered it

West Bend’s assistant vice president–Human Resources. “We’re fortunate that many who started their careers here plan to retire from West Bend. This speaks not only to the benefits, amenities, and culture of West Bend, but also to the loyalty of our associates.”

West Bend employs approximately 1,200 associates in its West Bend, Wisconsin headquarters and throughout the 11 Midwestern states in which it does business. For more information about West Bend, please visit thesilverlining. com.

“It can be done. The Healthiest Companies in America award recipients prove that employers can both engage their employees and improve their health outcomes,” said Cathy Kenworthy, President and CEO of Interactive Health. “With holistic, engaging and personalized workplace wellness programs that encourage and achieve great participation, employees lead healthier and more productive lives.” For the complete report, please visit interactivehealthinc.com/clientsuccess/healthiest-companies. For more information about HNi, please visit hni.com.

ERRORS & OMISSIONS

IS YOUR AGENCY’S MARKETING

LEADING TO A SHATTERING E&O CLAIM? HOW THE LANGUAGE ON YOUR WEBSITE CAN LEAD TO ALLEGATIONS OF NEGLIGENCE I recently spent a couple of days with the head of Swiss Re/Westport Insurance Corporation. We talked at length about E&O claims and the good and bad of the process. The good news: claims for certificates of insurance are down. This is definitely a trend in the right direction. The bad news is that claims involving marketing language are up. Specifically, it’s language involving promises made to prospects or clients via agency websites. It’s not the language itself that is drawing the claim; rather, lawyers are referring to statements on agency websites that could be

“business partner,” you’ve created a special relationship. In Wisconsin, it’s not easy to prove that an agent has elevated the duty owed, but the courts will review and make a determination. What follows are real claims examples triggered by website marketing:

misleading or interpreted as broken promises.

board for the opening statement. This exhibit

1. In one situation, counsel enlarged the language from an agency’s website on poster

E&O claims involving marketing language are up. Specifically, the language pertains to promises made to prospects or clients via agency websites. Let’s take a moment to revisit our prelicensing class. If you recall, different states have different levels of duty owed to a client. Some states require that we provide professional services like risk management and coverage recommendations. Wisconsin, however, is an “order taker” state. As a base, Wisconsin agents are only responsible for binding the exact coverage requested by a client. Further, the coverage has to be specific in its request, e.g. $500,000 in property coverage. The request needs to be much more specific than “the best coverage available” UNLESS you’ve promised otherwise. Once you’ve made the claim “professional,”

highlighted statements from the agency’s marketing materials including, “Insurance is confusing…let us help you through the maze. We are your business partner.” The plaintiff’s counsel used this language to make a very convincing argument that the agency had an enhanced duty to the customer and had abandoned its “business partner” by not advising as to the appropriate coverage. Everyone was surprised by these developments, including the agency owner, who had forgotten about the website.

“expert,” “specialist,” “all-risk,” “always,” or

correspondence and emails. The mission

WISCONSIN INDEPENDENT AGENT

2. In another case, an agency developed a mission statement that appeared on its website as well as all outgoing

statement said, “We will obtain coverage to fully protect the financial stability and assets of our customers.” When a customer caused a serious car accident and had inadequate liability limits to fully compensate the injured party, the customer pointed to the agency’s mission statement to establish a heightened duty of care in procuring adequate coverage. The promise of the mission statement was problematic from a defense perspective, and the case was settled quickly as a result. The takeaway is to thoroughly review your website and other marketing materials asking: a Could any representations create unrealistic customer expectations? a Does the content make promises the agency may not be able to fulfill? a Does the agency inadvertently create a heightened standard of care through its written commitments? a Would you want your website statements blown up on a poster board as a trial exhibit? Recognizing that skill and experience makes our independent agents great in Wisconsin, keep in mind that statements on your agency’s website are not just advertising slogans - they could be used as evidence against you. In short, only make promises that you can deliver. Please feel free to contact me if you > Meggen Gagas would like additional (meggen@iiaw.com) is information on this the IIAW’s Director of topic.

Agency Services.

JULY 2016 | 25

COMMENTARY FROM COUNSEL

GIVEAWAYS, FREE CONTESTS AND…

ILLEGAL LOTTERIES?

From time to time, the legal services hotline receives questions from agencies seeking to run an online campaign, promotion, or sweepstakes in connection with their marketing efforts. Setting aside unfair inducement and rebating scenarios, and assuming a pure “chance” giveaway open to any person or business regardless of whether they buy insurance from the agency, it may seem innocuous to run a drawing or a lottery for a small prize, yet these scenarios can still present legal peril. Because the laws and rules governing promotional activities vary greatly from state to state (and even website to website, in the case of terms of use), you must proceed with caution. Here are some (non-exhaustive) considerations to keep in mind.

Website Terms and Conditions Many websites (including the most popular social media sites) have their own highly individualized (some might even say Draconian) rules and terms of use relating to online marketing and promotional activities. The risk of non-compliance with these terms of use is less legal than practical—if you really want to use social media to promote your agency or event, having the website’s owner shut down your promotion for violating their terms of use is not the path to success.

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One of the most popular social media sites, Facebook, has a series of terms and conditions that govern promotions held on the website or through apps connected to the site. Currently, Facebook requires that any promotions held on their website must include “[a] complete release of Facebook by each entrant or participant” and an “Acknowledgment that the promotion is in no way sponsored, endorsed or administered by, or associated with, Facebook.” The rules also require anyone who uses “Facebook to communicate or administer a promotion (ex: a contest or sweepstakes)” to be responsible “for the lawful operation of that promotion.” Facebook requires that anyone engaging in a promotion on their website to post “the official rules,” alongside “offer terms and eligibility requirements (ex: age and

residency restrictions).” The promotion must also comply with all “applicable rules and regulations governing the promotion and all prizes offered (ex: registration and obtaining necessary regulatory approvals).” Certain activities (such as the use of personal “timelines” and friend connections for promotional activities) are expressly prohibited. For example, Facebook forbids any promotion that encourages users to share a link on their timeline (or a friend’s timeline). Facebook’s web page containing the terms and conditions governing promotions can be found at: www.facebook.com/page_guidelines. php#promotionsguidelines. Facebook’s general rules, terms and policies can be accessed at: www.facebook.com/policies. This is just one example, but its complexity is a model for other online meeting places. WISCONSIN INDEPENDENT AGENT

COMMENTARY FROM COUNSEL State and Federal Law Most states have strict laws governing lotteries and other types of gambling that also apply to many promotional contests—even in situations where only a small amount of money (or value) is at issue, and even if the company or person hosting the promotion does not stand to reap a direct financial benefit. Wisconsin, for example, prohibits any activity that includes the three elements of prize, chance, and consideration. “Consideration” is defined much more broadly than just financial compensation. The Wisconsin Department of Administration has published a guide to illegal lotteries that describes consideration as “anything which is a financial or commercial advantage to the promoter or a disadvantage to any participant.” The Department’s Guide to Contests, Sweepstakes, and Sales Promotions can be found on the Department’s website-www. doa.state.wi.us. Wisconsin’s Bureau of Consumer Protection has also published a “Contests and promotions guide” available on its website at www.datcp.wi.gov.

noted a range of estimated values from zero to $214.81 per “like.” See Jim Edwards, What is a Facebook ‘Like’ Actually Worth in Dollars? (Mar. 27, 2013, 10:06 AM), www.businessinsider.com/what-is-a-facebook-likeactually-worth-in-dollars-2013-3. Finally, federal law (including advertising laws and regulations from the Federal Trade Commission) may also be implicated by promotional activities. Additionally, laws and regulations relating to the activity of minors online and some international laws may also apply to a promotion hosted online.

Conclusion

Due to the complexity of the issues surrounding lotteries and sweepstakes (and the risks associated with these activities), I strongly recommend that you seek individualized legal advice in connection with any promotional activity. Competent counsel can work with you to develop terms and conditions that ensure compliance with the various laws, rules, and regulations pertaining to promotions. Developing a set of terms and Most states have strict laws governing lotteries and other types of gambling that conditions in advance of any also apply to many promotional contests. Wisconsin, for example, prohibits any promotional activity that includes the three elements of prize, chance, and consideration. contest is also good business One might consider online promotions, using again the Facebook because it can help to ensure that example, where a participant need only “like” the page as providing consumers understand the rules of the > Josh Johanningmeier is the IIAW’s General no value—yet there are commentators and analysts willing to place a contest and their chances of winning Counsel. Call the Legal measure of pecuniary value on such “likes” and “shares.” One 2013 (and help to prevent unhappy would-be Services Hotline at (877) article, reviewing various analyses of the value of a Facebook “like” customers). 236-1669.

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JULY 2016 | 27

Doing The Right Thing Since 1964

James A. Roe

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Our people will earn your trust. Our service will keep it. We understand the needs of today’s independent agents, so we offer more than a diverse line of product offerings. We have personable experts who will work seamlessly with your team to meet the needs of your customers, where and when you need it. When you want service that exceeds your expectations, we’re ready.

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2016 PRELICENSING CLASS SCHEDULE Conducted at the State Association Headquarters, IIAW prelicensing classes fulfill the study requirements for life, health, property and casualty. Full course materials — not just an outline — are included with registration. The classes are: ! Designed to help you pass your state licensing examination. ! The quickest way to meet the WI education hours requirement. ! Taught by experienced insurance professionals who know the business. ! Conducted in a comfortable classroom with free parking. ! Approved by the Office of the Commissioner of Insurance.

2016 CLASS DATES

PRICING & CLASS D E S C R I P T I O N S

Life & Acc./Health

Property & Casualty

July 11-14

July 25-28

Aug. 8-11

Aug. 22-25

Sept. 12-15

Sept. 26-29

Oct. 3-6

Oct. 17-20

Oct. 31-Nov. 3

Nov. 14-17

Dec. 5-8

Dec. 12-15

To register, click the Education tab on IIAW.com. For WI exam info, visit prometric.com.

NON-MEMBER PRICING: $335 You may also take individual classes. Class descriptions and prices are below. Life & Accident/Health Day One (Monday) 8:30 a.m. - 4:00 p.m. ($80) SECTION A: Principles of Insurance & General WI Insurance Law Ethics Day Two (Tuesday) 8:30 a.m. - 4:00 p.m. ($85) SECTION B: Life Policies, Terms & Concepts Day Three (Wednesday a.m.) 8:30 - 11:30 a.m. ($42.50) SECTION B: Life Policies, cont. & WI Life Insurance Law Day Three (Wednesday p.m.) Noon - 4:00 p.m. ($42.50) SECTION B: Accident & Health Policies, Terms & Concepts

CLASS SITE/DIRECTIONS The IIAW is located at 725 John Nolen Dr. in Madison, WI. Take the Rimrock Rd. exit (north) off of Highway 12/18 (Beltline), turn right on to John Nolen Dr., then turn right immediately into the driveway. Located near the Alliant Energy Center.

Day Four (Thursday) 8:30 a.m. - 4:00 p.m. ($85) SECTION B: Accident & Health, cont. & WI Health Insurance Law

Property & Casualty Day One (Monday) 8:30 a.m. - 4:00 p.m. ($80) SECTION A: Principles of Insurance & General WI Insurance Law Ethics Day Two (Tuesday) 8:30 a.m. - 4:00 p.m. ($85) SECTION B: Property Policies, Terms & Concepts Day Three (Wednesday a.m.) 8:30 - 11:30 a.m. ($42.50) SECTION B: Property Policies, cont. & WI Property Insurance Law

INCLEMENT WEATHER If weather conditions are questionable, use your own judgment regarding your personal safety. However, any missed class time will have to be made up.

HOTEL INFORMATION Students requiring lodging will receive a special rate at the Clarion Suites, 2110 Rimrock Rd. in Madison. Please call the hotel directly at 608.284.1234 and ask for the independent insurance agent’s discount.

R EGISTER

IIAW MEMBER PRICING: $320 Member pricing given for full class registrations.

FOR

Day Three (Wednesday p.m.) Noon - 4:00 p.m. ($42.50) SECTION B: Casualty Policies, Terms & Concepts Day Four (Thursday) 8:30 a.m. - 4:00 p.m. ($85) SECTION B: Casualty Policies, cont. & WI Casualty Insurance Law ! Please contact Katie at Katie@IIAW.com for information about multiple registration discounts. The course fee includes all class materials. Materials are distributed on the first day of class. You receive: • The Life & Accident/Health or Prop. & Casualty Insurance Study Manual. • The Intermediary’s Guide to WI Insurance Law. • The State of WI Insurance Licensing Candidate Handbook. This provides all the necessary information to obtain a license.

C LASSES

IIAW. COM

FOOD FOR THOUGHT This is not the Ferrari that’s #3 on the list but it’s close. This car is the 1961 Ferrari 250 GT SWB California Spyder featured in Ferris Bueller. Only 56 of these were ever made and one recently sold at auction for $17 million.

BUICK REGALS ARE NICE, TOO Ferris Bueller’s Day Off was released 30 years ago as a summertime flick. It turned out to be a classic movie with many memorable scenes, including the one where Ferris hijacks his friend’s Dad’s 1961 Ferrari 250 GT California. In honor of Ferris, the summer and classic car shows, here are the 10 rarest cars in the world. 10. 1969 ZL1 Camaro – $1 million 9. Tucker ’48 – $1.2 million 8. Aston Martin Bulldog – $1.3 million 7. Mercedes 300SL Gullwing – $1.5 million 6. Talbot Lago Grand Sport – $2.5 million

2. 1921 Helica de Leyat – $20 million

5. Porsche 916 – $3 million

1. Rolls-Royce 15 hp – $35 million

4. 1954 Oldsmobile F-88 – $3.5 million 3. Ferrari 250 GT Spyder Convertible. Manufactured sometime between 1953 and 1956, there was only one convertible model ever made – $10 million

For the full article about these cars, go to goliath.com/auto/the-12-rarest-cars-in-theworld. Source: goliath.com & artofgears.com

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hqnienow@AAAwisconsin.com

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