March 2012 IIAW Magazine by Independent Insurance Agents of Wisconsin

wisconsin

independent agent MARCH 2012

WESTPORT INSURANCE: SUCCESSFULLY NAVIGATING YOUR E&O

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independent agent Open Door Policy Survey Says… . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 IIAW E&O Program: Personal Service Stands Out . . . . . . . . . . 6

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Commentary From Counsel Automatic Renewal Of Certain Business Contracts Limited By New Statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Member Profile Integrity Insurance: Redefining Partnership . . . . . . . . . . . . . . 16 News From ACT Social Media And Online Marketing: An Objective Look At What’s Going On . . . . . . . . . . . . . . . . . . 24 Government Affairs Investment In Government Affairs Produces Big Returns . . 29 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

MARCH 2012 Eric Schwartz, Editor On The Cover… The IIA of Wisconsin is proud to partner with Westport Insurance (and its parent company Swiss Re) to provide our members the best E&O program. They are strong, stable companies that offer excellent coverage. But one of the best features of the E&O program works right here in Madison. Mary Morrison is the E&O administrator for the Big “I” and she puts all of her focus on providing personal service. “People can reach me anytime with questions,” said Mary. Please turn to page 6 for more with Mary and our E&O program. On the back cover are photos from last year’s convention. Our annual convention is less than three months away and it’s going to be exciting. Join us on May 9 and 10! Register at iiaw.com.

> OUR ADVERTISERS AAA ................................................................ 34 ACUITY Insurance ........................................... 35

2011-2012 Executive Committee

2011-2012 Committee Chairs

President............................................................Mike Hierl P.O. Box 949, Fond du Lac, WI 54936-0949

Agency Operations................................. Sandra Hardrath P.O. Box 1030, Manitowoc, WI 54221-1030

AmTrust North America ...................................18

President-elect .............................................. Michael Froh P.O. Box 1320, Sheboygan, WI 53082-1320

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

Arthur J. Gallagher......................................... 27

Secretary-Treasurer ......................................David Dunker P.O. Box 443, Brookfield, WI 53008-0443

Employee Benefits............................................. Tim Bever 555 Main St. #320, Racine, WI 53403

Chairwoman of the Board ........................... Linda Steiner 555 Main St. #320, Racine, WI 53403

Finance & Compensation ............................ Dave Dunker P.O. Box 443, Brookfield, WI 53008-0443

State National Director ..................................Skip Hansen 100 North Corporate Drive #100, Brookfield, WI 53045

Government Affairs .....................................Tom Helbach P.O. Box 40, Mosinee, WI 54455-0040

2011-2012 Board of Directors

Industry Relations ..............................................Ted Haase P.O Box 6, Seymour, WI 54165

IIAW ................................................................. 15

Membership Development ................................. Jeff Thiel P.O. Box 1610, Waukesha, WI 53187-1610

IMT Insurance ................................................. 28

Smaller Agencies .................................... Michael Walston P.O. Box 236, Kewaunee, WI 54216-0236

Integrity Insurance ........................................ 22

Chris Costakis 251 Progress Way #300, Waunakee, WI 53597-2520 Thomas Holter P.O. Box 938, Beloit, WI 53512-0938 Lise Meyer Kobussen P.O. Box 633, Sauk City, WI 53583 Bruce Kommers P.O. Box 66, Antigo, WI 54409-0066 Jeff Rasmussen 525 Junction Road, Madison, WI 53717

Technical ......................................................Andy Burkart P.O. Box 1320, Sheboygan, WI 53081-1320 Young Agents .......................................... Derek Wickhem P.O. Box 1500, Janesville, WI 53547-1500

Badger Mutual ................................................ 32 Big “I” Professional Liability.......................... 33 Burns & Wilcox .................................................11 Erickson-Larsen ............................................... 6

JM Wilson ........................................................ 13 Pekin Insurance.............................................. 26 SECURA Insurance ............................................ 4 SFM .................................................................. 8

Frederick Thomas 330 East Kilbourn Avenue, Milwaukee, WI 53202

Society Insurance............................................. 7

Cap Wallrich P.O. Box 90, Shawano, WI 54166-0090

The Hanover .................................................... 14

Matthew Weimer 100 North Corporate Drive #100, Brookfield, WI 53045

West Bend ........................................................ 2

Donald Williams P.O. Box 595, Beaver Dam, WI 53916

Wilson Mutual .................................................. 31

MARCH 2012

WISCONSIN INDEPENDENT AGENT

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As I reviewed the results from the IIA of Wisconsin survey sent out last month, I began to draw similarities between the game show and the relationship between the Independent Insurance Agents of Wisconsin (IIAW) and the Professional Insurance Agents of Wisconsin (PIA). Both Associations sent out surveys to their members to gauge their opinions while hoping to have been responsive to the predicted results or needs. In fact, we are two very similar “families,“ occasionally competing with one another over the same objective: to assist and support independent insurance agents in Wisconsin. But I’ll get to that a bit later. First, back to the survey. The survey’s purpose was to gain feedback regarding the benefits and services that are valued by our membership. This survey allows us to conduct an internal audit of what is — or isn’t — working. My philosophy is to learn from the past while focusing on new creative and innovative ways to revitalize this organization as the Association of the future. I greatly appreciate the feedback we received from our members. It will improve the job we are doing. When survey participants were asked to share which benefits they valued most, responses frequently mentioned the Action News, Wisconsin Independent Agent magazine, the annual convention, Best Practices, HR Toolkit, government affairs, and client newsletters. The vast majority said we were doing a good job. Recommendations centered on providing more educational opportunities at different locations and merging with the PIA. During the past few years as the economy, industry and agencies have all been challenged, a consensus among IIAW leadership has emerged that even a 100-year old plus association can be challenged, too. But it’s during these challenging times where creativity and opportunity will thrive. The reality for us at the Association is that, for a long time, we were able to rely on ancillary income to provide many member services below a break-even threshold. This market and continual pressures on both companies and agencies are forcing them and the Association

MARCH 2012

families against one another in a contest to name the most popular responses to survey questions posed to 100 people.

to reprioritize and revolutionize the services we offer. Our balance sheets and reserves remain extremely healthy, but we must live within our means. The essential member benefits the IIAW provides — advocacy, education, networking opportunities, counsel and information — will never go away. The challenge lies in doing more with less. We feel that we can excel in doing this without affecting the vital services as defined by the membership and the survey.

As the new executive vice president of the Association I have a great deal of respect and admiration for the membership and leadership of the IIAW and PIA. Regardless, both associations have storied histories that help create the competitiveness that exists today. Is it necessary? Is it healthy? Without question, the IIAW is one of the most respected state associations in the country. We have some of the best talent, both on staff and working as volunteers. We offer some incredible services for our members, but so does the PIA. Let’s be honest, both associations have their strengths and weaknesses and that’s why many choose to be a member of each organization. Will the dawn of a new era in leadership create an opportunity that didn’t previously exist? As the IIAW looks to the future and develops new services to be responsive to the needs of our members we continue to hear, why two associations? Can there be one, merged association? Has such a discussion taken place? I understand and respect both sides of the argument for and against, but these are questions that at the very least deserve a

WISCONSIN INDEPENDENT AGENT

conversation. Such conversations have yielded positive results in other states. We need to do more to ensure our industry presents a unified front and collaborates where appropriate. Few industries and ours is one of them are under constant pressure from regulators and legislators, not to mention market and economic forces. I fear that the two associations will spend more time worrying about what each other is doing rather than focusing on how we can be more helpful to our members. To be fair, a certain level of competition does push each association to stay on their toes. But why duplicate expensive efforts and resources? I hope no one misconstrues my comments as putting the horse before the cart, but I felt it was important to broach the subject and create the opportunity for discussion. The questions and comments surrounding the subject have been intensifying recently. I do not profess to have all the answers to inquiries and circumstances surrounding every issue. I believe it’s important to surround yourself with talented individuals possessing a variety of knowledge and skillsets. Thankfully, this industry has no shortage of such individuals. Like most, I’ve made my fair share of enemies and mistakes; however, I do my best to learn from them. The course that has been plotted will change toward promoting greater collaboration with the PIA. Regardless of the result, our collective actions should be in the best interest of independent insurance agents. Any level of cooperation is sure to be beneficial. Maybe it’s my naiveté, but it’s time to call this game of Family Feud a draw. It’s healthy to have constructive conversations about the future of our > Matt Banaszynski is the industry and its Executive Vice President associations. of the Independent My door is always Insurance Agents of open and so is Wisconsin. Contact him my mind. at matt@iiaw.com.

I I AW E R RO R S & O M I SS I O N S P RO G RA M : P E R S O N A L S E RV I C E STA N D S O U T In 1861, more than 500 homes in Glarus, left homeless. With Glarus essentially Switzerland caught fire and burned to destroyed, residents realized that their the ground. About 3,000 people were insurance coverage was poor.

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programs in the country. The IIABA convenes a committee of independent insurance agents to discuss rates, policy and industry changes that could effect E&O insurance. This committee of member peers paved the way for the added coverage for breach of data. Itâ&#x20AC;&#x2122;s a state-of-the-art policy that is a sign of the times. â&#x20AC;&#x153;The policy came about because agencies and agents began marketing more through Web portals,â&#x20AC;? said Mary. â&#x20AC;&#x153;It was a new concern. As technology changes, the E&O policy has to change.â&#x20AC;? Another big part of the Associationâ&#x20AC;&#x2122;s E &O success is the partnership with Westport Insurance, specifically Ron Kettner and Sabrena Sally. Ron is vice president and senior underwriter at Swiss Re/Westport; Sabrena is a senior vice president. â&#x20AC;&#x153;I have great communication with them,â&#x20AC;? said Mary. â&#x20AC;&#x153;It helps to have a direct pipeline to Ron if anything comes up. Heâ&#x20AC;&#x2122;s handled Wisconsinâ&#x20AC;&#x2122;s E&O as an underwriter for 10 years and knows the insurance climate here. We have quarterly conference calls to discuss policy.â&#x20AC;?

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By 1863, the Swiss Reinsurance Company of the available coverages are in place,â&#x20AC;? said Mary. Zurich was founded. Today, Swiss Re is one of â&#x20AC;&#x153;It doesnâ&#x20AC;&#x2122;t matter what the size of the agency the largest reinsurers in the world with over $25 is. I spend as much time on smaller agencies billion in revenues, an A+ (Superior) rating from as I do on larger agencies. We care about what A.M. Best, and a history of staying ahead of risk happens to our members and want them to feel trends. The companyâ&#x20AC;&#x2122;s affiliation with Westport good about their experience.â&#x20AC;? Insurance Corporation lends underwriting expertise and the best E&O coverage in the industry. Solid underwriting and financial strength are great assets when it comes to E&O insurance, but independent agents in Wisconsin may appreciate something more down-to-Earth â&#x20AC;&#x201D; personal service and the ability to talk with someone locally. â&#x20AC;&#x153;People can reach me anytime with questions,â&#x20AC;? said Mary Morrison, the IIA of Wisconsinâ&#x20AC;&#x2122;s E&O Administrator and a licensed agent. Mary works at the IIAW state offices in Madison and is here every day. â&#x20AC;&#x153;Thatâ&#x20AC;&#x2122;s where we really stand The IIAW E&O team: Mary Morrison (left), E&O administrator, out. Other carriers have to call an and Tammy Wenzel, E&O specialist. underwriter in another part of the country. I can give personal service.â&#x20AC;? With 29 years of experience and her This attention to detail and care has paid dedication to customer service, Mary has off with loyal customers. â&#x20AC;&#x153;We have one of become friends with many policyholders. Mary the highest retention rates in the country,â&#x20AC;? values those relationships and pushes herself to said Mary. meet the policyholdersâ&#x20AC;&#x2122; expectations. Further, the Independent Insurance Agents â&#x20AC;&#x153;Every new piece of business is valued and & Brokers of America (IIABA)/Westport E&O reviewed to make sure the pricing is fair and all program is one of the only nationally endorsed

For more information about the specifics of the IIAWâ&#x20AC;&#x2122;s errors and omissions program, supplemental documents, and answers to basic questions, please go to www.iiaw.com, click Membership and then E&O Insurance. You can also call Mary at (800) 362-7441 or e-mail her at mary@iiaw.com.

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MARCH 2012

WISCONSIN INDEPENDENT AGENT

COMMENTARY FROM COUNSEL

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AUTOMATIC RENEWAL OF CERTAIN BUSINESS CONTRACTS LIMITED BY NEW STATUTE A new Wisconsin law is now in effect which impacts the enforceability of automatic renewal provisions in business contracts. This new law was lobbied for and enacted at the behest of small business trade associations, representing complaints of small business owners who did not like the circumstances under which their business equipment or service contracts were automatically renewed.

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Under the new law — Section 134.49 of the Wisconsin Statutes — certain business service providers and business equipment lessors (collectively defined by the statute as Sellers) must provide initial disclosures and reminder notices to certain service recipients or lessees (Customers) at specified times in order to preserve the enforceability of an automatic renewal provision in a contract with the Customer for: (1) the lease of business equipment, if any of the business equipment is used primarily in Wisconsin; or (2) the provision of business services (a “Business Contract”). Unless an exception is available (and there are many), a Seller’s failure to comply with the disclosure and notice requirements in §134.49 will render an automatic renewal provision in a Business Contract unenforceable and may subject a Seller attempting to enforce such a provision to liability for damages. Sellers and Customers both must understand the requirements and effects of the new law. Sellers — including, in many situations, those providing equipment and services to IIAW members — will likely be aware of the requirements of §134.49 and will amend their agreements with you to comply with the new law to ensure the enforceability of their automatic renewal provisions in Business Contracts. On the other hand, agencies as Customers should be aware of the requirements of §134.49 in the event they can use the new law as a means to terminate a Business Contract that has automatically renewed against their wishes and no longer meets their expectations or needs. This article briefly summarizes the important notice provisions in the new law, which could impact

IIAW members’ contracts with service providers ranging from lawn care and snow removal, to office equipment, to site security. Indeed, just as there are myriad exceptions in the statute, one could come up with numerous examples of contracts where it may impact your agency.

Initial Disclosure of Automatic Renewal Provisions The Seller must provide the initial disclosure to the Customer at the time the parties enter into or modify a Business Contract. The initial disclosure requirement may be satisfied in either of two ways: (1) included in the contract itself; or (2) presented in a separate form. By either method, the disclosure must contain certain information pertaining to the renewal of the Business Contract, including a statement that the Business Contract will automatically renew unless the Customer declines renewal and the date of the deadline for the Customer to decline renewal. Also, by

THE NEW LAW ALSO REQUIRES A REMINDER NOTICE TO BE SENT BEFORE THE DEADLINE TO DECLINE AUTOMATIC RENEWAL OF A BUSINESS CONTRACT.

either method, the Customer must sign where the disclosure is provided (i.e., if the initial disclosure is included in the Business Contract, the Customer must sign the page on which the initial disclosure appears; if the initial disclosure is included on a separate form, the Customer must execute that form and the Seller must retain a copy). Be aware — the initial disclosure requirement does not apply to Business Contracts entered into or modified prior to May 1, 2011, or subsequent renewals of such contracts.

Reminder Notice of Approaching Deadline to Decline Automatic Renewal The new law also requires a reminder notice to be sent before the deadline to decline automatic renewal of a Business Contract. Note: Unlike the requirement to provide the initial disclosure, this requirement does apply to Business Contracts entered into or modified prior to May 1, 2011, and subsequent renewals of such contracts. The reminder notice must be provided to the Customer at least fifteen days prior, but no more than sixty days prior, to the deadline for the Customer to decline renewal of the Business Contract, and must contain much of the same information > Josh Johanningmeier provided in the initial is the IIAW’s General disclosure. Counsel. Call the Legal CONTINUED ON NEXT PAGE

Services Hotline at (877) 236-1669.

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MARCH 2012

WISCONSIN INDEPENDENT AGENT

M E E T I N G AT T H E S TAT E O F F I C E

On Feb. 7, Jack Costello and George Hogan of Travelers Insurance visited our state offices for a meeting with IIA of Wisconsin staff and OCI officials. From left: Jack Costello, regional president of Travelers Insurance; Matt Banaszynski, IIA of Wisconsin Executive Vice President; and Ted Nickel, Wisconsin’s Commissioner of Insurance. Not pictured: George Hogan, Travelers’ Regional Director of Field Management.

AUTOMATIC RENEWAL OF CERTAIN BUSINESS CONTRACTS LIMITED BY NEW STATUTE CONTINUED FROM PREVIOUS PAGE

Right to Match Provisions Void Under the New Statute Section 134.49 also voids a provision in a Business Contract entered into, modified or renewed after May 1, 2011, that requires the Customer to permit the Seller to match any offer the Customer receives from or makes to another Seller for services to be provided after the end of the stated term or renewal period of the Business Contract.

Consequences for Non-Compliance A Seller’s failure to comply with the requirements of §134.49 will render an

automatic renewal provision in a Business Contract with a Customer unenforceable. If that happens, the Business Contract will terminate at the end of the then-current contract term, and the Seller will need to secure a new agreement with the Customer. Additionally, a Seller may be liable to a Customer for damages and court costs if the Seller attempts to enforce an automatic renewal provision that has been rendered unenforceable due to the Seller’s failure to comply with the statute.

WISCONSIN INDEPENDENT AGENT

Conclusion Section 134.49 is a complex new law and determining whether it applies to your company’s agreements with suppliers of equipment and services requires careful analysis. As always, you should consult with your legal counsel on its applicability to and impact on your existing or prospective contracts.

MARCH 2012

AVOIDING SOCIAL MEDIA TRAPS:

EXPERTS GIVE ADVICE

Social media is a tool that can benefit your agency or company. Here are words of wisdom from some industry insiders to avoid the pitfalls of social media.

> David Hulcher, assistant vice president of agency errors and omissions riskmanagement, Big “I” Advantage division

Create a social Web policy for agency employees so that they know when to take a discussion offline and put the customer into the normal flow of business procedures. When the conversation starts to be about the individual situation of a prospect, “we recommend to agencies that they establish up-front some communications guidelines,” Hulcher said. “You don’t want customers starting to give their personally identifiable information over social media.” As soon as the conversation gets specific, the agent must also preserve the content of the discussion in the agency management system, he added. Ensure that your social media site includes a disclaimer so that your customers understand up-front how the site can be used. And it is also important to ensure that personally identifiable information is not included in the social media communications, Hulcher said.

It is important to ensure that personally identifiable information is not included in social media communications.

> Sabrena Sally, senior vice president, Westport Insurance Corp.

> Jeff Yates, executive director of the Agent’s Council for Technology (ACT), Independent Insurance Agents & Brokers of America.

Read and understand the rules of

Make sure employees are trained.

each social media site. User agreements are standard on social networking sites, said Sabrena Sally, and they usually contain lengthy legal terminology. “Agencies would be wise to designate one or just a few key individuals to select media sites with which the agency can interact,” she said. “With that approach, an agency could be very proactive and, for example, pull down copies of the usage agreements and have them reviewed by a qualified counsel.”

According to the ACT Website, major E&O risks from use of social media include incorrect advice; misrepresentation of policy terms; referrals without permission from the referred party; business defamation; trade libel; advertising liability; and posting private consumer information on the Web.

A key part of an agency’s social media policy should deal with whether agents can refer to the agency in their own social media activities. Sometimes agency employees may use the agency name, logo or other advertising material on their personal sites or provide a link to the agency site. Sally advised that agencies should address to what extent employees have permission to do these things. “We see often that an agency designates a few key individuals to represent it in the social media context,” she said.

Know where you’re licensed and make sure that you’re well aware of what the regulations are regarding advertising in those states, she said. For example, Sally noted, New York specifically mentions electronic communications in its directive that talks about agency advertising. An agency considering the use of social media policy should do so in a structured way. “It needs to be a very strategic, wellfunded approach that’s integrated into the agency — not only in marketing and advertising, but also into the agency’s standard procedures,” she said.

WISCONSIN INDEPENDENT AGENT

Make sure employees use the “social Web code of conduct.” Yates said the code encourages employees to speak in the first person; to be one’s self; to be thoughtful and respectful of others; to listen and build relationships; and to avoid the hard sell. “Be aware of the culture of each social media site,” he said. “It’s the same as an agent talking about things at a Rotary Club meeting. Be professional and judicious in what you say.”

each agency designate a person to whom employees could refer unflattering online postings. “It might be the agency principal, who would think through what the strategy might be,” he said.

Regarding how to respond, Yates said agencies should think of turning a negative into a positive by working with the individual to solve the problem. “We’ve had quite a bit of experience with agencies with social media, and we have not seen a lot of trashing of agencies,” he said. “Basically, they do a good job; that’s why it doesn’t happen.” Responding well to criticism is a good way to show the professionalism of an agency, and to show customers that there are many considerations in purchasing insurance — that it’s not just a commodity where price is everything, Yates said. This is an excerpt from a recent article in Best’s Review written by Ron Panko, senior associate editor at A.M. Best Company.

COMMITMENT A PROMISE WE DON’T TAKE LIGHTLY

Comply with all statutory and regulatory guidelines regarding advertising liability. Each agency should have a process in place to review marketing materials, whether for use in traditional venues or social media. “The key point is that agencies need to know that pages or blogs on social media could be considered an advertisement under their states’ advertising laws,” Yates said. “In some states, agents have to display their licenses in ads that show where they are authorized to write business.”

Have a procedure for responding to criticism that gets posted on blogs or in chat rooms or forums. Yates said the ability for aggrieved customers to complain in this manner “is one of the greatest developments” of social media. “You’ve seen that play out with the banks, when customers got them to back down on charging fees for using debit cards,” he said. Yates suggested that MARCH 2012

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The three rings symbolize Integrity, the agent and the policyholder. They vary in width to represent the changing needs of each party. Each ring is continuous and interlocked, forming an essential interdependent relationship. In addition, the three rings symbolize Integrity’s unwavering commitment to service, trust and relationships.

Redefining Partnership By Eric Schwartz

independent agency/carrier partnerships through the depth, strength of commitment, innovation and return on investment of our relationships.”

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An example of this is the formalization of their consultative business model. Integrity works to find key drivers inside an agency, then jointly plans a localized strategy around opportunities and proactively addresses any challenges. This consultative approach has generated great value for agencies and been the catalyst for shared success in meeting objectives.

The Appletonbased insurance company has prospered for nearly 80 years. In 1933, when Integrity was founded, they had 200 policyholders, mostly farmers. Today, Integrity is a leading regional carrier serving 80,000 policyholders across three Midwestern states, Wisconsin, Iowa and Minnesota. The world has evolved and Integrity has grown strategically along with it.

At the core of the company’s strategy is its brand. In Sept. 2010, the company unveiled a rebranding strategy that fused the

Integrity’s senior management team, from left: Jill Stache, Vice President – Commercial Lines; Julie Walker, Vice President – Strategic Planning; Joseph DiMartino, President and CEO; Brad Kelly, Vice President – Sales & Marketing; Cindy Heindel, Vice President – Human Resources/Administration; Donya Wilson, Vice President – Personal Lines; and Christian Martin, Vice President – Claims.

They are uniquely capable of owning this market position through their regional focus as an independent company with the advantages realized from an affiliation with Grange Mutual Casualty Company. In April, Integrity and Grange will celebrate 10 years together as business partners. “Our brand is driven by our stable Midwestern legacy, professional warmth

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company’s entrenched security and financial strength with a clear vision for the future. Integrity’s brand continues to define their approach in the marketplace, as they differentiate their business model with respect to service, trust and relationships – the core of their brand.

and for being consumer oriented,” said Joe DiMartino, president and CEO. “In addition, we are a highly automated company that uses technology to enhance our customers’ and agents’ experience.” Technology is a great resource that can be leveraged; however, agent and

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Further, Integrity redefines partnership through their Partner of Choice Service Standards. These standards clearly outline the aggressive expectations they have on themselves with regard to the agent and policyholder experience. Measurement of performance takes place to ensure the company is meeting its own high expectations and standards.

It’s a responsibility that Integrity takes seriously. policyholder relationships are foundation of Integrity’s success. “We have all of the tools to interact with customers via the channel they prefer, but at the end of the day, it is all about listening to our agents and policyholders and doing what we say we are going to do,” said Brad Kelly, Integrity’s Vice President of Sales and Marketing. “Our Voice of the Customer program constantly gathers feedback from our policyholders and agents about Integrity’s service, gauges loyalty, and then we use that information to improve our performance. We are a company that listens to our agents and responds.”

Redefining Partnership Part of Integrity’s success involves constantly moving the bar higher internally and externally. For 2012, the company’s strategic initiatives focused on redefining partnership in the marketplace. “We work to be a partner of choice for our agents,” said DiMartino. “At Integrity, we are focused on redefining partnership. We view this as setting the industry standard for

MARCH 2012

“Agents say that we hold ourselves accountable,” said DiMartino. “As a mutual company, decision makers get the necessary information and analyze all factors including policyholder and agent dynamics — we look

beyond just the company perspective. There has been a keen focus placed on accountability for the past several years and customer accountability will remain our focus.” Integrity Insurance, rated A (Excellent) by A.M. Best, is located at 2121 East Capitol Drive in Appleton. The company partners with nearly 2,900 independent agents at more than 600 agency locations. Over 70,000 policyholders trust Integrity with their business. Integrity is an exclusive company sponsor of the Independent Insurance Agents of Wisconsin. Find them on Web at www.integrityinsurance.com

INTEGRITY INSURANCE MILESTONES "1965 — Integrity announces a “Boat Bonus,” which ran from April through September. For every new boat policy written, Integrity gave the agent a $2 bill.

"Oct. 3, 1933 — Franklin C. Jesse, Sr. opens Integrity Mutual Insurance Company on the 4th floor of the Irving Zuelke Building, 103 West College Ave. in Appleton. About a month later, Wilbert Spanagel joined as a field representative out of Eau Claire. The new fire and allied lines company formed with $10,800 in assets and 200 policyholders, mostly farmers.

"Late 1940s — Integrity offers auto and casualty insurance for the first time. The company has grown to 16 employees with $233,781 in written premium.

"1959 — Forty-five agents represent Integrity in Minnesota. The company has 49 employees and is growing fast. Written premium totals $1,475,443.

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"Dec. 19, 2001 — Integrity signs affiliation agreement with Grange Mutual Casualty Company. Premium tops $50 million.

"March 2005 — Gerry Relien, Integrity’s longest tenured employee, retires after 45 years of service. In 1960, her wage was $1.19 an hour.

"1977 — Franklin C. Jesse, Sr. retires from Integrity as chairman of the board, a position he held for five years. Franklin spent 44 years with Integrity.

"2008 — Affiliation with Grange Mutual grows to a $1 billion venture.

"1984 — The company installs an IBM Mainframe, along with the first stand-alone computer in the company’s history. At that time, only a handful of associates had access to DOSbased terminals.

"April 1991 — New home office (and current home) opens at 2121 East Capitol Dr. in Appleton. The building received the 1992 Honor Award from Wisconsin Society of Architects. The company employs 110 professionals.

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"May 2010 — Joe DiMartino named president of Integrity Insurance; he was named CEO in March 2011. The company insures 73,000 policyholders with direct written premium exceeding $106 million.

"2012 — Integrity continues its support of the local United Way, the American Cancer Society, The Boy Scouts of America, the community blood center and local food pantries. Employees have given more than $600,000 since 1998.

N E W H O M E O F F I C E F O R S C H WA R Z I N S U R A N C E

Schwarz Insurance’s home office has been located at 350 Prairie St. in Prairie du Sac since 1969. The agency’s future home is under construction

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in the North Ridge Business Park, about 1-mile northwest from the current office. The building in the background is the corporate home of Culver’s.

FROM THE ARCHIVES

Insure them accordingly with AmTrust. Think AmTrust for all your small business insurance needs. We offer workers’ compensation and commercial package products in a variety of classifications, including specialty niche segments such as: Fine Dining | Lumber Specialty | Auto Service Plus | Businessowners Policies Back in 1957 and ‘58, when the Milwaukee Braves and the New York Yankees slugged it out for the World Series crown, the IIA of Wisconsin partnered with the Braves to display the world’s largest insurance policy to guarantee a Braves victory. The long sheet of paper on the policy is an endorsement by Association members from all across the state. It was driven everywhere to be endorsed by agents and then presented to the Braves. From left at Milwaukee County Stadium in September 1958: Charlie Grimm, Braves manager; Paul Mast (center), IIAW Executive Vice President (and Bob Jartz’s predecessor); and IIAW President Art Moss of Beloit. The Braves beat the Yankees in 1957 to win Milwaukee’s only title; the Bronx Bombers turned the tables in 1958.

For more information about how you can write business with AmTrust, please call 877.528.7878 or visit www.amtrustnorthamerica.com. * Not all products available in all states

Your Success is Our Policy.SM

MARCH 2012

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B U Y I N G, S E L L I N G, A N D M E RG I N G A N AG E N CY: W H AT S H O U L D YO U D O? merger or acquisition (check your policy for verification of the time limits.) Failure to notify your carrier in a timely manner could result in a gap in coverage. Let‘s go through the steps you should follow when you make a life and business changing decision regarding your agency.

Two of the biggest decisions of your insurance career are the following: 1. You decide to sell the agency you‘ve worked hard to create. 2. You decide to buy an agency that someone else worked hard to create. You‘ve met with the owners of the agency. You‘ve looked at the book of business and agreed on a price. Hopefully, you‘ve contacted your attorney to help you draft the buy/sell agreement. Then, just a few short days away from closing the deal, someone asks: “What about the E&O coverage? Who‘s doing what? Are you going to pick up the prior acts or am I? Can we just transfer the E&O policy to the new owners? What kind of losses have you had?” All of these questions should be asked at the beginning of the talks regarding the sale/purchase, but unfortunately, they usually aren‘t discussed until the last minute and they can have a big impact on the deal. Think about this: when you buy a new car or are selling your current one, one of the first things you should do is contact your insurance provider. It‘s no different when you are buying or selling an insurance agency. It also applies when you are only buying or selling a book of business. In most, if not all cases, your E&O policy states that you must notify your E&O provider within 90 days of a

Buying An Agency You‘ve been talking with a fellow agent about buying his or her agency for some time and now you‘ve both decided that the time is right. There are many details to consider. First, do your due diligence and review the other agency’s operations, book of business, finances, and E&O policy. At this point it is advisable to retain an attorney to help you through the process. Remember, an attorney can only represent one party, not both. You and the seller should each seek separate counsel. It is a good idea to have a confidentiality agreement with the seller so that you can freely review all of the documents necessary to begin the change of ownership. After you have completed your due diligence and you and the seller are comfortable with all aspects of the agency, have an attorney draft the buy/ sell agreement. Included will be such things as the timing of the sale, the assets to be transferred, the price, and of particular importance, who is responsible for the liabilities of the selling agency. The cleanest way to do this is for each party to retain their own liabilities. In regard to the seller‘s E&O policy, they will purchase tail coverage and the buyer will add the new agency‘s book of business to their current E&O policy. The reason this is the cleanest way to make the change is because the seller will

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have the peace of mind of knowing that, should a claim arise after the sale for acts while they owned the agency, their E&O policy will provide coverage for them. For the buyer, they know that they will not be responsible for any acts that may have occurred prior to the purchase of the agency. This is true whether or not the selling agency will continue as a separate entity or location for the buying agency. In most cases, even if the buyer maintains the new agency as a separate entity or location, it can be included on their current E&O policy for errors and omissions that are made after the sale. Another option, while not the best way to transfer ownership, is for the purchasing agency to agree to accept responsibility for prior acts. This is accomplished by adding the selling agency to the buying agency‘s E&O policy. However, please remember that the E&O carrier must approve this before the sale is completed. It is imperative that you contact your E&O agent as soon as you begin the buy/sell process. You will be required to provide a loss history of the seller, and the carrier may require an application providing information about the mix of business, gross annual premium, commissions, staff, etc. In some cases, the carrier may not agree to provide prior acts due to claims history, nature of the book of business, etc. In that case, the seller should purchase tail coverage from their current E&O carrier. One thing to keep in mind is that the cost of tail coverage or additional premium expense, if the buyer provides the prior acts, can and should be considered in determining the sale price of the agency.

Selling An Agency As a seller of an agency, you may feel that it’s important to maintain your agency’s legacy. If this is important to you, be sure to discuss this with your attorney so that it is properly addressed in the agreement. If you have valued employees that you

MARCH 2012

wish to provide for, you should include how they will be taken care of in the agreement. This may be a source of negotiation as the seller may not wish to add any permanent staff, so make sure this is brought up in your discussions with the buyer. An important aspect that was mentioned previously is protection for you if a claim should arise after the sale. As stated before, the best way to ensure this is to purchase tail coverage from your current E&O carrier. While you may not want to add the expense of tail coverage and you believe you are protected because of your agreement with the buyer that they will provide coverage for prior acts and will maintain an E&O policy, you have no guarantees that it will be done. It is not unheard of after an agency sale for the buying agency to either go out of business, sell their agency to another party who will not agree to provide prior acts, or have their E&O policy terminate either voluntarily or involuntarily. In each of these cases you could be left without coverage. Another thing to consider should your agency be added as an additional insured on the buyer’s policy is that any claims, whether they are for your agency or the buyer’s agency, will be subject to the policy limit of the buyer’s policy, regardless of whether there are multiple claims as a result of either agency. In other words, are you comfortable that the policy limits of the buyer’s E&O policy are sufficient to cover both parties’ claims? Also, it should be made clear who is responsible for any deductible payment.

Mergers If you are merging with another agency to either form a new agency or be a continuation of one of the two, there are a couple of different ways to handle this in regard to your E&O coverage. One way is to have a new E&O policy for the newly created entity. This ensures a clean slate for all involved. If a new policy is created, each of the former agencies can purchase tail coverage or they can be added as additional insureds on the new entity policy. Again, keep in mind that any claims will be subject to the

MARCH 2012

limits of the remaining policy and remember that this must be approved by the E&O provider prior to the completion of the agreement to ensure that the carrier can comply with your wishes. Another way to handle a merger is to terminate one policy and have that agency added as an additional insured to the policy of the “surviving” agency. The agency that is terminating their policy can either purchase tail coverage or be added as an additional insured upon approval by the E&O provider.

Internal Sale Many times an owner has a key agency employee who they believe is qualified to take over the agency. Everything that has been stated before applies just the same in these situations. There should due diligence by both parties, attorneys should be retained, agreements drafted and entered into, and all other aspects of the change of ownership should be carefully contemplated and resolved.

intend and that there are no gaps in coverage. 3. Giving timely notice to your E&O provider is of utmost importance as many carriers may be unable to comply with your intent after the transaction has already been completed. You spent your professional insurance career building a business that has provided you with a livelihood and personal fulfillment. If you are either growing or selling your agency, you want the peace of mind of knowing that you have adequately protected yourself.

> Ronald S. Kettner is a vice president and senior

underwriter at Swiss Re/Westport. He has over 30 years experience in the insurance industry, underwriting personal and commercial lines insurance as well as professional liability insurance during his career.

> Richard F. Lund is an attorney and vice president

and senior underwriter at Swiss Transferring A Re/Westport. He has also been an Book Of Business agents’ E&O claims counsel and has Remember, if all written and presented numerous you are doing E&O risk management/loss control is transferring a seminars, mock trials, and articles It is advisable nationwide since 1992. book of business, to retain an either as a buyer or a seller, all attorney to help of the things you through the mentioned Note: This article is intended for previously apply. general information purposes only process. While you might and is not to be relied upon or used think that a for any particular purpose. Swiss Re transfer of a small shall not be held responsible in any book of business way for, and specifically disclaims should be simple, any liability arising out of or in any as soon as a claim is made it can become very way connected to, reliance on or use of any of the complicated. information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not Key points to remember: be considered legal, accounting or professional 1. Consult your attorney and have a formal advice, nor shall it serve as a substitute for written agreement outlining the duties and the recipient obtaining such advice. The views responsibilities of all of the parties. expressed in this article do not necessarily represent the views of the Swiss Re Group (“Swiss 2. Contact your E&O provider as soon as you can Re”) and/or its subsidiaries and/or management to ensure that coverage can be provided as you and/or shareholders.

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VA LU E BAS E D B E N E F I T D E S I G N : A N OV E RV I E W, PA RT 1 Everyone is familiar with the term, “killing gnats with a sledgehammer.” It’s a metaphor for using an excessive amount of force to fix a problem that would otherwise require a smaller and usually much simpler solution. With all of the many changes occurring in the employee benefits landscape today, it can be said that both brokers and employers have used the same approach to manage health care costs for the past 30 years. The sledgehammer has become the tool of choice. By way of example, the sledgehammer is analogous to the large-scale plan or contribution changes that employers have initiated to gain some stability in their health care plan costs. Copayments, deductibles, out-of-pocket maximums, as well as increases in monthly contributions, spousal waivers and dependent eligibility audits have all been tactics to balance the increasing cost of medical benefits with the employers’ and employees’ ability to pay. These methods are understandable in that up until recently, the alternative methods of impacting health care costs and utilization (the number of services consumed) were both limited and (it could be argued) only marginally impactful. For example, the early days of “wellness programs” amounted to plastering a poster in the employee lunchroom about the value of maintaining “good health” — often without defining what constituted “good health.” Technology has now changed all that! Twenty years ago, we had cell phones that were the size of a small suitcase. Now we have cell phones

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Value Based Benefit Design — The concept that services or providers that have great value should cost less than services or providers with minimal value.

that resemble something out of a sci fi novel with their ability to capture images and voice anywhere in the world in real time. As the cell

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phone has evolved, so too have the tools and resources to manage health care costs. We can do away with the sledgehammer! Starting in the 1990s, researchers at the University of Michigan’s Health Management Research Center began to examine the various tools, techniques and resources available to impact plan participant behavior. The broad theory being that if they could find a way to make health care plan participants more engaged and rewarded for healthy lifestyles and behaviors, this would yield better results in the short and long run. No one needs to review how health care costs have escalated. We have all seen the numbers, trends and forecasts. Similarly, we all know of the 80/20 rule in health care. No, it does not reference a coinsurance percentage, but rather the fact that 20 percent of the plan participants cause 80 percent of the health care costs. “The trouble is, by the time you identify that 20 percent, the people have changed and the next 20 percent are knocking at the door,” said Dee Eddington, PhD, a researcher at the Health Management Research Center. “The solution is to get out in front of the cost curve.” What has evolved from the years of research at the University of Michigan is a new approach to benefit plan design called Value Based Benefit Design (VBBD). Value Based Benefit Design introduces the concept of “value” into an employee benefit program in that those services or providers that are of great value should cost less than those services or providers whose value is minimal. As an equation it would look like this:

Value = Quality/Cost Therefore, to increase value, one has to either increase the numerator and/or decrease the denominator. If all of this is sounding a bit too theoretical, let’s examine a practical example and application of VBBD. As was mentioned earlier, the sledgehammer approach held that a way to manage costs

WISCONSIN INDEPENDENT AGENT

is to increase co-payments. For example, to balance the increasing cost of prescription drugs the sledgehammer would be used to raise copayments for all drugs. Seems nice and clean and what we have been doing for some time. But what are the byproducts of increasing all prescription drug copayments? The answer is that for many patients, as the cost of the drug is increased, the consumption/compliance/ adherence rate declines. No surprise here! Simple economics! As the price of a good or service is increased, people demand less of that same good service, or they look for alternatives. Regrettably, for those plan participants with chronic conditions, those that choose to consume “less,” often in the long run incur costs that are greater than the cost would have been to keep them compliant and adherent to their medication. Two examples are statins, which lower cholesterol, and ACE inhibitors and beta blockers that lower blood pressure. Both elevated cholesterol and elevated blood pressure are two of the major contributing factors to heart disease and stroke. Therefore, does it not make sense to lower the cost of > Arvid R. “Dick” Tillmar these prescription is the owner of Tillmar drugs to $0 to Connect, a business increase compliance consulting firm. Tillmar has 45-years insurance (taking the drug industry experience. Prior as prescribed) to establishing Tillmar and adherence Connect in 2010, he was (remaining on the a shareholder, preventive health advocate, certified drug) as it relates workplace wellness to the cost to treat instructor and employee a cardiovascular benefits consultant with event? The “value” Diversified Insurance in this equation is Services in Brookfield. In 2009, Dick was named that statins, ACE the IIAW Agent of the inhibitors and beta Year. Contact him at blockers provide 414.690.2232 or tillmar@ CONTINUED ON PAGE 25

tillmarconnect.com.

NEWS FROM ACT

VA LU E BAS E D B E N E F I T D E S I G N CONTINUED FROM PAGE 23

SOCIAL MEDIA AND ONLINE MARKETING: AN OBJECTIVE LOOK AT WHAT AGENCIES ARE DOING IN THE ONLINE WORLD Often when I speak with an agency owner, COO or marketing manager about social media, I get asked about the results other agencies are seeing, in particular their return on investment (ROI). As a result of lacking good solid data to provide an answer, I decided to put together this survey to learn what industry people were doing in online marketing with social media.

I’m not making any recommendations in this report, just presenting the results for you to use as you see fit. With that being said, the following three findings were the most eyeopening to me: More than 60 percent of those of you who responded are not measuring the return on investment of your current marketing efforts. Close to half of respondents who are not using social media will start to do so within a year.

and local newspapers. Postcards are used by 39 percent of respondents.

with about half of the latter group taking steps to block access to social media sites.

Respondents’ most-used online marketing method, far and away, is their Website (96%). After that, in order, come Facebook, LinkedIn, and e-mail blasts.

Almost 50 percent of respondents who do not currently use social media plan to begin doing so within a year and two-thirds will do so eventually.

Across all agency sizes, respondents’ Facebook pages have an average of just over 200 Likes; the average Twitter account has 440 followers. Respondents in the $2.5MM-$5MM and $5MM$10MM revenue ranges are the most active — with the most Likes, followers and contacts — in the various social media platforms. Those in the $25MM+ revenue range (which may skew toward large regionals) were also much more active in online marketing. Additionally, agencies in the $1MM and lower revenue range showed a greater usage of LinkedIn and Twitter. Close to the majority of respondents indicated that they maintain their platforms internally, including the creation of the content they post on them.

Of those who responded, a bit more than 60 percent do not have a coordinated marketing plan of any kind.

Of those who responded, about 40 percent have a coordinated plan for traditional and/ or nontraditional marketing. About 60 percent do not include nontraditional channels in a coordinated marketing plan.

The survey received responses from 293 agencies across 41 states and Canada. Just about 60 percent of respondents identified themselves as agency principals or management. Another 40 percent said they worked in IT, marketing or sales. Throughout the summary that follows, the term nontraditional marketing encompasses both social media and online marketing.

Almost 70 percent of the agency respondents indicated that they do not have a formal or documented social media plan, either as a part of an overall marketing plan or as a standalone document. Thirty-two percent agencies did say they have a documented social media plan in place.

The three most popular traditional marketing methods (used by approximately half the respondents) are the Yellow Pages, direct mail

The percentage of respondents who allow unlimited use of social media during the workday is about equal to the percentage who do not allow it at all (each approximately 35%),

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Among those respondents who use social media in their daily operations, Facebook and LinkedIn are the favorites by far, with Twitter coming in a distant third. Just over a quarter of respondents do not use online marketing methods. Nearly every respondent reported having a Website, nearly two-thirds have a Facebook page, less than half use LinkedIn, and approximately one-third use Twitter, a Website blog, and Google Places. In addition, 13 percent indicated that they use some sort of location-based platform, and about 23 percent use a third-party sales or marketing platform (not their primary management system). In both traditional and nontraditional marketing, respondents said that “New Leads” and “Brand Recognition” were their primary goals, with “Relationship Building” cited third.

> This survey was created, evaluated, and the report written by Jason Hoeppner, Well more than half an independent agency the respondents do consultant at B. H. Burke not measure the results & Co., Inc., of Westbrook, of their marketing, CT. Learn more about us at whether traditional or www.bhbco.com.

MARCH 2012

nontraditional. Of those who do track it, use of a sales management or agency management system, and use of a spreadsheet or similar document, was fairly even. And although 64 percent of respondents said that they do not measure the return on investment of their marketing, one respondent stated: “We measure it (ROI) by growth, but also in the quality of client we are getting, what type of call-ins and referrals we are generating.” For respondents who use social media, Twitter and Facebook are the most frequently updated sites, LinkedIn and Google Places Profiles, the least. About 65 percent of respondents said they updated their Facebook Pages at least weekly (Note: this result does contain all respondents, not just agencies.)

Almost 50 percent of respondents who do not currently use social media plan to begin doing so within a year.

We also looked at the survey responses to learn how much new business can be attributed to social media platforms. Because not all respondents provided answers and those who did may have only provided estimates or may not have had access to hard data while they were taking the survey, this section of our findings cannot be relied on for complete accuracy. With that caveat notwithstanding, these facts stood out: Respondents with annual revenue in the $500,000-$1MM range reported that an appreciable percentage of their monthly new business commission could be tied to online efforts, with their Website, Facebook, and Google AdWords making up the largest portion of this business. Respondents with annual revenues in the $10MM-$25MM range reported that about 7 percent of their monthly new business commission was attributable to their Website. Respondents in all other revenue groupings reported that from approximately 1 percent to 2.4 percent of monthly new business revenue was a result of their online marketing. Note: This last section was not updated for agency-only respondents.

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more “value” to the health plan, employer and plan participants than prescription drugs that cure toenail fungus. Should we not therefore make the cost of prescription drugs free for statins and ACE inhibitors, as well as beta blockers and not pay anything for drugs that treat toenail fungus? That is what is termed Value Based Benefit Plan design!

Need another example? Health plans cover the services in a hospital emergency room. Many health plans will also include a reduced copayment for using an urgent care center. However, we treat all charges for both emergency room and urgent care use alike. The reality is that not all ER and urgent care center patients are alike. It would be an excellent goal to find a to reduce unnecessary ER or urgent care usage. To date, to offset costs, the approach has been to charge patients higher copayments and deductibles. The byproduct is that some patients forego medical treatments until it becomes problematic. Take for example patients with asthma. Asthma patients tend to have the highest preventable usage of ER and urgent care services and represent 7.5 percent of the U.S. population. Improperly managed, asthma can often require the services of an emergency room setting to stabilize an asthma patient. The “value based” proposition here is that with improved patient education, proper incentives and ongoing health coaching, significant reductions can be made in the rate at which asthma patients use emergency services. So far, the discussion of VBBD has focused on the cost component. Admittedly, one of the basic tenants of VBBD is that those health care services that provide value and well being should be provided at such an amount that price is not a barrier to consumption. Conversely, those health care services of low value should have a price that discourages inappropriate use. In his book “Zero Trends,” Dr. Dee Eddington states the five goals of health as being: 1. From health as the absence of disease to health as vitality and energy. 2. From only caring for the sick to enabling healthy people to stay healthy. 3. From the cost of healthcare to the total value of health. 4. From individual participation to population engagement. 5. From behavior change to a culture of health. But VBBD is not just a cost issue. Imbedded in VBBD is the current-day availability of predictive modeling and disease management programs. The use of behavioral science in identifying and

WISCONSIN INDEPENDENT AGENT

encouraging individuals with “modifiable risk factors” to change their lifestyle and thereby their “risk factors” can have a significant impact on health care costs and use. Data analysis has been shown to be a powerful resource in identifying those patients that are chronic and the “emerging chronic” covered population within a health plan. As the chart below illustrates, almost half of all health care plans costs are for chronic conditions and comprise more than a third of all use. Moreover, we recognize that as many as half of all chronic conditions are related to lifestyle. Finally, those plan participants who have been identified as chronic do not represent a static population, but rather one that is constantly evolving. As such, VBBD strives to help the chronic plan participants modify their risk factors so as to become less chronic or to eliminate the chronic condition(s) altogether. Conversely, VBBD addresses the “emerging chronic” plan participants so that they do not become chronic in the first place. TYPE OF CLAIM/OCCURRENCE

COST - % UTILIZATION - %

General/routine care

5.8%

Functional impairment

14.6%

5.5%

Chronic

47.7%

34.8%

Acute/serious

24.7%

1.5%

7.2%

0.1%

Trauma

58.1%

Source: Towers, Perrin-2007

But what about discrimination issues? Does offering a better benefit/lower cost as a function of value or efficacy compromise a health plans discrimination status? The answer is no. While final regulations relating to health plan discrimination rules under IRC Section 105h for both insured (as included in the Patient Protection and Affordable Care Act) and self-insured plans will likely be established in 2012, to date the emphasis has been on the extent to which higher compensated employees receive or are eligible to receive a benefit that is not otherwise available to the non-highly compensated. Such is not the case with VBBD as the availability and eligibility of the VBBD benefit is not a function of eligibility or compensation. In the April edition of Wisconsin Independent Agent, we will continue with part 2, the role of a broker.

B I G “ I ” A N D S W I SS R E L AU N C H N E W W E B R E S O U RC E The Independent Agents & Brokers of America Big “I” Professional Liability Program and Swiss Re Corporate Solutions recently launched a new and improved risk management “E&O Happens” Website available exclusively to agency E&O Swiss Re policyholders. On average, about one in seven agents will report a potential E&O incident to their carrier every year according to Swiss Re claims data,” said Robert Rusbuldt, Big “I” president and CEO. “The Big ‘I’ Professional Liability Program joined forces with Swiss Re Corporate Solutions to create this industry-leading risk management program to help Swiss Re Corporate Solutions policyholders avoid E&O claims and improve their agency’s operation.” The Big “I” Risk Management Website — “E&O Happens” — is a key component of the organization’s risk management efforts. Available at www.iiaba.net/ eohappens, Swiss Re policyholders will find risk management information and tools to help them avoid future claims such as: understanding the root causes of E&O claims, prevention tips for all agency staff, sample disclaimers, sample procedures

AUTO HOME BUSINESS LIFE HEALTH

and customer letters, operational selfassessments, real-life case studies for learning, E&O-related articles, and more. “The resources available on the E&O Happens Website are very practical and can help agencies create greater awareness with agency staff of the need to proactively avoid E&O claims,” says Sabrena Sally, Swiss Re Corporate Solutions senior vice president. “We want to offer our insureds more than just a policy but a comprehensive program. Every agent needs to think about their own E&O exposure and the good news is that a well-run agency operation is one that can avoid claims and successfully defend itself should one occur.” The Website also offers expanded E&O related content with the inclusion of the Big “I” Agents Council for Technology

(ACT) and Big “I” Virtual University (VU) E&O related materials. More information regarding ACT and the VU are available at www.iiaba.net or www.iiaba.net/eohappens.

Just like any golfer, D.A. Points finds the game of golf filled with challenges he doesn’t always foresee. In life, we all face the unexpected, too. Your agency faces hurdles and difficulties every day. Your clients are hampered by life’s difficulties, as well. At Pekin Insurance, we go Beyond the expected® to remove obstacles that may hinder your agency’s growth. We make it easy to do business with us by providing you with the right tools to make running your agency successful and profitable! • Competitive Rates • Unique Commission Earning Opportunities • Broad Portfolio of Products (Personal Lines, Commercial Lines, Life, Health, and Annuity) • Profit Sharing (1-Year Agreement with Lock-In Option) • Company Trips Every Year • Co-op Advertising Program • Social Media Campaign • Easy-to-Use Raters for All Lines of Business • Upload and Download Capabilities • Qualified Field Representation

• • • •

Training Department with CEC Classes Life, Annuity, and Health Specialists E-Applications Unique Coverage Enhancements Available like Pet Insurance, Water & Sewer Line Breakage, Equipment Breakdown, and many more! Agent-Friendly Intranet Site 24-Hour Claim Call Center with 4-Business-Hour Call-Back Guarantee Catastrophe Team with Mobile Claim Office And, There’s Much More!

If you want to start “tearing it up” at your agency just like D.A. does on the golf course, contact us today and we will remove “handicaps” to your agency growth with our Pekin Pluses that will make you feel like you just made a “hole-in-one!”

Pekin Insurance is proud to sponsor Pekin native D.A. Points on the PGA TOUR. 2505 Court Street, Pekin, IL 61558 • 800-322-0160, Extension 2394 • www.pekininsurance.com

WISCONSIN INDEPENDENT AGENT

MARCH 2012

Expand Your Reach by Merging With Gallagher To support your professional advancement, Gallagher offers career paths for merger partners and their employees. As a result, many merger partners move up steadily into our executive ranks and their employees gain access to a full range of education and training programs—all aimed at career advancement and maximum earning potential. “After owning an agency for 16 years, our firm merged with Gallagher. Since joining, Gallagher has continued to provide me with opportunities to grow personally and professionally by allowing me to lead the Energy Practice, and most recently, to assume the regional leadership role for the South Central territory.

For more information, contact: Dave Koberstein Managing Director Arthur J. Gallagher Risk Management Services, Inc. 18000 W. Sarah Lane, Suite 100 Brookfield, WI 53045-5840 262.792.2202 dave_koberstein@ajg.com

Selling our company was a very emotional event for my family, partners and employees. My personal and professional expectations have been exceeded by the Gallagher team.” — Mike Henthorn, South Central Regional Manager

When you’re part of Gallagher, your business grows.

SURVEY: 51% OF INSURERS EXPECT TO INCREASE STAFF IN 2012 A new study says 51 percent of the insurance carriers recently surveyed expect to increase staff in the next 12 months. But it’s not all rosy news: the survey also found that 19 percent of the carriers expect to reduce staff, while 30 percent said they will maintain their current staff level. The poll was conducted from Jan. 9 to 25, by Chicago-based insurance recruiting firm The Jacobson Group and Cincinnati-based consulting firm Ward Group. Overall, 112 insurers participated in the study which was published on Feb. 22. Among the participants, 62 were regional carriers and 50 were national or multinational. The average number of employees at regional insurers in the survey was 867. For national or multinational carriers, the average number of employees was 2,755. Property/Casualty (P/C) insurers made up 87 percent of the respondents. Among companies that expect to cut staff this year, the biggest reason cited was automation (20 percent), followed by reorganization and streamlining. (14 percent) Some 69 percent of the insurers in the survey said they expect higher revenues in 2012, while 20 percent anticipate no growth and 11 percent forecast lower revenues. Among the companies surveyed, 47 percent said they had hired more employees

during the past year, while 30 percent said they reduced their staff and 22 percent said they made no changes to their staffing level. The 2012 jobs outlook appears better at smaller companies. The survey said 60 percent of small carriers plan to add additional staff over the next 12 months — which is 13 points higher than responses for mid-sized companies and 18 points higher than large companies. The survey found that: !"51.2 percent of all companies in the survey plan to increase staff during the next 12 months, up from 44 percent in a similar survey six months ago. !"The likelihood of companies increasing staff is up 4.5 percent since July 2011. This trend was consistent in nearly every function except compliance and product management, which remained flat. Actuarial was the only function that showed a slight decrease in likelihood to increase staff. !"While optimism to grow revenue is higher than prior studies, it fell 6 points from the previous high of July 2011.

!"Nearly 47 percent of the companies stated that change in market share will drive their expected revenue changes. !"For the second straight survey, the primary reason to hire more staff continues to be an increase in business volume. Some 43 percent of companies listed this reason to hire compared to a previous high of 53 percent in July 2011. !"Technology, underwriting and claim roles are expected to grow the greatest over the next 12 months. !"With permanent staffing increasing, recruiting is also up slightly over the past two years. !"Actuarial, executive and technology positions continue to be the most difficult to fill. Commercial P/C underwriting positions continue to be in higher demand and are more difficult to fill. !"Over the next 12 months, there will be a continued increase in the use of temporary employees.

GOVERNMENT AFFAIRS

INVESTMENT IN GOVERNMENT AFFAIRS PROGRAM

PRODUCES BIG RETURNS FOR BIG “I” MEMBERS American investment icon and billionaire Warren Buffett once said, “Price is what you pay. Value is what you get.” The key for consumers is to find sufficient value in the price they pay for goods and services. That isn’t a problem when it comes to IIAW membership. In fact, it’s hard to put a price tag on the value of a Big “I” membership. Needless to

Source: Insurance Journal

say, the Return on Investment members receive would make Buffett smile.

We are seeking quality agency appointments to become part of our “Worry Free” family. Simply bundle your customer’s auto, home and business insurance into IMT’s “Worry Free” bucket, and you will be worry free too.

The benefits and services offered by IIAW are second to none and provide members with the professional support needed to prosper in Wisconsin’s insurance industry. One of the most valuable benefits enjoyed by IIAW members is the Association’s government affairs program. As every independent insurance agent knows firsthand, the insurance industry is heavily regulated in Wisconsin. Given the intense and constant regulatory pressures on the industry, it’s critical for independent agents to have a strong presence in the State Capitol, at the Office of the Commissioner of Insurance (OCI) and throughout Wisconsin government. The IIAW has invested heavily in an effective government affairs program

West Des Moines, IA

800.274.3531

www.imtins.com

MARCH 2012

to defend the interests of Big “I” members – and the investment has yielded impressive results.

Over the past

IIAW Government Affairs Success

onerous bills have

Despite the state’s turbulent political environment, the IIAW has had a number of legislative victories over the past year. Of course, the IIAW’s crowning legislative achievement was passage of the Consumer Choice in Auto Insurance Act. The bill, which was signed into law last year, restored fairness in Wisconsin’s auto insurance market. While the new law does not alter the state’s auto insurance coverage mandate, it does reduce the minimum limits for mandatory liability coverage, uninsured and underinsured coverage and medical payments coverage. It made several other positive changes to state law, including a prohibition against car insurance stacking. The Big “I” government affairs team also helped pass legislation to treat employer-provided health insurance benefits for an employee’s adult child as non-taxable income. The newly enacted law aligns Wisconsin tax law with federal law, saves employees significant out-ofpocket expenses and eliminates a major administrative burden for state businesses. In addition, the IIAW has been active on a number of other high-profile legislative and regulatory issues, including product liability reform, surplus lines insurance regulation and mitigating the regulatory burdens of the federal health care reform law.

Avoiding Regulatory Disaster While the IIAW’s high-profile legislative

WISCONSIN INDEPENDENT AGENT

year, a number of been introduced that would harm the business interests of independent insurance agents across Wisconsin. The IIAW government affairs team has successfully shielded Big “I” members from these ill-advised policies. victories have received all the attention, the Association’s “anonymous” successes deserve equal billing. Over the past year, a number of onerous bills have been introduced that would harm the business interests of independent insurance > Tim Hoven is the agents across founder of Hoven Wisconsin. The Consulting in Madison, Wisconsin. Tim also IIAW government served in the Legislature affairs team has from 1994 to 2002. successfully Hoven Consulting is the shielded Big “I” Government Affairs team CONTINUED ON PAGE 31

for the IIA of Wisconsin.

NINE TIPS FOR KEEPING YOUR GOALS AND OBJECTIVES ON TRACK IN 2012

INVESTMENT IN GOVERNMENT AFFAIRS PROGRAM

PRODUCES BIG RETURNS FOR BIG “I” MEMBERS CONTINUED FROM PAGE 29

members from these ill-advised policies.

As you read this, we are already well into 2012 and have a pretty good idea as to what kind of year it’s shaping up to be. If you made New Year’s resolutions, or otherwise set some professional and personal goals for the year, how are those working out? If you’re like most people you’ve had at least one or two moments when your determination and resolve have been tested. While studies show that many New Year’s resolutions and goal setting exercises fail, the good news is that making your goals and resolutions a reality is entirely up to you. If you are driven, determined and dedicated to making your goals and resolutions happen, barring some unforeseen catastrophe, they will happen. So whether you’re on track, off track, or somewhere in between, here are some steps to take that will give you your best chance at hitting the mark in 2012.

1) Commit for to your goal or resolution for 30 days. As you probably know, it takes 30 days to develop a habit. The problem is that most of us aren’t consistent for at least 30 days in a row. Maybe we committed for seven days and then took two days off, back on for five, off for two more, on for six, etc. In order to make the habit, you have to do it for 30 days straight.

2) Start small. Rarely do we change our lives significantly overnight. Typically, it takes one small step followed by another and another until we wake up one day, six or 12 months later, and notice a dramatic change. Start with one small step and build each day. This approach helps to build momentum and prevents us from getting overwhelmed or discouraged by taking on too much too soon.

To make significant changes in your life, start with one small step and build each day. 30

3) Remove temptation. If you are trying to eat better, remove all the junk food from your house. If you are trying to spend less time on social media or with e-mail, limit the frequency and amount of time

To date, the IIAW has blocked passage of the following legislative proposals opposed by the Association: ! Property Insurance Coverage Mandate – This legislation would prohibit an insurer from canceling, refusing to renew or reducing coverage under a property insurance policy due to the policyholder’s claim history for unpreventable damages caused by forces of nature.

you can spend on each during the day. Remove items and set rules like when you can partake, if ever, in certain activities which are getting in the way of what you are trying to accomplish.

4) Associate with role models. Birds of a feather do flock together. If you want to be a top salesperson, hang out with top salespeople. If you want a successful relationship, hang out with people who have successful relationships. People who are successful in the areas you want to be successful in take certain actions to make it happen. What are those actions? Take the same actions, get the same results; success leaves clues.

5) Write it down. Writing out your goal(s) every morning and seeing them at least twice a day can dramatically increase the possibility of making them a reality. The more you see a goal, the more it is impressed upon your subconscious brain. And the more your goal is impressed upon your subconscious brain, the more your brain will work on the goal to help you achieve it. Put your goal(s) somewhere you will see it every day. The best places are on your bathroom mirror, in your car, and on your list of items to get done during the day.

6) Know the benefits. What will you get, or more importantly, what will you become if you achieve this goal? How will you and your world be better off? How will those around you be better off? What are the ultimate payoffs of your goal personally, professionally, and otherwise?

7) Know the consequences if you don’t follow through. What will it cost you if you don’t achieve this goal? How will you suffer personally, professionally and otherwise? Will it negatively affect your health, your self esteem, your career?

WISCONSIN INDEPENDENT AGENT

What will the negative affect be on those around you and your relationships if you don’t achieve this goal?

8) Keep the end result in mind. What is your ultimate vision for yourself, for your life, and for the world around you? How will achieving this goal help make this vision a reality? Keep your overall objective in mind and remember why you adopted this goal or resolution to begin with. Imagine how you’ll feel when you achieve it.

! Car Insurance Coverage Mandate – This legislation would impose new regulations on the insurance industry, including restrictions on insurers who issue car insurance coverage. Under the bill, insurers would be required to inform insured individuals they have the option to select any mechanic or body shop for vehicle repairs. The legislation also requires insurers to pay for covered vehicle repairs at the same rate the general public would pay,

unless the insurer and repair shop have an agreement. Lastly, the bill would prohibit insurance adjusters from preparing vehicle damage estimates without physically inspecting the vehicle. ! Insurance Policy Restriction Mandate – This legislation would prohibit insurers from considering credit history when issuing or renewing car or property insurance. It would also prohibit insurers from using this information when setting insurance premiums. In addition, the proposal would prohibit insurers from considering an individual’s zip code when issuing or renewing – or setting premiums for – car insurance. ! Medical Loss Ratio Mandate – This legislation would require Wisconsin health insurers to spend at least 80% to 85% of a consumers’ premium on medical care. Last fall, OCI requested a federal waiver from the medical loss ratio (MRL) requirement included in the federal health care reform law. The federal law requires health insurers

to spend at least 80% of customer premiums on medical care. ! Insurance Readability Mandate – This legislation would require health insurance policies to be easier to read and understand for policyholders. The unnecessary and heavy-handed proposal would significantly increase costs for the health insurance industry and interfere with consumerfriendly policies already provided by most companies in Wisconsin. The IIAW’s comprehensive government affairs program may be only one of many benefits you receive as a Big “I” member, but its impact on your business’ bottom line alone is worth the price of membership. For additional information on the IIAW’s government affairs program and the Association’s lobbying activity during the current legislative session, please do not hesitate to contact the IIAW office.

9) Remember: the only thing that can stop you is YOU. What are you capable of if you set your mind to something and determine nothing will get in your way? Pretty much anything. What stops people isn’t the difficulty of achieving the goal or making the resolution stick, it’s that people lose the resolve to consistently do what needs to be done every day. You > John Chapin has more have to consistently than 21 years of sales do what must be done, experience and is the whether you feel like it co-founder Complete Selling Incorporated, or not. That’s how you a company helping reach success. Set a goal, salespeople significantly develop a plan for its increase their results. achievement, then follow For free access to John’s free white paper on what these steps and make it happen. Life is 90 percent it takes to be successful in sales (along with a between your ears. The monthly newsletter) visit only thing between you his Web site at www. and where you want to completeselling.com. go is in your head.

MARCH 2012

WISCONSIN INDEPENDENT AGENT

GETTING CREDIT

You’re an independent agent.

On Feb. 1, the IIAW classroom was filled up for the all-day session, E&O In The Electronic Office. Instructor Mary Hauri-Kleinsmith does a fantastic job of engaging and informing her students.

Do you trust your pit crew?

IIAW Annual Convention Kalahari Resort, Wisconsin Dells May 9-10, 2012 Register at iiaw.com

The Big “I” Professional Liability Program Protect. Prosper. Prevent. Our risk management resources keep your agency from making common preventable mistakes.

Our superior coverage and expert claims teams are in your corner in the event of a claim.

When you know you have the best E&O protection, you can focus on growing your most important asset–your business.

The Big “I” and Swiss Re are jointly committed to providing IIABA members with leading edge agency E&O products and services. The IIABA and its federation of 51 state associations endorse Swiss Re’s comprehensive professional liability program.

www.independentagent.com/EO

WISCONSIN INDEPENDENT AGENT

MARCH 2012

Insurance products underwritten by Westport Insurance Corporation, Overland Park, Kansas. Westport is a member of the Swiss Re group of companies and is licensed in all 50 states and the District of Columbia. ©2008 Swiss Re

Food for Thought:

!"#$!% !

&'#(!)%'*+

CAN I HAVE 20 TO 50 MORE CHANCES, PLEASE?

First impressions are crucial. In the field of mental technology it’s found that we form a first impression on a person, place or thing in the first two to five seconds. By 30 seconds, we have solidified that thought. That’s the impression. Research shows that if you make a bad first impression, it takes between 20 to 50 additional positive impressions just to make up for that one negative first impression. Attention job seekers and sales professionals: be prepared.

THE MARCH IDES DOESN’T HAVE THE SAME RING TO IT

Source: headdrama.com

Source: National Geographic

Before March 15, 44 B.C., when Marcus Brutus and other conspirators assassinated Julius Caesar, the Ides of March had a less ominous reference point. The Ides of March simply marked the appearance of a full moon. Now the Ides represent a specific day of abrupt change.

Power Your Insurance Business With A Great Brand. Join AAA’s Team of Independent Insurance Agents. AAA brings a powerful difference to your insurance carrier line-up. That’s because we’re a club, not just another company – offering your customers more than a sense of security, but a sense of belonging. Here’s your opportunity to share in AAA’s brand strength, while enjoying a competitive commission structure, outstanding contingency program and innovative co-op advertising resources.

For current opportunities, contact Heidi Nienow at 608-828-2614 or hqnienow@aaawisconsin.com Insurance underwritten by Auto Club Insurance Association or Auto Club Group Insurance Company.

WISCONSIN INDEPENDENT AGENT

MARCH 2012

T H E R E L AST Y E A R U O Y E R ? WE DON’T MISS IT THIS YEAR IIAW ANNUAL CONVENTION KALAHARI RESORT, WISCONSIN DELLS MAY 9 & 10 REGISTER AT IIAW.COM