Insurance Journal - Aug 19, 2013 by Insurance Journal

We help you get your name out. You help us get our message out. Let the back-scratching begin! Working together, we’ll provide your policyholders with the Strength to Rebuild ® after California’s next damaging earthquake. CEA’s Marketing Value Program (MVP) offers FREE marketing tools to help you connect with clients. Simply put, it’s back-scratching all around. • Get postage-paid direct mail printed with your name and address. • Register early and get a FREE go-bag and gas-valve shutoff wrench. • Send FREE preparedness starter kits to your new CEA policyholders. • Distribute your direct mail with FREE statewide advertising support. The MVP helps CEA get its message out about earthquake insurance, and it helps your business in a way that says “I care.” All California-licensed agents employed or appointed by CEA’s participating insurance companies can join the MVP. Sign up today at EarthquakeAuthority.com/MVP

Happy Shall You Be! Service, a smile and “happy to quote” is Debbie’s mantra. Access these lines out of the Monarch Arizona office, serving Arizona, Nevada and Hawaii: • Artisans & General Contractors • Apartments and Homeowner / Condo Associations • Bed & Breakfast Operations, Hotels and Motels • Special Events • Vacant Land • Farming Operations • Environmental - Contractors, Consultants & Site Liability • Excess and Umbrella • Inland Marine Debbie enjoys what she does and you will enjoy what she does for you!

One Who Serves Debbie Perry, ASLI Senior Commercial Underwriter Arizona Office 877-406-8026 debbiep@monarchexcess.com

You’ll Get the Royal Treatment

Watch our videos at MonarchExcess.com La Crescenta 818-249-0100 • Simi Valley 805-577-6800 • San Diego 619-521-2170 • Rancho Mirage 760-779-5555 Novato 415-883-1411 • Fresno 559-226-0200 • Arizona 877-406-8026 • Hawaii 818-425-9847 • License 0697233

NATIONAL

On The Cover

Special Report:

Inside This Issue

101 Sales & Marketing Ideas for Agencies

August 19, 2013 • Vol. 91 No. 16• National

NATIONAL COVERAGE

IDEA EXCHANGE

8 Q2 Revenue Growth Strong for Mid-Size, Large Privately-Held Agencies: Survey

32 Information Technology and Risk Complexity 35 I Can’t Believe I Forgot!

8 60% of Direct Buyers Eventually Return to Independent Agents: Study

43 Growing Your Property Casualty Agency: Shulman

8 Commercial Rate Increases Slowed in July: MarketScout

44 Minding Your Business: Oak & Johnson

16 Concerns Over Cyber Security Risks Outweigh Traditional Risks

50 Closing Quote: Fight for Policy Ownership

17 Special Advertising Supplement: Corporate Profiles

28 Top 25 P/C Companies: Direct Premium Written Up Nearly 4.8% 30 E&O Insights: Pearsall on Producers and E&O 36 Special Report: 101 Sales & Marketing Ideas for Agencies

DEPARTMENTS 6 10 10 12 14 46

4 | INSURANCE JOURNAL-NATIONAL August 19, 2013

Opening Note Declarations Figures Business Moves People MyNewMarkets

www.insurancejournal.com

Online > Paper

Write your toughest stuff. 4 questions, 3 minutes, $5 million personal umbrella. No paper required.

Family-owned and operated. Proudly dog-friendly. Available nationally. Underwriting criteria varies by state. Visit us online for guidelines California Insurance License 0D08438

NATIONAL COVERAGE

Opening Note Insurance Without TRIA

f Congress fails to renew or makes significant changes to the federal terrorism risk insurance program, some insurers will be forced to significantly alter their underwriting portfolios to reduce terrorism exposures. Also specialty or monoline workers’ compensation or commercial property writers focused on larger urban markets would likely have the greatest credit sensitivity to reductions in available terrorism reinsurance. In a recent report, Fitch Ratings discusses potential economic and credit rating effects for the property/casualty industry and Commercial Mortgage Backed Securities (CMBS) market if the Terrorist Risk Insurance Program Reauthorization Act (TRIPRA), which is currently on track to expire Dec. 31, 2014, is not renewed or if coverage is substantially scaled back. Terrorism insurance has served as a protection for CMBS bondholders and Fitch said it may decline to rate or cap its ratings on CMBS transactions with inadequate terrorism insurance if the federal reinsurance program changes or disappears. This would most likely occur on a high profile property in a single asset CMBS transaction, the ratings firm said. Fitch said it would be more difficult to determine the ratings effects that a lack of terrorism coverage might have on multi-borrower CMBS pools. Over the last decade, commercial property insurers have improved their ability to model exposure to terrorism events, according to the report. Net exposures are managed currently through the availability of large reinsurance limits through TRIPRA. Withdrawal of TRIPRA reinsurance protection without readily available substitute coverage “could lead insurers to exclude terrorism from property coverage to manage risk aggregations,” Fitch said. The availability of private market stand-alone terrorism coverage has increased over time, however Fitch said it is unlikely that substantial private market capacity would arise as a substitute to TRIPRA coverage if the program ends. Likewise, Fitch said it is “difficult to predict whether financial and property markets have a greater propensity to adapt to an environment without government sponsored terrorism insurance program compared to the conditions in 2002.” Since insurers are prohibited from excluding losses from terrorism-related perils in workers’ compensation policies, TRIPRA expiration or meaningful changes “may have significant effects on workers’ compensation insurance coverage availability and pricing,” according to Fitch. Legislation has been introduced in the House of Representatives to extend TRIPRA. As in past years when the program faced expiration, Congress probably will not act until the last minute, if at all.

Andrea Wells Editor-in-Chief 6 | INSURANCE JOURNAL-NATIONAL August 19, 2013

EDITORIAL Editor-in-Chief Andrea Wells | awells@insurancejournal.com V.P. Content Andrew Simpson | asimpson@insurancejournal.com East Editor Young Ha | yha@insurancejournal.com Southeast Editor Michael Adams | madams@insurancejournal.com South Central Editor/Midwest Editor Stephanie K. Jones | sjones@insurancejournal.com West Editor Don Jergler | djergler@insurancejournal.com International Editor Charles E. Boyle | cboyle@insurancejournal.com Senior Editor Susanne Sclafane | ssclafane@insurancejournal.com ClaimsJournal.com Editor Denise Johnson | djohnson@claimsjournal.com MyNewMarkets.com Associate Editor Amy O’Connor | aoconnor@mynewmarkets.com Columnists Catherine Oak, Curtis Pearsall, Alan Shulman Contributing Writers Kelsey Johnson, Jana Owen, Douglas Powell, F.E. ‘Rick’ Russell II, Veronica Somarriba SALES V.P. Sales & Marketing Julie Tinney (800) 897-9965 x148 | jtinney@insurancejournal.com West Dena Kaplan (800) 897-9965 x115 | dkaplan@insurancejournal.com South Central Mindy Trammell (800) 897-9965 x149 | mtrammell@insurancejournal.com Midwest Lauren Knapp (800) 897-9965 x161 | lknapp@insurancejournal.com Southeast Howard Simkin (800) 897-9965 x162 | hsimkin@insurancejournal.com East Dave Molchan (800) 897-9965 x145 | dmolchan@insurancejournal.com New Markets Sales Manager Kristine Honey | khoney@insurancejournal.com Classifieds, Jobs, Agencies Wanted/For Sale Ly Nguyen (800) 897-9965 x125 | lnguyen@insurancejournal.com MARKETING/NEW MEDIA Marketing Administrator Gayle Wells | gwells@insurancejournal.com Advertising Coordinator Erin Burns (619) 584-1100 x120 | eburns@insurancejournal.com New Media Producer Bobbie Dodge | bdodge@insurancejournal.com Videographer/Editor Matt Tolk | mtolk@insurancejournal.com DESIGN/WEB V.P. of Design Guy Boccia | gboccia@insurancejournal.com V.P of Technology Joshua Carlson | jcarlson@insurancejournal.com Design and Marketing Executive Derence Walk | dwalk@insurancejournal.com Web Developer Jeff Cardrant | jcardrant@insurancejournal.com Web Developer Chris Thompson | cthompson@insurancejournal.com IJ ACADEMY OF INSURANCE Director of Education Christopher J. Boggs | cboggs@ijacademy.com Online Training Coordinator Barbara Whiffen | bwhiffen@ijacademy.com ADMINISTRATION Chairman Mark Wells Chief Executive Officer Mitch Dunford Accounting Manager Megan Sinclair | msinclair@insurancejournal.com

FOR QUESTIONS REGARDING SUBSCRIPTIONS: Call: 855-814-9547

or you may subscribe or change your address online at: insurancejournal.com/subscribe

Insurance Journal, The National Property/Casualty Magazine (ISSN: 00204714) is published semi-monthly by Wells Publishing, Inc., 3570 Camino del Rio North, Suite 200, San Diego, CA 92108-1747. Periodicals Postage Paid at San Diego, CA and at additional mailing offices. SUBSCRIPTION RATES: $7.95 per copy, $12.95 per special issue copy, $195 per year in the U.S., $295 per year all other countries. DISCLAIMER: While the information in this publication is derived from sources believed reliable and is subject to reasonable care in preparation and editing, it is not intended to be legal, accounting, tax, technical or other professional advice. Readers are advised to consult competent professionals for application to their particular situation. Copyright 2013 Wells Publishing, Inc. All Rights Reserved. Content may not be photocopied, reproduced or redistributed without written permission. Insurance Journal is a publication of Wells Publishing, Inc. POSTMASTER: Send change of address form to Insurance Journal, Circulation Department, PO Box 3618, Northbrook, IL 60065-3618 ARTICLE REPRINTS: For reprints of articles in this issue, contact Rhonda Brown at 1-866-879-9144 ext. 194 or rhondab@fosterprinting.com. Visit insurancejournal. com/reprints for more information.

www.insurancejournal.com

RoCk-solId fInAnCIAl stREngtH sUpERIoR ClAIms sERvICEs UnrIvAlEd CUstomEr sUPPort InnovAtIvE RIsk fInAnCIng UndERwRItIng onE RIsk At A tImE

Do one thing. Do it better than anyone else.

It’s how wE mAIntAIn A CUstomEr rEtEntIon rAtE of ovEr 90 PErCEnt. At Applied Underwriters, workers’ ®

compensation is all we do. This allows us to provide the deep resources and expertise to handle your claims with precision and speed. And rather than send you all over the globe for answers, we give you one number to call – your direct line to a dedicated team in Omaha that understands your company’s unique needs. Experience our way of doing things. Just one company, with one focus, and the hardest-working workers’ compensation insurance around.

most classes. All states. Call (877) 234-4450 or visit auw.com for more information.

NATIONAL COVERAGE

News & Markets Q2 Revenue Growth Strong for Mid-Size, Large Privately-Held Agencies: Survey

edian organic revenue growth reached 6.9 percent in the 2013 second quarter for mid-size and large privately held insurance agencies and brokerage firms, according to a survey by Reagan Consulting, a management consulting firm for the independent insurance distribution system. Reagan Consulting said the 6.9 percent median organic revenue growth was the highest recorded in its quarterly survey, which began in 2008. The firm uses confidential submissions from about 125 mid-size and large agencies and brokerage firms. Median revenue of the firms completing the survey is approximately $15 million. The survey also showed that the agent-broker profitability margin of 24.0 percent was the highest recorded since the survey began. Other survey findings include: • Privately-held firms held a growth advan-

tage over public brokers, growing 1.6 percent faster than the public brokers’ 5.3 percent average rate for five large publicly held brokerage firms. • Commercial lines grew at an 8.2 percent median rate through the first half of the year, up 1.4 percent from 6.8 percent in the first quarter of 2013. • The second-quarter survey found that agents and brokers, after a strong firsthalf performance, have increased their full-year 2013 organic growth projection to 7.0 percent. While profitability in the second quarter is inflated by the cash-basis recognition of contingent income typically received in the first half, the survey said that the earnings trend is strong nonetheless. The survey measures profitability in terms of EBITDA (earnings before interest, taxes depreciation and amortization).

60% of Direct Buyers Eventually Return to Independent Agents: Study

ost customers who are lured away from independent agents by direct insurers promising lower prices will ultimately return to an independent agent. According to a recent study commissioned by The Hanover Insurance Group, nearly 60 percent of consumers who had purchased insurance through a direct channel 10 or more years ago reported switching back to an independent agent because they wanted more value. This study was conducted for Hanover, an independent agency company, by the research firm InsightExpress, which surveyed 1,000 consumers who purchased insurance through direct channels 10 or more years ago. Most consumers who switched back to 8 | INSURANCE JOURNAL-NATIONAL August 19, 2013

independent agents cited expertise and convenience for their decision. According to the survey, the motivators for consumers who switched to work with independent agents also included the benefits of having one point of contact to handle insurance needs and questions and having the guidance of an experienced personal insurance professional. “The majority of respondents said their number one reason for switching from a direct insurance provider was to have someone to guide them through their insurance buying decisions,” said Mark R. Desrochers, president, personal lines insurance at The Hanover. “Clearly trust and expertise are important to consumers.”

*Earnings before interest, taxes depreciation & amortization. Source: Reagan Consulting’s Organic Growth and Profitability quarterly survey

Commercial Rate Increases Slowed in July: MarketScout

fter four months of going up at 5 percent, commercial property/casualty insurance rates have moderated. The July 2013 rate increase was plus 4 percent, according to MarketScout’s market index. Rate increases for commercial auto, workers’ compensation, directors and officers, and employment practices liability in the United States all moderated by 1 percent. Fiduciary rates were up slightly from plus 2 percent to plus 3 percent. Large account ($250,001 to $1 million premium) rate increases moderated from plus 4 percent to plus 3 percent. By industry classification, every industry group except for public entity business moderated by 1 percent. “We will have a much better feel for where things are headed once the results are tabulated for September and October,” said MarketScout CEO Richard Kerr. The National Alliance for Insurance Education and Research conducts the pricing surveys used in MarketScout’s analysis of market conditions. www.insurancejournal.com

January 29 th , 9:35 a . m .

ExpErtIsE crEatEs an opportunIt y I n an I ns tant,

U n der w r iter Phil Sa m m S k eeP S a n agen t a he a d o f w h at’ S ne x t

Phil shared thirty minutes with agent, Kate Morely, discussing her local industry insights and clients’ changing business risks. More importantly, he shared a few industry insights that helped Kate envision an entirely new avenue for growing her book. Way to make every minute count, Phil.

To learn more about our broad portfolio of insurance products and services, and the industries we serve, visit www.cna.com.

Construction • Education • Financial Institutions • Healthcare • Manufacturing Professional Services • Real Estate • Retail • Technology • Wholesale Distribution

Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All products and services may not be available in all states and may be subject to change without notice. CNA is a registered trademark of CNA Financial Corporation. Copyright © 2013 CNA. All rights reserved.

NATIONAL COVERAGE

Declarations Neck Deep

Online Shopping

Dangerous Month

“He was driving in almost neck-deep water and trying to control the bus while it was floating.” — Rhonda Ho, operations manager for Canyon Coach Lines, said a tour bus owned by the Las Vegas-based company was being driven by Joseph Razon, who saw a car right in front of him go through a section of the highway covered by some water. Flash flood waters swept the bus with 33 people aboard hundreds of yards down a wash in northwestern Arizona on July 28 and the vehicle flipped on its side, but no one was injured.

“The Internet provides consumers easy and quick access to many websites that offer to save them money on auto insurance.” — New Jersey Department of Banking and Insurance Commissioner Ken Kobylowski’s comment on shopping for auto insurance online. But he cautioned that while some of these sites are legitimate, others can be fake websites, scams or firms that are offering inadequate coverage or very limited benefits. He advised consumers to take precautions and be careful in providing personal information online.

“The good news is many of these injuries are avoidable, and business owners can take advantage of risk management tools that help them build effective safety strategies in the workplace.” — Kim Bittle, regional vice president of Travelers Insurance, which reports that August is the most dangerous month of the year when it comes to on-the-job injuries in Texas. According to an analysis of Travelers’ claims data from the past two years, Texas employers filed more workers’ compensation claims in August than any other month, and most are from injuries that may be avoided, including strains, sprains, lacerations and contusions.

False Alarms

“The bad thing about false alarms is it can tend to make officers complacent. … That’s a dangerous situation if you think it’s going to be false but it turns out to be a good alarm where someone’s broken into a residence or a business.” — West Des Moines, Iowa, Police Lt. Jim Barrett comments on the danger to police officers of false burglar alarms. Des Moines started charging for false burglar alarms in 2008 and collected $138,000 for nearly 2,397 billable false alarms last year. Of the 3,806 burglar alarms that Des Moines police responded to in 2012, 90 percent were false.

Figures 0.25

Was the blood alcohol level of an Oregon longshoreman who got drunk on the job, urinated while standing on a dock and then fell 6 feet onto concrete. A federal appeals court ruled he should not get workers’ compensation benefits for his injuries.

$1 Million

4 Tons

The approximate weight of $150,000 in quarters with which a southern Illinois businessman paid off part of a court-ordered legal settlement. Roger Herrin, of Harrisburg, was ordered to repay $500,000 in insurance money related to a 2001 car accident in which his teenage son died. The reimbursement followed years of disputes about how the insurance money was apportioned to victims. The coins were packed into dozens of bags.

The amount in damages a Texas woman wants from a steakhouse that lets patrons throw peanut shells on the floor. Amelia Tijerina she says she slipped and fell on the peanut shells at the Texas Roadhouse, and suffered physical pain, mental anguish and physical impairment. Tijerina is also seeking damages for medical expenses, lost wages, loss of earning capacity and court costs. Texas Roadhouse Inc. argues Tijerina’s actions caused the injury. 10 | INSURANCE JOURNAL-NATIONAL August 19, 2013

$75,000

The amount a North Charleston, S.C., man was ordered to pay to author Fern Michaels for forwarding a defamatory email to a website that promoted Michaels and other romance authors. The court found the man acted in reckless disregard for the truth and intended to harm the author’s reputation. www.insurancejournal.com

NATIONAL COVERAGE

Business Moves

Hub International, Hellman & Friedman LLC Global insurance broker Hub International Limited has agreed to be acquired by funds advised by Hellman & Friedman LLC. The transaction values Hub at approximately $4.4 billion. Under the terms of the agreement, investment funds managed by Hellman & Friedman will hold a majority interest in the company, while members of Hub’s senior management will continue to have a significant equity position, according to the announcement. Hub is currently owned by private equity firm Apax Partners, which acquired it in June 2007 together with Morgan Stanley Principal Investments for more than $40

per share in a deal worth $1.8 billion. As a result of that transaction, Hub was delisted from the New York and Toronto stock exchanges. With more than 6,500 employees in the United States (including Puerto Rico) and in Canada and Brazil, Hub said it expects to achieve 2013 revenue of approximately $1.2 billion, after the annualized impact of acquisitions. The Hub-Hellman & Friedman transaction is subject to customary closing conditions and is expected to be completed before the end of 2013. The company’s existing debt arrangements will be replaced at closing with new debt financing that has been committed by BofA Merrill Lynch, Morgan Stanley Senior Funding Inc. and RBC Capital Markets. EPIC, SafeHarbor Risk Management EPIC, a San Mateo, Calif.-based retail property/casualty insurance brokerage and employee benefits consultant, acquired SafeHarbor Risk Management. Founded in 2009, privately-held SafeHarbor is a P/C insurance brokerage and employee benefit consulting firm, with locations in New York and Boston. EPIC’s co-founder John Hahn said the addition of the SafeHarbor team would help establish EPIC’s footprint in the East Coast. EPIC has more than 300 employees operating from 10 offices across California (Los

Angeles, Irvine, Ontario, Inland Empire, Folsom, Fresno, San Francisco, San Mateo, Petaluma and San Ramon) as well as in Denver and Armonk, N.Y. Andrew Agency, Samuel D. Baughman The Andrew Agency, an independent insurance agency based in Richmond, Va., announced its acquisition of Samuel D. Baughman Insurance Services, an agency also based in Richmond. The Andrew Agency serves clients in Virginia, Maryland and South Carolina, offering personal and business property/ casualty and life and health insurance products and services. Samuel D. Baughman Insurance, which first opened its doors in 1953, is an insurance agency offering property/casualty and life and health insurance. Confie Seguros, Economy Insurance Mart Growing personal lines agency Confie Seguros has acquired Economy Insurance Mart of Spring Hill, Fla., which sells auto, home and small commercial insurance. Economy Insurance Agency was founded in 1993 and is a privately owned independent insurance agency serving Hernando County. Confie Seguros has built a national portfolio of regional auto insurance brokerages and is seeking to enlarge its geographic footprint throughout Florida. The company has annual revenue exceeding $200 million and more than 300 retail locations.

We Hate It When That Happens... But We Know What to Do When It Does

A VIII Rated by A.M. Best

See Our New Video at uciagency.com or Call 760-345-9029 12 | INSURANCE JOURNAL-NATIONAL August 19, 2013

www.insurancejournal.com

Now she can be

insured. Introducing Small Business Insurance from ACE

International Package, Environmental, E&O and D&O Package, MTC, Umbrella | acecrs.com

What does it mean when your clients are ACE insured? It means their small business is properly protected with comprehensive specialty coverage and you’ve experienced the difference of working with ACE Commercial Risk Services. We’ve quickly become one of the fastest-growing providers of specialty insurance for smaller accounts because we are reinventing the small-commercial placement experience. We give you more choices, better access to expertise and creative solutions: from responsive underwriters with whom you can craft a policy and relationship, to a remarkable online platform that facilitates speed-of-light client service, to local business development consultants who bring you new products, ideas and resources for efficient revenue growth. Dial 888-762-9223 to register for an ACE Commercial Risk Services Product Exposition and learn how we can help you grow your business, profitably. Chicago 9/10/2013; New York 10/16/2013; Atlanta 10/29/2013. © 2013 ACE Group. ACE®, ACE logo®, and ACE insured are trademarks of ACE Limited. Insurance is provided by ACE American Insurance Company (Philadelphia, PA) or, in some states, other insurers within the ACE Group of Companies or its allied distribution associates. All products may not be available in all states and surplus lines products can only be offered through licensed surplus lines brokers.

NATIONAL COVERAGE

People Patricia McEvoy

Kevin Tobin

Julie Burnett

Derek Noble

ASTISH14873.indd ASTISH15197.indd 11 ASTISH5333.indd

The Hartford Financial Services Group promoted Patricia McEvoy to chief ethics and compliance officer. In her previous role, McEvoy was vice president and assistant general counsel in the corporate and property/ casualty litigation unit of the law department. She has been with The Hartford since 2000. Prior to joining The Hartford, she was counsel in the law departments at United HealthCare and Travelers Insurance Co. The Hartford also appointed Steve Samataro as head of national accounts for the group benefits division. Most recently, he was a regional vice president of sales for Prudential Financial. Additionally, The Hartford hired Mike Dunst for its group benefits business as national practice leader for absence management. Marsh, an insurance brokerage division of Marsh & McLennan Cos., appointed Kevin Tobin CEO of its Private Client Services (PCS). Based in Chicago, Tobin will be responsible for leading Marsh’s PCS unit, which serves the personal insurance needs of affluent individuals and families. Previously, he was chief operating officer of Marsh’s Insurance Services Businesses (ISB) unit. Tobin succeeds Lisa Lindsay, who will remain at PCS. Liberty Mutual Insurance has given Executive Vice President Julie Burnett an added responsibility as head of distribution for the business insurance operation. In addition to this appointment, Burnett will continue to lead the company’s small commercial strategy and execution, also within the business insurance operation. She is based in Liberty Mutual’s Boston headquarters office. Derek Noble joined Texas-based independent insurance brokerage Roach Howard Smith & Barton as a sales executive in its employee benefits department. Noble began his insurance career in Phoenix, working for

14 | INSURANCE JOURNAL-NATIONAL August 19, 2013

a national broker as well as a leading direct writer before returning to Texas. He specializes in real estate, healthcare, transportation, technology and manufacturing. Wells Fargo Insurance, part of Wells Fargo & Co., named Jason Paulnock senior vice president and managing director for its Minnesota offices. Based in Minneapolis, Paulnock will lead business development, client service and sales, and cross-sell for the company’s insurance operations in Minnesota. Most recently, he was regional vice president for Wells Fargo’s Midwest Government, Education & Nonprofit banking team. Wholesale insurance broker Swett & Crawford promoted Matt Brott to sales leader for the Atlanta branch. In addition to his new sales leadership responsibility, Brott will continue to serve as a broker in Swett & Crawford’s property practice group. Brott began his career at Partners Specialty Group as a property broker, prior to joining Swett & Crawford in 2007. Poms & Associates Insurance Brokers Inc. named John Bessenbacher vice president of new business development in its Sacramento, Calif. office. Previously, Bessenbacher was the new business development manager at Gallagher Benefit Services. Additionally, Poms named Casey Tynan as vice president of business development in its Denver office. XL Group named Mark McConico as vice president and underwriting manager for XL’s U.S. risk management group in Los Angeles. McConico comes from Aon Risk Solutions, where he served as vice president and casualty manager in their risk management and middle market groups. XL Group also promoted Theresa Schlageter to senior vice president and regional manager of the Western Zone for its U.S. risk management business.

1/27/11 9:42 AM 6/11/11 9/6/11 2:54 8:30 PM

www.insurancejournal.com

The ISU Insurance Agency Network ROI* The Numbers Speak for Themselves 2011

2010

527% ROI

542% ROI

2012

628% ROI

2008

458% ROI

2009

430% ROI

*Return on Investment (ROI) = total membership fees paid by members divided by total paid to members.

The average ISU Member earned 628% MORE than they paid for membership. PLUS ISU Agency Network Members :  Own 100% of Their Book and Client Relationships  Receive 100% of Policy Commissions  Earn Profit Sharing from first dollar with NO Minimum Requirements  Receive Direct Access to Carriers  Offer Enhanced Client Services  Suffer NO contract termination fees or penalties nor Carrier access restrictions  Benefit From the Strengths and Resources of a National Organization  ISU - The Power of Independence and the Strength of Unity.  Over 150 offices and 1,700 professionals accessing over 300 Carriers nationwide

Go to www.Join ISU.com or call 877-500-4478

The ISU Agency Network

NATIONAL COVERAGE

News & Markets Concerns Over Cyber Security Risks Outweigh Traditional Risks By Andrea Wells

yber security risks have become more worrisome to large organizations than traditional natural catastrophe risks, according to a new study. The study, titled “Managing Cyber Security as a Business Risk: Cyber Insurance in the Digital Age” and conducted by Experian Data Breach Resolution and the Ponemon Institute, reported that 41 percent of large businesses (those with 500plus employees) believe cyber security risks are greater than other insurable business risks such as natural disasters, business interruption and fires. Another 35 percent of respondents in the survey reported that cyber security risks are equal to other insurable business risks. Despite growing concerns over cyber security, the study also found that less than one-third of respondents (31 percent) have purchased cyber insurance coverage. However, those firms that do not currently have insurance coverage — more than half of all survey respondents (57 percent) — indicated they plan to purchase cyber security coverage in the near future. The survey predicts 50 percent growth in policies purchased in the next year, with more than 100 percent growth within the next two years. “We are reaching a tipping point where the majority of companies we surveyed now rank cyber security risks as high as other major insurable business risks,” said Michael Bruemmer, vice president at Experian Data Breach Resolution. “We anticipate that demand for cyber security insurance is likely to increase in response to evolving breach response policies.” Potential Cost of Breach The cost potential of a future data breach is a primary driver when it comes to purchasing cyber insurance, according to the survey. Many companies realize that security incidents create significant financial risks that must be managed like other major 16 | INSURANCE JOURNAL-NATIONAL August 19, 2013

business risks. Among those companies that had an incident in the past 24 months, 70 percent of respondents said the experience increased their interest in these policies. Of the 56 percent of respondents that had breaches, the average cost of these incidents was reported at $9.4 million in the last 24 months. However, those costs are only a fraction of the average maximum financial exposure that the companies surveyed (breached or not) believe they could suffer because of cyber incidents. Respondents quantified the average potential maximum financial risk of a data breach at $163 million, with some projecting more than $500 million in damages. Thirty percent noted they do not plan on purchasing cyber insurance. For those firms that chose to go without coverage, 43 percent indicated that it is because of the cost and too many exclusions, restrictions and uninsurable risks. Of those with the insurance, 62 percent believe the premiums are fair given the nature of the risk. Coverage Satisfaction The study also found that those organizations with cyber insurance felt largely satisfied by the protection the coverage provides. They also indicated satisfaction with the added benefits that come with securing the coverage. “Going through the process of evaluating cyber insurance for their company, 62 percent of the people said that they felt like their company was in a better state of readiness because of going through the process of evaluating cyber insurance, which means

that just the preparation and awareness help to improve their level of capability for an incident response for a data breach,” Bruemmer told Insurance Journal. Of those with a policy, 30 percent have experienced an exploit or a data breach and submitted a claim. Nearly all were happy with their providers’ responses to the claim (95 percent good to excellent). Access to other resources that often are provided by the cyber insurer (forensics, notification, etc.) helped manage the overall security risk, the respondents said. Most policies provide benefits for forensics and investigative costs (64 percent), notification costs to data breach victims (86 percent) and legal defense costs (73 percent). The interest and adoption of cyber insurance policies as a means to mitigate cyber security risk will grow, researchers say. “Companies worry about the financial impact following a data breach,” said Dr. Larry Ponemon, chairman and founder of the Ponemon Institute. “Cyber insurance could be an important part of a risk management strategy to protect against potentially severe financial losses.” To access the full report, “Managing Cyber Security as a Business Risk: Cyber Insurance in the Digital Age”, visit www.experian.com/managing cybersecurity. www.insurancejournal.com

Dear Reader: Every business has a story to tell. For many corporations, small and large, that story ties closely to the personal lives of their founders. Throughout Insurance Journal’s history, we have come to know and appreciate many of the unique stories in our industry. And year after year, we have watched as our advertisers’ and readers’ companies have grown and changed. As a leading industry news and information source, we are not able to profile all of the corporations that cross our path. Our position as journalists sometimes makes it difficult as well. Consequently, we have created this special supplement to allow our clients, and some of the corporations you may work with on a daily basis, to tell their story ... in their own words. We hope you find this supplement interesting and informative. Best wishes from all of us at Insurance Journal. Mitch Dunford CEO, Insurance Journal mdunford@insurancejournal.com www.insurancejournal.com

August 19, 2013 INSURANCE JOURNAL-NATIONAL | 17

The Best Friend of the Local Agent!

VIRTUAL PROFIT CENTER

Fully Integra ted AMS360

Applied

, Sagitta

TAM, & QQ Solu tions

What the System Does for You... Mobile Responsive Web Platform • Web Traffic Booster Engine • Email Marketing Social Media Engagement • Mobile Producer Alerts • Sales Pipeline Management Prospecting Engine • Round Out Engine • Referral Manager • Renewal Manager Reports You Can’t Live Without • The Astonish Training System

... and so much MORE!

TURN YOUR FUTURE & EXISTING BOOK OF BUSINESS INTO AN UNSTOPPABLE REBEL FORCE OF PROFITABILITY! The ONLY complete agency growth system!

ASTONISH.COM

TAKE THE TOUR TODAY!

877-905-1999

Think CoverX. CoverXSpecialty is committed to delivering a diverse lineup of insurance products to our appointed wholesale producers. Having provided our customers with expertise for over 40 years, CoverXSpecialty now utilizes over 80 experienced professionals in nine strategically located regional oﬃces to best handle your insurance needs.

ENCED I R PE

RT UST

R E N T R A P D E ED

Construction • Entertainment • Transportation • Excess/Umbrella • Life Sciences Product Recall • Oil & Gas • Manufacturing • Security • Small Business Unit

COMMI

® CoverX is a registered trademark of CoverX Corporation. CoverX®Specialty products and services are offered on a wholesale basis through CoverX Corporation, a wholesale surplus lines insurance producer. CoverX operates in California as CoverX®Specialty Insurance Services (CA license #0573926).

Learn more at: www.coverx.com

DRAGONFLY:

300 MILLION YEARS OLD

T-REX:

EXTINCT

FINANCIAL STABILITY RATINGS® LEVEL THE PLAYING FIELD FOR REGIONAL AND SPECIALTY INSURERS

FUNDAMENTALS ARE SIGNIFICANT, NOT SIZE

Contact us today to learn how Demotech and Financial Stability Ratings® can help Coverage Specialists level the playing ﬁeld. Call 800-354-7207 or visit

www.Demotech.com

Create a Countdown to ROI Success. On the launch pad. In 1958, the United States launched its first satellite into space and within three short years, an American astronaut orbited the Earth. In the 1960s, the US set their sights on landing a person on the moon. Before the end of the decade, Neil Armstrong’s famous ”one small step” saw that goal fully realized. But that wasn’t the end. The last four decades have seen continued advancement with missions reaching to the edge of our galaxy and beyond. The recent landing of the Mars Rover ‘Curiosity’ has sparked the interest of a new generation, and as the Voyager 2 spacecraft nears the edge of our solar system, NASA continues to drive scientific progress and innovation.

ForemostAgent.com

Foremost Means More.™

Exploring new frontiers

Technology here on Earth has also advanced, and today agencies are faced with new options to market themselves using social media sites such as Facebook and Twitter. Much like a rocket launch, a good marketing campaign requires a plan and a way to measure the success of that plan. A recent study of insurance agencies done by B.H. Burke and Co. found that nearly two-thirds were not measuring the success, or return on investment (ROI), of their social media marketing; and even more didn’t know how to begin. It’s time to take the next step and the best way to do that is to define your social media strategy, support it with appropriate content and measure your ROI with the appropriate metrics.

Set a trajectory for success

Ideally, when you first started marketing your agency on social media you defined your purpose or at least considered what you what you wanted to accomplish. However, chances are that, like most companies, you did not. Measuring ROI should be unique to each agency, depending on marketing goals and desired return. Some agencies simply want to expand their fan base (likes, followers, etc.), others are looking to increase fan interaction, and others still are looking for something more tangible and traditional, such as leads or sales. Decide what is most important to you and how it will help your business, set a goal and focus on reaching it. It’s also helpful to look at what you’re doing now and how your page is functioning – you may simply need to expand or refine your current efforts. However you outline your plan, the most important thing is to maintain your effort through consistent, valuable content.

Don’t just watch from orbit

Regardless of how you choose to measure success, providing consistent, valuable content will keep your fans engaged and help your page to continue growing. Look at what is creating the most engagement on your page and expand on that. If you need help, the Foremost Social Media Suitcase has plenty of ready-to-use content available that you can easily copy and paste to your page. If you have chosen to

measure success on the number of fans, you’re not off the hook. Just as quickly as people can opt in, they can opt back out if they feel they’re not getting the value they were promised. If your focus is leads and sales, engage your audience with interesting content and attempt to direct them to a contact or quote page on your company website. Once you have an active page and regularly engaged audience, begin measuring your defined success and determining your return on investment.

Launch, measure, repeat

Measuring your ROI is unique to both your defined success and the platform that you’re using. Facebook makes measuring Likes and engagement very easy by way of Insights. Other pages, such as Twitter, may require you to use a third party application or manually capture information. Generating sales and leads from social media can be tricky and measuring it can be even trickier. Begin monitoring your website traffic using Google Analytics, if you’re not already doing so. Google Analytics allows you to view which pages on your website are most popular and, most importantly, where the traffic is coming from. Facebook also has a conversion tracking function available (Facebook.com/Business/ROI) for measuring the success of individual ads that are meant to increase sales and leads. There are also a number of companies which offer paid service plans to monitor and analyze your social media activity.

The frontier is never final

The most important thing is to define what success means to you – whether it’s number of fans, level of engagement or generating sales and leads – and support your success by staying active and involved. In a perfect world you should be attempting to create a healthy balance by deploying tactics to increase your fans, regularly engage them, convert them to sales and continually measuring your success. The social media universe is still full of unknown territory. Each day brings new discoveries that can help you market your agency online – get out there, take the step, plant your flag and have a plan for what’s next. Product, coverage and discount availability vary by area.

So far this year, 4,031 Foremost producers have launched their social media platforms with the help of the Social Media Suitcase. From instructions on how to get started to content you can use in your own social media campaigns, the Foremost Social Media Suitcase will help increase your overall success in the social media space. Find out today how one small step can take your agency into the future ... and beyond. Go to ForemostAgent.com and find out how Foremost Means More for you.

ForemostAgent.com

Foremost Means More.™ AUTO, MANUFACTURED HOME, MOTOR HOME, TRAVEL TRAILER, LUXURY MOTOR COACH, SPECIALTY HOMEOWNERS, VACANT PROPERTY, SEASONAL PROPERTY, LANDLORD AND RENTAL PROPERTY, MOTORCYCLE, OFF-ROAD VEHICLE, SNOWMOBILE, BOAT, PERSONAL WATERCRAFT, COLLECTIBLE AUTO, FLOOD AND COMMERCIAL. Product availability varies by state. ”Foremost” and the ”F” logo are registered trademarks of FCOA, LLC, 5600 Beech Tree Lane, Caledonia, MI 49316. 9009295 8/13

ITC technology is the superpower that allows agents to be smarter and more efficient with their time and money. As your sidekick, your goals are our goals. Our products work together to automate the lifecycle of your customers. From getting the leads, to converting them, to retaining the customers. ITC I has it covered so our agents can better meet the growing demands and needs of today’s consumer. Insurance Website Builder: Our award-winning websites are the best in the industry because every website is designed to help agents sell insurance online and get more clients. AgencyBuzz: Automated agency marketing keeps agencies in Agen front of their prospects and clients through consistent communication with a personal touch. TurboRater: Our very first product more than 30 years ago, TurboRater has evolved with the changes in the industry and has become a top personal lines comparative rating system in security, efficiency and its 16 available states thanks to the securit speed it delivers. InsurancePro: A management system that makes agency management affordable and easy by decreasing workload and improving efficiency. Are you ready to be your own superhero?

TURBORATER NOW AVAILABLE IN CALIFORNIA

ARE YOU READY FOR YOUR NEXT SUPERPOWER? SECURE. EFFICIENT. CLOUD BASED. GETITC.COM/SUPERPOWER

MARKETING | RATING | MANAGEMENT

NATIONAL COVERAGE

News & Markets P/C Direct Premium Written Up Nearly 4.8%

irect premium written (DPW) for property/casualty insurance companies continued its upward trend during the first quarter of 2013. At year-end 2012, the industry reported more than $523 billion of DPW — an all-time industry high. For 2012, total DPW for all P/C insurers aggregately increased 4.4 percent over 2011, an increase of nearly $22.3 billion. Through the first quarter of 2013, this growth trend has By Douglas A. Powell continued as DPW for all P/C insurers aggregately increased 4.8 percent over 2012. For the three months ending March 31, 2013, P/C companies comprising the Top 25 insurers in terms of DPW leveraged their experience and increased their DPW nearly

12 percent over 2012. This continues the Top 25 insurers’ impressive premium growth and financial stability. The Top 25 accounted for nearly half of the growth in the P/C industry’s DPW. In contrast, the remainder of the industry reported an increase in DPW of only 3 percent year-over-year. In examining DPW further, P/C companies reported an aggregate increase in DPW through first quarter 2013 of 8.3 percent over first quarter 2008. P/C companies also have aggregately maintained a sufficient level of policyholders’ surplus (PHS). Insurers added nearly $36.5 billion to PHS since first quarter 2012. One measure that indicates P/C companies are conservatively leveraged is the DPW to PHS ratio. An insurer’s DPW to PHS ratio is indicative of its premium leverage on a direct basis, without consideration for the

effect of reinsurance. For first quarter 2013, this ratio (estimated for a full year) is 69.6 percent. Since 2010, this ratio has remained stable at about 70 percent. Although the market continues to exhibit signs of firming and DPW continues to increase, P/C insurers should not expect a traditional hard market in the near future. The double-digit premium growth experienced in the historical hard market cycles may have created unrealistic premium growth expectations for this current recovery. It is more realistic to expect gradual, stable growth. However, if the industry continues to hold to its recent, gradual growth trends, it will once again report its highest level of year-end DPW. Powell is a senior financial analyst with Demotech Inc. Email: dpowell@demotech.com.

Top 25 Property/Casualty Companies Based Upon Dollar Amount of Direct Premium Written (DPW) Growth Year-to-Date Results March 31, 2013 versus March 31, 2012 Company Name

DPW 03/31/2013

DPW 03/31/2012

$ Growth

% Growth

State Farm Mutual Automobile Insurance Co. State Farm Fire and Casualty Co. GEICO Casualty Co. Zurich American Insurance Co. LM General Insurance Co. Allstate Fire and Casualty Insurance Co. Atlantic Specialty Insurance Co. QBE Specialty Insurance Co. Travelers Property Casualty Co. of America USAA General Indemnity Co. Factory Mutual Insurance Co. Wesco Insurance Co. United Financial Casualty Co. GEICO General Insurance Co. Cincinnati Insurance Co. Safeco Insurance Co. of Illinois QBE Insurance Corp. Liberty Mutual Insurance Co. Nationwide Mutual Insurance Co. Esurance Property and Casualty Insurance Co. USAA Casualty Insurance Co. California Automobile Insurance Co. COUNTRY Mutual Insurance Co. United Services Automobile Association Progressive Select Insurance Co. Top 25 by DPW Growth All Other P/C Companies Total

$8,051,907,645 $3,928,914,263 $518,987,709 $1,385,322,471 $294,441,063 $1,252,146,432 $204,676,765 $289,300,737 $1,180,866,908 $410,927,850 $693,601,798 $241,610,034 $207,365,447 $1,781,716,524 $798,628,980 $389,635,959 $345,023,321 $1,224,231,712 $917,774,689 $205,106,766 $1,100,472,211 $95,704,142 $355,792,659 $1,575,240,015 $281,608,462 $27,731,004,562 $103,897,486,125 $131,628,490,687

$7,783,500,701 $3,690,670,567 $298,499,267 $1,208,419,514 $142,854,295 $1,104,058,061 $64,516,434 $169,558,022 $1,071,990,901 $302,058,500 $587,645,808 $141,984,082 $111,065,502 $1,688,342,934 $706,598,593 $302,987,373 $258,711,717 $1,140,087,381 $835,027,217 $125,319,256 $1,021,050,103 $17,504,980 $278,768,979 $1,499,010,653 $211,864,604 $24,762,095,444 $100,832,210,138 $125,594,305,582

$268,406,944 $238,243,696 $220,488,442 $176,902,957 $151,586,768 $148,088,371 $140,160,331 $119,742,715 $108,876,007 $108,869,350 $105,955,990 $99,625,952 $96,299,945 $93,373,590 $92,030,387 $86,648,586 $86,311,604 $84,144,331 $82,747,472 $79,787,510 $79,422,108 $78,199,162 $77,023,680 $76,229,362 $69,743,858 $2,968,909,118 $3,065,275,987 $6,034,185,105

3.45% 6.46% 73.87% 14.64% 106.11% 13.41% 217.25% 70.62% 10.16% 36.04% 18.03% 70.17% 86.71% 5.53% 13.02% 28.60% 33.36% 7.38% 9.91% 63.67% 7.78% 446.73% 27.63% 5.09% 32.92% 11.99% 3.04% 4.80%

Data Source: The National Association of Insurance Commissioners, Kansas City, Mo., by permission. Information derived from an SNL product. The NAIC and SNL do not endorse any analysis or conclusion based upon the use of its data. 28 | INSURANCE JOURNAL-NATIONAL August 19, 2013

www.insurancejournal.com

From our family to yours. Who do you trust more than family? Century-National Insurance Company has been family owned and family run for more than 40 years. At Century-National Insurance Company, the security of you and your client’s family is our only business. From Business Auto to a full array of Personal Lines products, our family is here to protect your family. As a prominent insurer in the West, our focus is a steadfast commitment to serving your customers in their time of need. Looking for a Super Regional Carrier with an A.M. Best “A” rating, superior service, a suite of competitive products and where you can talk to an actual person? The word’s out...the best security for your client is no longer a family secret. 800.733.0880

HOMEOWNER’S

| www.cnico.com

EARTHQUAKE

MOBILE HOME

COMMERCIAL AUTO

PERSONAL AUTO

UMBRELLA

CLOSER LOOK

Sales & Marketing E&O Insights: Producers Play a Significant Role in E&O

hen reviewing errors and omissions (E&O) statistics, it is often alleged that producers cause the issue in more than half of these claims. However, because a producer is alleged to have made the “error or omission” does not necessarily make it so. Most E&O carriers report they are able to close out more than half of all E&O claims for no loss By Curtis M. Pearsall payment. Yet producers remain a target. A producer’s job at an insurance agency presents tremendous challenges and responsibilities. For insurance agencies, the degree to which these men and women perform this job professionally and ethically can greatly determine not only the agency’s success, but its E&O risk, too. To begin, producers must possess a high level of technical knowledge. As producers interact with prospects and customers, some of this knowledge will need to be imparted. As a result, producers must be strongly committed to knowing the various classes and lines of businesses, and what differentiates one from another. Relying strictly on licensing training is not enough. Know Your Customer Technical knowledge by itself is like a glass half-full. Having product and industry knowledge with no sales skills — or sales skills without knowledge — is insufficient. Learning the sales structure/process is critical, yet the sales process involves more than just making the sale. Organizations which provide solid training for sales and marketing typically break the training into three segments: pre-sale, sale and post-sale. How producers conduct themselves during the complete sales process will likely determine whether they are successful and to what degree they are an E&O risk. Before ever visiting the potential customer, the producer should get to know 30 | INSURANCE JOURNAL-NATIONAL August 19, 2013

the prospect and the risks to which the prospect is exposed. A great starting point is to use one of the various exposure analysis checklists. Checking the prospect’s website to better understand specific exposures is beneficial, too. In many, if not all states, an insurance producer (agent/broker) has a common-law duty to obtain the coverage the client specifically requests within a reasonable time or inform the client of the inability to do so. Accordingly, producers must do a fair share of listening to what the customer/prospect wants. Don’t Say It Producers may use various promotional pieces or slogans to enhance their sales success rate. While this marketing message may enhance the ability to be successful, special attention should be given to the words and phrases used in promoting the producer and the agency. For example, using words such as “expert” or “specialist” has the potential to impose a greater degree of liability on the producer and the agency should a problem develop. Using these terms can cause a “special relationship,” making the producer more of an advisor. Producers also should avoid using the word “recommend.” It might sound harmless, but say you recommend that a client secures a $1 million umbrella. If this client has a loss well in excess of $1 million, you could face an E&O claim for “recommending” a limit that was insufficient. Inherent in all of the interactions is the need for prompt, professional documentation. This applies whether producers

are interacting with the prospect or the markets they are using. If a problem develops, quality documentation — or a lack of — will heavily determine the direction of the E&O claim. Documentation is not an option. It is mandatory. Review the Policy Presuming the producer gets the order, the policy is now requested. Once the policy is received, it should be reviewed to ensure it reflects what was ordered. The producer should have an active hand in this process. The policy should be delivered promptly — in person, mailed or sent electronically. In all but a few states, the client has a duty to read the policy, so producers should strongly encourage the customer to do so. Being a producer requires tremendous knowledge, professionalism and attention to detail. This will go a long way to ensuring success. Without these attributes, you are an E&O nightmare waiting to happen. It’s your choice — and the right choice should be easy to make. Pearsall, CPCU, ARM, is president of Pearsall Associates Inc., a risk management consulting firm specializing helping agents protect themselves. He is also a special consultant to the Utica National Agents E&O program. Phone: 315-768- 1534. E-mail: curtis@pearsallassociates.com. Blog: www.agentseotips.com.

www.insurancejournal.com

I �h��

I �i�� I �lo��

I Document scanners for your digital life. © 2013 Fujitsu Computer Products of America, Inc. All rights reserved. Fujitsu and the Fujitsu logo are registered trademarks of Fujitsu Ltd. All other trademarks are the property of their respective owners.

Visit http://Ez.com/insurjournal

IDEA EXCHANGE

International Insider Information Technology and Risk Complexity By Veronica Somarriba

n today’s legal environment, nearly every company faces some kind of litigation risk. With the growing ubiquity of technology in not just the corporate market, but the consumer marketplace as well, the risk for global technology companies is usually connected with their various products and services. Technology companies may become exposed to litigation risk as a result of product failures or projects that run into trouble. IT projects are frequently large and complex, often go over budget and take more time than originally estimated. Some projects may run into such significant problems that they are never completed. Others may fail to live up to expectations. Technology products, systems and services, meanwhile, may fail to perform as expected. In addition to these risks, new risks have emerged relating to how consumers are impacted by a technology company’s product or services. Technology companies have relied on errors and omissions (E&O) policies to help protect them in case of defects, deficiencies or inadequacies with their products and services. Traditionally, these companies purchased a global policy issued in the United States. In these cases, the litigation risk was generally from another business, usually a corporate customer seeking damages for economic injury to its business. But a new trend has begun to emerge. The corporate customers of global technology companies have begun requiring their technology vendors to buy admitted insurance in the local market. These policies are then often combined with a controlled master policy. In other cases, technology 32 | INSURANCE JOURNAL-NATIONAL August 19, 2013

vendors are themselves choosing to buy admitted insurance in the local market to obtain specialized coverage as they respond to growing concerns about local consumer protection laws. While the combination of admitted policies and controlled master policies has been the standard

practice in the global property and liability markets and has been an emerging trend in the directors and officers (D&O) markets, this is a brand new development in the E&O market. Technology Projects Fraught with Risk Businesses are under constant pressure to keep their computer systems up-to-date and running smoothly. After several years, businesses often face difficult decisions about upgrading systems that have started to become obsolete or that no longer meet the company’s needs. New technology projects, however, can be fraught with risk. Projects may easily go off track, resulting in losses and lawsuits. Consider these examples: Healthcare plan administrator

CareSource Management Group sued Lawson Software in 2011, claiming an enterprise resource planning software project hadn’t been able to get beyond the testing phase and that the project had experienced numerous problems, according to an IDG News Service. CareSource is demanding at least $1.5 million in damages. Chemical products manufacturer Avantor Performance Materials filed a lawsuit against IBM in 2012 for fraud and breach of contract over the implementation of a software project, according to Reuters. Avantor is seeking tens of millions in damages from IBM. Whaley Foodservice Repairs filed a lawsuit against Epicor in 2011 because of problems with an enterprise resource planning project. The lawsuit claimed that the project racked up five times its expected implementation costs and was delayed multiple times. Whaley was seeking its money returned as well as compensation for damages, according to a Computerworld report. As these examples show, technology companies and their customers face significant risk when taking on a major IT project. In other cases, however, technology vendors are at risk of litigation from consumers. Apple Inc. was sued in Texas last year over allegations it knew of defects in the motherboards of its MacBook and MacBook Pro laptop computers and didn’t correct them, according to a Bloomberg report. While multinational technology companies typically have purchased global E&O policies issued in the United States, this has begun to change. Many corporate customers now want their vendors to have admitted E&O insurance from the local market. This trend has begun to emerge in the European Union, Japan, India and Israel. A Trend Toward Admitted E&O Policies Businesses often buy admitted policies continued on page 34 www.insurancejournal.com

HAV RISK E A T DOE HAT SN’T FIT?

Call the commercial auto experts... We’ve got you covered. PACIFIC GATEWAY INSURANCE AGENCY

27200 Tourney Rd Suite 360 Valencia, CA 91355

Phone: (800) 354-4844 - Fax (661) 257-5988 www.pgiainsurance.com - License #: 0C04869

We oﬀer a wide variety of commercial auto, garage, property, package and general liability products. All backed by an A++ ﬁnancial rating by AM Best.

IDEA EXCHANGE

International Insider continued from page 32 to meet the regulatory requirements of the consumer based litigation. When the various jurisdictions where they do busiinjured party who is filing suit is a ness. When it comes to property insurance, consumer, the nature of damages for instance, regulators may require busisought is greatly influenced by connesses to purchase admitted insurance. sumer protection and regulatory laws. E&O, however, is not usually a mandato The practices of the global property ry coverage, and the requirement for admitand D&O markets have also had an ted insurance has not generally come from impact. Because it has become the regulators standard practice in but from the The combination of admitted those markets for technology policies and controlled master companies to buy vendor’s admitted policies policies is new in E&O. business and combine them customers as a contractual requirement. with a controlled master policy, that These businesses have begun to impose practice has become more common this requirement on their IT vendors for a for the E&O market as well. number of reasons, including currency and For their part, technology compatax issues. While technology vendors are nies may prefer admitted polices because of now purchasing E&O insurance in the local differences in policy language, triggers and market because of these contractual requireclaims reporting requirements. Some poliments, sometimes they are purchasing it cies, for instance, may be on a claims-made on their own in response to concerns about basis, while others may be on an occurrence

Coverage Denied? IT’S NOT A PROBLEM, IT’S OUR SPECIALTY. If your clients are unable to obtain malpractice insurance, then it’s time to call the experts. We specialize in providing malpractice insurance for medical professionals, including physicians, surgeons, podiatrists, and dentists who, for whatever reason, have difficulty obtaining coverage. Features of our program include: • Rated A by A.M. Best Company • $1 million/$3 million claims-made coverage, up to $2 million/$6 million • Broad policy form • Superior claims management • Choice of a more restrictive policy for a reduced price • Quick turnaround time to meet your needs

For more information, contact us today at (800) 537-7362 or visit www.pulic.com.

reported basis. Some technology companies may consider an admitted policy combined with a controlled master policy to offer better coverage than a global policy issued in the United States. When arranging a global program, technology vendors need both the admitted policies from the locally licensed insurers as well as the controlled master policy, which would provide difference in conditions (DIC) and difference in limits (DIL) coverages, all coordinated out of one location. The DIC/DIL master policy works with the local admitted policies to provide the U.S. insured with global coverage. Technology vendors and their insurance agents should look for insurers that have the expertise and ability to place the required coverages in the local markets and to write the master policy as well. It is also important to look for an insurer with solid financial strength ratings, top-notch loss control and claims handling services and a global network of brokers and affiliates. With a well-structured global program combining both admitted local policies and a controlled master policy, technology companies will have broad E&O insurance coverage that also will meet the needs of their customers. Somarriba is senior vice president and Worldwide Technology Segment Manager for the Chubb Group of Insurance Cos.

PULDCO16491.indd 1 4531_InsuranceJournal_Apr2013.indd 1

34 | INSURANCE JOURNAL-NATIONAL August 19, 2013

3/24/13 12:47 2:23 PM 3/22/13 PM

www.insurancejournal.com

IDEA EXCHANGE

Sales Management I Can’t Believe I Forgot!

f you live in fear of forgetting prospects’ names, sometimes within mere seconds of being introduced to them, you’re not alone. Surveys show that 83 percent of the population worries about their inability to recall people’s names. Ironically, while most of us hate having our names forgotten or mispronounced, the majority of us claim we just “aren’t good at remembering names”. Forgetting names becomes more than just By Jana Owen an embarrassing social faux pas in sales. Straining to recall a name can preoccupy you, paralyzing you from paying attention to your client or prospect. He or she may perceive you not only as unfocused and easily distracted, but possibly as not very bright if you’re unable to devote your full attention. Even worse, if you forget the name of a client with whom you’ve worked in the past, he or she may view your memory lapse as a betrayal of trust, which can cost you future money. There are many other instances in which clients complain of forgetting important information. Presentations, key business information, promises made to clients, task items that were never written down, meeting details, dates, and numerous other things are commonly chalked up to “getting older,” (which is simply not the truth). There are numerous factors that affect memory — stress, sleep, nutrition, oxygen levels. Times of day even make a difference. The simple fact is your memory reserves the right to leave you at any moment, so try to incorporate a few of the following steps to help you to recall names. Improve Name Recall The most important key to effective learning of any kind is understanding that there are three learning styles: www.insurancejournal.com

visual, auditory and kinesthetic (physically interactive). The more you can apply all three of these styles to a task, the more quickly and solidly you will learn anything. Practice each of the following steps to improve your name recollection in every sales and social situation. When you’re first introduced to someone, look closely at his or her face and try to find something unique about it. By observing a memorable characteristic, you’re incorporating the visual learning style. The next step uses auditory and kinesthetic learning styles. When you meet someone, slow down for five seconds and concentrate on listening to him or her. Focus on the prospect and repeat his or her name back in a conversational manner, such as “Susan? Nice to meet you, Susan.” Also make sure to give a good firm handshake, which establishes a physical connection with the prospect. At the end of the

conversation, integrate auditory learning by repeating the prospect’s name one more time, but don’t ever overuse someone’s name. Use the prospect’s name only right at the beginning of the conversation, and then again at the end; if you feel like you can do so naturally, you might insert someone’s name once or twice in a natural fashion during the course of the conversation, too. But if you’ve ever had a stereotypically pushy salesperson Set the use your name a intention to dozen times in a five minute conversalisten and tion, you know how remember a annoying this can be, name. so don’t overdo it. Writing is a form of kinesthetic learning — your body gets involved in the learning process — so if you’re serious about remembering people’s names for the long term, keep a journal or log of important people you meet, and review it periodically. Set Intentions One of the most important aspects of any result you get in life is your set intention. Set the intention to listen and remember a name. People can’t remember names for one main reason: they’re just not paying attention. This process forces you to think. Looking at the prospect closely, shaking his or her hand confidently and repeating the name a few times — are easy to do, will solidify the name in your memory, and will ultimately convey a positive image of you to clients and prospects. Owens is a speaker, instructor and coach for Freedom Personal Development. Phone: 512-502-JANA (5262).

SPECIAL REPORT

5 – Customer’s Shoes Put yourself in the customer’s shoes. Think: “If I were them, what questions would I ask?” — Scott Mikkelsen, Mikkelsen, Kelly, & Kipp Insurance 6 – Referral Partnerships Enter into a mutually beneficial agreement with a referral partner (i.e., accountant, car dealership) with the objective of sending each other hot leads. I gain a lot of new business using this approach. — Eric Lanzillotta, CBIA Insurance Agency Inc. 7 – Foot in the Door For commercial insurance: Drop off a cookie in the shape of a foot to a prospective insured. The cookie should have a note attached that says, “Trying to get my foot in the door.” — Trisha Wright, The Hartford.

Insurance Journal has listened to readers, spoken with experts, combed through columns and articles and even searched outside insurance circles to find the best sales and marketing tips for independent agencies today. Here are 101 ideas, in no particular order.

1 – Know Your Client Be alert to details that matter to the client and recognize what makes every encounter with each client unique. Our brand promise, “Because You’re Different,” hinges on employees knowing their distinctive clients and sustaining a positive relationship. Tell your client things you are doing for them that they might not know about and make a point to ask them questions about their business. — Jackie Donnelly, Heffernan Insurance Brokers 2 – Link Up Ask key commercial clients for their permission to include a link to their websites on your agency’s website. You can bet they will give you their OK and will probably appreciate your loyalty to them, which 36 | INSURANCE JOURNAL-NATIONAL August 19, 2013

should help you bond with a long-term client. — Phil Tuccy, Insurance Group Consulting LLC 3 – Share Problems Make the customer’s problem your problem. — Scott Mikkelsen, Mikkelsen, Kelly, & Kipp Insurance 4 – Mobile Friendly Make your insurance website mobile-friendly so your customers on-the-go can easily access your information if they need it. — Laird Rixford, Insurance Technologies Corp.

8 – Checklists Use coverage and exposure checklists to increase sales. By doing the job of a professional insurance agent, you will also create a great reputation for yourself. — Chris Burand, Burand & Associates LLC 9 – Make Friends Stop pushing product and price. Make friends and they will become your best clients. — Al Diamond, Agency Consulting Group Inc. 10 – Thank You Send a handwritten thank you card to clients when they send you referrals and say the following, “The sincerest form of flattery to my agency is in a referral from you, our client. Thank you so much for your vote of confidence and we will take special care of your referral.” Then enclose two more of your business cards. — Catherine Oak, Oak & Associates

11 – Measurements Measure customer www.insurancejournal.com

sentiment with social media — not just negative, but positive, too. If your customers are singing you praises, use that to tell more people about your great customer service and get some real marketing mileage out of it. — Don Wolff, Astute Solutions 12 – Umbrellas Sell increased limits on umbrella policies. Invite personal and small commercial lines umbrella insureds to increase their policy limits beyond $1 million. Many CSRs and producers write a small umbrella once — and then forget to suggest adding another million, or more, at renewal time. — Alan Shulman, www.AgencyIdeas.com 13 – Promote Your Website Promote your website on all of your marketing. This could include business cards, brochures, emails and social media. Basically, anywhere you have your agency logo, your URL should be there, too. — Laird Rixford, Insurance Technologies Corp. 14 – Turn to Your State Association If you have an agency challenge, chances are that someone else has already faced it — and solved it. Turn to your state agents’ association for a broad range of solutions to problems you face as an agent or agency principal. — Sharon Emek, Work At Home Vintage Employees (WAHVE) 15 – Screen Share It’s not always possible to get an in-person appointment. Using easy-to-use screenshare technology such as Join.me is a good way to share a presentation, or go through your website while you’ve got the prospect or client on the phone. — Julie Tinney, Insurance Journal 16 – Virtual Checks Use remote deposit to electronically deposit checks without leaving the office. Remote deposit captures images of both sides of checks, analyzes them for image quality and authenticity, and automatically balances deposits before submission. That makes the bank available 24/7, www.insurancejournal.com

saves time and money, and boosts security. Remote deposit does not require application software, and uses a scanner (typically provided by the bank) as well as a PC with an Internet connection. — Mary Grazen, InsurBanc, a division of Connecticut Community Bank N.A. 17 – Great Customer Service It’s not a secret tactic, but it is the most effective one. When our agents provide customers with outstanding service, they show their appreciation by giving us referrals. — Trident Insurance Agency 18 – Give Them Something Never leave your client or prospect empty-handed. Give them something useful and informative that will make them think of you every time they see it and use it. — Christopher J. Boggs, Academy of Insurance, www.IJAcademy.com 19 – Track New Business Appointments New business production is the ultimate indicator of sales performance, but understanding meaningful activity may be the missing piece of your sales management platform. — Tommy McDonald, MarshBerry 20 – Website Design A well-designed website will serve as the hub of all digital agency marketing. When done well, it can serve multiple purposes: customer service, education, sales, retention. — Laird Rixford, Insurance Technologies Corp. 21 – Tracking Metrics Growing agencies have one thing in common: They track where every new piece of business is coming from, so they know which marketing efforts are paying off. They also track the number of policies per client, so they know whether they are building deeper relationships. — Jeff Yates, Agents Council for Technology

22 – X the Lingo Get rid of lingo and find a way to talk to clients in words and phrases they can easily understand. — Anonymous 23 – Strategize All marketing needs a strategy and a goal. You want to post a banner? Send an email to a list? Start a newsletter? Great. Why? — Anonymous 24 – Double Referrals Create a referral program that rewards existing and new customers. This creates a win-win which is naturally what a referral should be. Dropbox and Uber have successful referral programs that award the existing customer and new customer with bonus storage and service credit when the new customer signs up. — Josh Carlson, Wells Media Group 25 – Believe in Your Brand Passion is contagious. If you love where you work, shout it to the rooftops. Let others know why your agency is the best. You’ll be much more likely to generate genuine enthusiasm, which could drive more customers to use your services. — Aimee Woodall, The Black Sheep Agency 26 – Data Goldmine For more than 20 years, agencies have had the most lucrative gold mine locked up in customer data. You may have 20 valuable nuggets of information about every client in your system: birthdays, claims, policies held, policies not held, ex-dates and so forth. So, if you’ve got 5,000 customers, you’ve got 100,000 pieces of information ...that changes every single day. Technology exists to turn that “dead data” into a marketing goldmine. — Michael Jans, Agency Revolution 27 – Be in Position to See Opportunity Work hard and try to put yourself in a position where, if luck strikes, you can see continued on next page August 19, 2013 INSURANCE JOURNAL-NATIONAL | 37

SPECIAL REPORT

continued from page 37 the opportunity and take advantage of it. — Mark Cuban, chairman of HDNet 28 – Drip Marketing Use a consistent drip marketing campaign: Bring value by providing useful info or ideas. You will be (hopefully) top-ofmind when the need for services will arise. — Brad Tamulski, Baldwin Krystyn Sherman Partners 29 – Unique Landing Pages Use landing pages that are designed to match specific marketing campaigns (e.g., an email sent to auto insurance prospects should link to a landing page that discusses auto insurance and matches the design of the email). This will improve your conversion rate. — Laird Rixford, Insurance Technologies Corp.

for business. You will either get it or find out remaining obstacles. — Brad Tamulski, Baldwin Krystyn Sherman Partner 33 – Community Involvement Savvy agencies and their employees are becoming increasingly involved in local causes to support their communities, and these efforts are generating new clients for them — clients who want to support businesses striving to make the community better. — Jeff Yates, Agents Council for Technology 34 – Target Marketing Smart call — target certain industries/ client sizes/etc. and tell them exactly why you’ve identified them as benefiting from what you have to offer. Prospects can be more receptive. — Brad Tamulski, Baldwin Krystyn Sherman Partners 35 – Social Media Marketing Social media marketing is more than tweeting/posting and running; it is rollup-your-sleeves interactive work that builds solid relationships and reputations. — Tammy Elizabeth Southin, social media marketing consultant

30 – Social Media Content Provide useful, engaging content on social media to attract new customers and retain relationships with existing ones. Always remember that social media is conversational. Never ignore anyone. Respond to all inquiries, comments, etc. — Valerie Foster, Monitor Liability Managers 31 – Community Like Its Partner with a community charity on Facebook. Preferred Insurance Services is partnering with Pet Project Rescue in Minneapolis until the beginning of September in the hopes of garnering $500 for the non-profit. Preferred has committed to donating $1 to PPR for every new “like” it gets on its Facebook page between now and then. In just three weeks, Preferred doubled its fan base — and raised nearly $200 for PPR in the process. — Preferred Insurance Services 32 – Don’t Forget to Ask Ask for the business. After showing value and laying out distinct advantages of a partnership, be clear about asking

36 – Show You Care Show your customers you care by helping them when they’re in trouble, responding quickly and effectively to complaints, or providing sympathetic feedback. It’s up to you to build a symmetrical feedback loop of appreciation and understanding. — Aimee Woodall, The Black Sheep Agency 37 – Clients in Common Find out from each of your key clients who their attorney and CPA is, and then contact those professionals and let them know you have the same good clients in common. It gets the attorney and CPA to send you more referrals because their clients use you. — Catherine Oak, Oak & Associates

38 | INSURANCE JOURNAL-NATIONAL August 19, 2013

38 – Video Testimonials Collect mini-video testimonials. Identify your happiest and most influential insureds. Ask them for a brief video testimonial you can tactfully use. A 6-second Vine or 15-second Instagram video recorded on your smartphone can be fun for your insured and for you. Use them online for marketing purposes and display them in-person when actively selling. — Alan Shulman, www.AgencyIdeas.com 39 – Bigger Footprint You have a license to sell insurance throughout your state, or more. Then do it. One of my clients shot from 95 contractors to 2,000 in four years. Her small town location did not dictate a small town marketing plan. — Michael Jans, Agency Revolution 40 – Email Use email marketing to cross sell. — Laird Rixford, Insurance Technologies Corp. 41 – Decide Once and For All Average marketing will flow from the unconscious decision to be “OK” with an average agency. Great marketing will flow from the decision to be great. Insanely great marketing will flow from the decision to be insanely great. It’s up to you, cowboy. — Michael Jans, Agency Revolution 42 – Go Out of Your Way Going out of your way to help a customer will likely benefit you in terms of customer retention and word-of-mouth. But it’s also just a genuinely good thing to do — and that’s worth something, too. — Aimee Woodall, The Black Sheep Agency 43 – Buyer’s Remorse Review What do you do when you discover that your personal or commercial prospect’s policies just renewed? One response is to target their post-sale period of uncertainty and offer to provide a “buyer’s remorse review.” Your prompt second opinion can open an unsure prospect’s mind to many valid criticisms. — Alan Shulman, www.AgencyIdeas.com

www.insurancejournal.com

44 – Free Coffee We have a promotion on our website that offers a $5 Starbucks giftcard for referring a friend to our agency. — Trident Insurance Agency 45 – Build a Community There is strength in numbers. Look for people who are excited about the work you do and highlight them. Create an ambassador program to get even more people involved. You’ll suddenly find your brand popping up in more places: in conversations, blog posts and “Best Company” lists. — Aimee Woodall, The Black Sheep Agency 46 – Dissatisfaction Surveys What’s wrong with your insurance? Don’t use the same old “let me quote” approach when soliciting commercial lines. Instead, employ a business “dissatisfaction survey” to differentiate yourself and to let the buyer vent about what’s wrong with his current insurance program. When you know exactly what bugs him, you can provide a custom solution. — Alan Shulman, www.AgencyIdeas.com

49 – Email Drips Set up email drips in an automated agency marketing system to automatically follow up on every prospect over a period of time. This will help keep your agency in front of the consumer without you having to remember to do the follow up. — Laird Rixford, Insurance Technologies Corp. 50 – Shopping Carts We have our president’s picture on shopping carts! We advertise our agency at the local grocery stores. — Trident Insurance Agency 51 – Reduce Redundancy Maintain your records and solidify your data with data download. — Real Time/Download Campaign co-chair Joyce Sigler, Jones & Wenner Insurance Agency 52– Consider Your Audience It’s all about the customer experience. Think about their experience and what they’re going through. Gather feedback. Consider what they like and what they don’t like. Try and fix the things they don’t like. Use their recommendations and concerns to change your company’s tactics or direction. Your customers will appreciate it. — Aimee Woodall, The Black Sheep Agency

47 – Turn to Training The industry’s nonprofit organizations are a rich source of training and education. The CPCU Society, ceu.com, AIMS Society, and NAPSLO are a few of the national organizations that offer specialized classes in property/casualty insurance. Local associations and affiliates also are helpful and even more accessible. — Sharon Emek, Work At Home Vintage Employees (WAHVE)

53 – Real Time Saves Real $$$$ Implementing real-time functions in your agency saves time and money. A typical agency with four CSRs each doing 15 transactions per day via real time (versus a company website) will save 90 days of CSR time and $14,400 annually, according to surveys. — Real Time/Download Campaign co-chair Stuart Durland, Seely & Durland Insurance

48 – Featured Partners We feature prospective clients and existing clients’ companies on our “partners” page for cross referrals. — Trident Insurance Agency

54 – Be Quick Be quick and responsive to a client’s need. When I get a referral or an Internet lead, I try to make contact right away. — Anonymous

55 – Soft Stalking If a prospect is not responding, begin following their company on Twitter and Facebook and participate. It’s surprising how many business-owners and CEOs actually check to see their new likes and followers. This is particularly true of smaller companies. It’s just another way to get your name in front of them without asking to personally connect on social media with someone you’ve never met, which can be creepy. — Julie Tinney, Insurance Journal 56 – Virtual Connections Use your existing technology to give producers immediate system access while they’re working remotely. Two technologies built into Windows make it as secure to connect to the office server from across the country as from across the hallway: virtual private networks (VPNs) and remote desktop protocol (RDP). — Frank Sentner, Work At Home Vintage Employees (WAHVE) 57 – Online Banking Use online banking to streamline processes. Sending and receiving funds electronically, transferring funds between accounts, scheduling direct deposit of payroll, and creating wire transfers are all ways to be more efficient as an agency. Bankers familiar with insurance agencies can help develop programs to create an efficient process in managing agency funds and accounts. — Mary Grazen, InsurBanc, a division of Connecticut Community Bank N.A. 58 – Varied Methods If you put all your time and energy into social media, you may end up ignoring the potential customers who aren’t on social media. Embrace a variety of marketing methods to succeed, including everything from face-to-face interaction to grassroots tactics. — Aimee Woodall, The Black Sheep Agency 59 – Set Up Knowledge Transfer Experienced workers are valuable sources of insurance expertise. Before they retire continued on next page

www.insurancejournal.com

August 19, 2013 INSURANCE JOURNAL-NATIONAL | 39

SPECIAL REPORT

continued from page 39 (and 10,000 Americans hit retirement age every day) and take their institutional knowledge with them, set them up as mentors for newer and younger producers and employees in your agency. — Sharon Emek, Ph.D., Work At Home Vintage Employees (WAHVE) 60 – Real People Delete your Facebook, delete your Twitter, meet real people, sell insurance. — Josh Carlson, Wells Media Group 61 – Listen Carefully Listening to clients’ concerns and answering their insurance questions thoroughly is extremely important in maintaining mutual trust. The client trusts that you are looking out for their best interests and that you are providing them with expert industry advice. — Trident Insurance Agency

have a wealth of information to share about risk trends and industry changes, as well as claim examples/scenarios. Also, follow them on LinkedIn or Twitter, and you can share or re-Tweet any relevant information. — Valerie Foster, Monitor Liability Managers 65 – In-House Social Media We have an in-house social marketing consultant that stays up-to-date with our blog and social media sites. They reach out to local businesses and post useful insurance tips that elicit calls to our agency for quotes. — Trident Insurance Agency 66 – Amplify Success Rather than trying to accomplish all of your promotion goals at once, focus on growing over time. Once you gain recognition, whether it’s a mention from an important influencer on social media or a front-page story, you can use that to show more potential audiences why your brand matters. — Aimee Woodall, The Black Sheep Agency

62 – Be the First to Know If you are tired that your agency’s not getting data before your customers do, encourage your carriers to initiate activity/ notifications for real-time notifications and policy data. — Real Time/Download Campaign co-chair Joyce Sigler, Jones & Wenner Insurance Agency

67 – ‘I Don’t Know’ Don’t be afraid to say: “I don’t know.” No one expects you to know everything; plus you now have the opportunity, and a reason, to connect with the client or prospect again. Not only will you know you have provided the correct information, you will have built trust.” — Christopher J. Boggs, Academy of Insurance, www.IJAcademy.com

63 – Become an Expert Encourage your producers to develop an expertise on an industry group or technical niche, and become the go-to person in the marketplace. Enhance the reputation by participating in national events, publishing articles and hosting seminars on the subject. — Laura Sherman, Baldwin Krystyn Sherman Partners

68 – Keep Score Become obsessed with being the best through performance benchmarking within your agency and within the industry. Top performers are motivated by winning. Encouraging competition internally creates a growth culture that helps you compete externally. — Tommy McDonald, MarshBerry

64 – Carrier Help Ask your carriers for content to use on your marketing materials, website, blogs or social media. They 40 | INSURANCE JOURNAL-NATIONAL August 19, 2013

69 – Get Out What You Put In Start small and strengthen over time. Put in

the hours to build relationships with the media and your customers. Brand recognition does not just happen overnight. — Aimee Woodall, The Black Sheep Agency 70 – Hire, Hire, Hire Predictable, sustainable growth is directly dependent on systematic reinvestment within your production staff year-over-year. — Tommy McDonald, MarshBerry 71 – Why Measure? You don’t have time to spend on efforts that don’t yield results. You have to illustrate how your efforts increase brand awareness, create buzz and generate new business; otherwise you’ll never know what gets you noticed and what ends up being overlooked. Demonstrate growth and illustrate investment. — Aimee Woodall, The Black Sheep Agency 72 – New Client Thank Yous Every new client gets a personally written thank you card with their agent’s information and a note that says: “We love referrals. Thank you for referring us.” — Trident Insurance Agency 73 – Total Agency Sales Culture Producers are the quarterbacks of a growth team, but key technicians and high-level servicers are your linebackers. Employ quality people throughout the entire organization, not just within your sales staff. — Tommy McDonald, MarshBerry 74 – Make Your Value Proposition Valuable Track utilization on all value added services, charge fees on top of commission, and have a communication process through stewardship reporting to ensure the client knows your value. — Tommy McDonald, MarshBerry 75 – Match Interests Employees and producers have favorite www.insurancejournal.com

charities to which they personally give time and donations. Choose one of those for your entire agency to contribute to by volunteering and/or a fundraising. It’ll build camaraderie, help the charity, and make your brand a little better known in the community. — Jill Bookman, American Collectors Insurance 76 – Institutionalize Your Relationships Develop a long-term retention plan on large-scale accounts by introducing key agency executives to decision-makers. Involve quality service, loss control, claims advocates, and other value-added service personnel during the prospecting process to help diversify the relationship long term. This practice allows for better delegation of servicing responsibilities, sells the team, and helps transition relationships as employees move on or retire. — Tommy McDonald, MarshBerry 77 – All Aspects of Life The bottleneck for selling comes from lack of activity. Turn your life gray and open the opportunity of prospecting with every part of your life. — Justin Berry, MarshBerry 78 – Take Chances Someone will always say: “You can’t do that!” Just because something hasn’t been done before doesn’t mean it won’t work or that it won’t make a huge impact. You have to take chances to stand out. — Aimee Woodall, The Black Sheep Agency 79– Understand Customers’ Business Do your homework. When the customer sees you’ve invested time into understanding his business, there is a certain level of trust established right away. — Sales and marketing consultant Barry Farber, as quoted in Entrepreneur magazine 80 – Be a Solution Don’t sell product and features rather be a solution and new business will come to you — Justin Berry, MarshBerry 81 – You Can’t Do It All! Social media and blogging are becomwww.insurancejournal.com

ing integral to a growing agency’s daily operations. Consistency is critical. It may be time to hire a part-time or full-time employee to do this. — Real Time/Download Campaign co-chair Stuart Durland, Seely & Durland Insurance 82 – Expand Your Virtual Reach Try your vendor’s web-based consumer self-serve quoting functionality, so your clients can serve themselves for quotes. — Real Time/ Download Campaign co-chair Joyce Sigler, Jones & Wenner Insurance Agency 83 – Google+ Use Google+ for research and lead generation. With more than 100 million active users on Google+, it is a great way to search information. It’s a good tool for finding people in a specific demographic, occupation, employer, etc. — Valerie Foster, Monitor Liability Managers 84 – Once is Enough With the use of a comparative rater, you can key once and realize multiple sales opportunities. — Real Time/Download Campaign co-chair Joyce Sigler, Jones & Wenner Insurance Agency 85 – Ask for the Sale No matter what else is recommended, a salesperson ultimately must always ask for the sale. — Chris Burand, Burand & Associates LLC 86 – Free Content Tap into the insurance content — newsletters, emails, infographics and social networking shares — that carriers and wholesalers provide. Share it with clients and prospects on social networks like LinkedIn and Facebook, and in your email newsletter and on your agency website. This showcases you and gives consumers relevant infor-

mation. — Laura Packard, American Collectors Insurance 87 – Differentiate Make building your book easier and use your agency’s institutional and personal differentiation to build partnerships of new business. — Justin Berry, MarshBerry 88 – Set Aside an Employee Day Pick a day once a year to honor and recognize your agency team with a surprise lunch or other special event that focuses just on them and the work they do all year long. Recognition works. — Jill Bookman, American Collectors Insurance 89 – Pop the Question It’s amazing what people collect. Ask your next 10 clients or prospects: “Do you keep anything of special value or significance in your home or garage?” That opens up a new line of conversation, expands the relationship, opens up a channel for cross-selling coverage for collectibles or collector vehicles, and reduces E&O risk. — Laura Packard, American Collectors Insurance continued on next page August 19, 2013 INSURANCE JOURNAL-NATIONAL | 41

SPECIAL REPORT

continued from page 41 90 – In Their Words Often, an individual can tell you what their primary concerns are in simple conversation. Have broad, open conversations with clients and prospect clients to learn about where they are in life. As you review their insurance needs, use that conversation as the guide for what your clients value most. — Laura Packard, American Collectors Insurance 91 – Get the Experience of Partners Ask for input from your business partners. Most will gladly pass along solutions that have worked for them in similar situations. It will expand your knowledge, strengthen your relationship and may even lead to additional opportunities. — Jill Bookman, American Collectors Insurance 92 – Find a New Way to Keep in Touch Client messages related to annual reviews, policy anniversaries and birthday are common. Also consider special communications related to risks. For example, send an email to clients with classic cars or recreational vehicle coverage in the spring when the “toys” are coming out of the garage! — Laura Packard, American Collectors Insurance 93 – ‘Sales’ Is Not a Bad Word Sales is often seen in conflict with service, but when this function is executed properly, it’s really the essence of good service. Proactive, attentive, needs-based sales in an insurance environment means that you are serving clients by looking out for their best interests, educating them about the need for coverage, and covering potential risk exposures. — Jill Bookman, American Collectors Insurance 94 – Set Your Goals Goals should be set at both an individual and company-wide level. Be realistic 42 | INSURANCE JOURNAL-NATIONAL August 19, 2013

but ambitious. Be measured but strive for the best. Your goals should be based on where you’ve been, as well as where you want to go. — Jill Bookman, American Collectors Insurance 95 – Mine for Specialties Mine your agency management system to find out where you have a niche. If you have three or four restaurant accounts, then you have knowledge within your agency about restaurants. Ask your current clients about other restaurateurs who could use your expertise. — Insurance Journal 96 – Document, Document, Document Keep track of what you do and what you tell clients. It provides seamless service when a colleague follows up later with a client at a moment when you are not available to answer questions. — Maureen Boeing, Landmark Insurance Agency and past chair, ASCnet 97 – Multitasking Break It is so easy to work on the computer while simultaneously talking on the phone. Stop. Commit yourself to focusing on the needs of the client with whom you are speaking. Dedicating that time to the conversation and lending full expertise to his or her situation will build stronger relationships and open the door to opportunities you may not have caught otherwise. — Jill Bookman, American Collectors Insurance

98 – Branch Out Pick your best niche and expand it like crazy. Keep nurturing your existing book while you grow your new “branch.” A wellpicked and “niche-branch” can outperform the entire agency. — Michael Jans, Agency Revolution 99 – Budget, Schmudget I wish more agencies would “act like grownup” businesses and budget their money. And then, I wish they’d know when to throw that budget away. If you’re getting a positive ROI on a marketing campaign that is what every entrepreneur dreams of: free money. Don’t let accountants run your business. Good marketing means that the marketplace pays for your marketing. (Don’t let lawyers run your business, either!) — Michael Jans, Agency Revolution 100 – Agency Newsletters A newsletter is an excellent tool to help educate customers on insurance issues, to make customers believe that they’re getting something extra for their insurance dollars, and to keep an agency’s name before its customers. — Mary Christiano, Professional Insurance Agents associations of New York, New Jersey, Connecticut and New Hampshire 101 – Don’t Use Complicated Diction When pitching, do not use complicated diction. Pride yourself on being able to explain the concept as quickly, clearly and simply as possible. The biggest problem in sales is client confusion. Confusion does not lead to a Yes. — Tom Szaky, CEO of TerraCycle, a N.J.-based “upcycling” and manufacturing firm, in a commentary in The New York Times

www.insurancejournal.com

IDEA EXCHANGE

Growing Your Property Casualty Agency 50 Ways to Market Personal Lines Insurance

ith apologies to Paul Simon’s classic song, there must be at least 50 ways to promote personal lines policies. Below is my list. I stopped at 50 due to the song, so if you wanted more, it’s Paul’s fault, not mine! 12 Social Media Fun video where you “fast read” all the potential [car] policy discounts you offer. By Alan Shulman Run radio ads on YouTube as audio behind a slideshow. Post Vine and Instagram mini-videos touting services or discounts. Policy-specific Facebook ads and promoted tweets targeted to local prospects. Offer free “executive level” insurance reviews to LinkedIn connections. Display entertaining mini-posters on Pinterest linked to relevant landing pages. Post fun personal insurance quizzes. Have prospects contact you for the answers. Post tip sheets to inform shoppers of personal insurance basics. Tweet insurance-related images along with your text. Offer free insurance tips to first-time home buyers. Display images of the many recreational vehicle types you insure. Post vehicle-specific promos for pickups, minivans, crossovers, etc. 10 Captive Audiences Poster-type ads in restrooms. Car insurance flyers placed under windshield wipers. Display ads on busses and taxis. Ads on supermarket shopping carts. “Fishbowl” business card drawings for free lunches at local restaurants. Entertaining insurance handouts at county fairs, etc. Offer outdoor quotes at sidewalk sales (strip mall-based offices only). Give a business card to neighbors of new home insureds “in case of emergency.” www.insurancejournal.com

Present condo insurance tips at homeowners association meetings. Work with property managers to offer renters insurance to tenants. 6 Web-Related Offer online real-time personal lines quotes. Feature quote request forms when real-time quotes are unavailable. “Blind” Web banner ads with a single promotional message. Clicks to a landing page revealing who you are. Post discount checklists for major personal lines policies. Display typical agency new business dollar savings by policy type (when known). Post a graph comparing premiums for the same policy specs among multiple insurers, when you have winning rates. 5 Internal Marketing Offer personal lines to commercial lines insureds. Cross-sell “missing” policies and upsell needed coverages to agency insureds. Resolicit desirable cancelled policies and failed quotes. Solicit group auto insurance from employers and groups you insure. Ask quality clients for “just one” referral. 5 Office-Based Limited weekend and evening hours. Offer teen driver insurance seminars to the community. Provide defensive driver courses to attract prospects. Waiting room slideshow of recently paid property claim photos (with permission). Provide old insurance paper shredding sessions for new prospects and insureds. 6 Printed Places Use personal URLs in conjunction with diret mail (and email) campaigns. Add QR codes to direct mail to send folks to online quote pages.

Advertise in local road rally or vehicle-specific auto club publications. Place inserts for various personal lines policies in area newspapers. Consistently run small 2-inch ads in newspapers that focus on a single policy. Buy front-page Post-It note ads that direct readers to a special Web landing page. 3 Giveaways Distribute door hanger bags with a policy price comparison graph and small giveaway. Give kids kites imprinted with the message “If your family [auto] policy premium is too high…” Give drink umbrellas to eligible shoppers to entice them to get an umbrella quote. 3 Team-Ups Join up with non-competing pros for a financial fair. Exchange permission referrals with car dealers, marinas, etc. Tout the cumulative value of stacked discounts... Multi-policy, pay in advance, digital policies, etc. Shulman, CPCU, is the publisher of Agency Ideas, a subscription-only sales and marketing newsletter. He is also the author of the many tools posted on the Agency Ideas Instant Download Store. Phone: 800-724-1435. Email: alan@agencyideas.com. Website: www.agencyideas.com.

August 19, 2013 INSURANCE JOURNAL-NATIONAL | 43

IDEA EXCHANGE

Minding Your Business Acquisitions and Agency Value

•The agency may not have a sales and marketing plan. So before choosing to grow through acquisition, make sure the agency is showing internal growth.

rowth by merger or acquisition is still a popular and valuable tool, despite the economy being on hard times. One of the main reasons it remains popular among agencies is because it is a way to show growth even with today’s market. Although this may seem like an easy way for an agency to grow their book of business, if this is the owner’s last resort for growth, there are usually other issues going on as well. The only way an acquiBy Catherine Oak sition will work as a growth tool is if the agency is already seeing internal growth. If the agency is not seeing internal growth, there may be other factors at play Some examples of why & Kelsey Johnson an agency may not be growing internally include: •Producers not performing; •CSRs workloads not appropriate; or

Agency Value Once the agency is ready to look into an acquisition or merger, agency value and the fundamentals around it become most important. If an agency is already in the middle of a deal, it is probably too late to worry about agency value. The best time to look into an agency valuation is when you start the process of being at either end of a merger or acquisition. Because merger and acquisitions have become popular, too many deals are being made with the buyer paying too high of a price in too short a period, because there is competition and the agency has not been properly valued. Also, agency owners get excited and may make a quick decision and can end up purchasing an agency that is not good for them. Regardless of the size of the purchase, a professional valuation is recom-

PROFESSIONAL LIABILITY EPLI D&O - For Profit D&O - For Non-Profit Medical Professionals - ALF’s, Clinics, Nursing homes, etc. E&O - A&E, Accountants, Ins. Agents, Attorneys, Consultants, Propery Mgrs. & Misc. Classes Go To: www.mjhallandcompany.com Or Call: (209) 870-2953

Carriers: Various admitted or surplus lines A rated carriers Minimum Premiums: Varies from $500 upward Now Serving: AK, AZ, CA, HI, NV, & TX MJHALLCO16573.indd 1

44 | INSURANCE JOURNAL-NATIONAL August 19, 2013

5/2/13 4:27 PM

mended. The biggest mistake agencies make in valuation occurs during a “self-made” deal. The purchase price is often set through a multiple of revenues and/or commission, and ignores the actual potential profit/cash flow to the buyer that the book or agency can generate. The “multiple” approach to valuing a business is outmoded and is not recommended by most professional appraisers. This approach is tempting to use if the acquisition is a small book of business and other assets are not included. The ease of calculating value at one to two times revenue can cost thousands of dollars, not only in lost profit from possible overpayment but also lost income from using available capital for the purchase rather than putting that money in other investments. When a valuation uses a multiple of revenue or commission, it ignores variation in profitability and risk. Two firms with the same revenue may vary significantly in both the risk that profit will be sustained, as well as in the actual profit margin generated. An astute buyer would not pay the same “multiple” for these two firms, if the risk and profit margins vary greatly. Valuation Methods There are several different acceptable approaches to valuing a book of business or an agency. www.insurancejournal.com

pro forma profit — the higher the risk for Income approach methods are commonly continued earnings the lower the multipliused by professional appraisers and are er. Astute buyers today are typically paying often the most appropriate. The two basic between five to seven times the pre-tax pro methodologies using the income approach forma profit to value the deal. are the Capitalization of Earnings and the For agency sellers, there are also new Discounted Future Earnings. capital gains taxes to deal with. Capital The Capitalization of Earnings method gains federal tax went up from 15 percent to uses a single-period earning stream (pro 20 percent on Jan. 1, 2013. In addition, there forma profit) and divides it by an approis a Health Care Act tax of 3.8 percent, so priate capitalization rate (rate of return) to that leaves capital gains federal tax at 23.8 arrive at a value for the business operation. percent, plus the state income tax on a sale. The Discounted Future Earnings methPreviously it was only 15 percent, plus state od uses the same concept but bases it on tax. The taxes are high, but there are talks a multiple year forecast, and takes into capital gains federal account the present value of Agencies must have about tax increasing to 35 perthe forecasted future earninternal growth as cent! So selling now is not a ings. bad idea, if capital gains tax The typical property/casu- well to profit from does go up again. alty firm today is able to gen- an acquisition. Also, a seller can take erate between a 15 percent payments over a couple years, so the tax to 25 percent pro forma profit margin. The burden is not all at once. If a seller accepts value of an agency or book of business is an earn-out, which is a percentage of then determined using a multiplier to this

www.insurancejournal.com

renewing commission over a few years, the value of the agency’s book of business can increase because the seller benefits from the improving economy and the hardening of commercial line rates at each renewal, especially for workers’ compensation. Buyers like to have an earn-out so they know that the book of business is properly transitioned before all payments are made. In conclusion, astute buyers should take the time to properly analyze any acquisition both financially and compatibility-wise. By following the recommended advice, sellers will position themselves to sell at an above average fair price. Remember that everyone must sell someday, either internally or externally. Planning a strategy well — especially with a good consultant — can be very worthwhile for both sellers and buyers. Oak is the founder and Johnson is a financial analyst at Oak & Associates, based in Santa Rosa, Calif. Email: catoak@gmail.com. Phone: 707-936-6565.

August 19, 2013 INSURANCE JOURNAL-NATIONAL | 45

NATIONAL COVERAGE

My New Markets Medical Devices / Products Market Detail: James River Insurance Co. (www.jamesriverins. com) offers products liability, general liability and professional liability with $5 million primary limits and unsupported excess available. Other coverage features include: claims made and reported; prior acts available; and vendor’s coverage. Premiums start at $5,000. Target risks are small- to medium-sized risks with an average premium of $20,000. Policy deductibles of $2,500 on some classes. Available limits: As needed Carrier: James River States: All states Contact: Customer service at 804-289-2700

contractors. Program highlights include: $1,500 minimum premium for most classes; commercial and residential contractors; no tract limitations and no restrictions on the amount of work subcontracted to others; up to 3 years for WRAP and project specific policies (minimum premium starting at $25,000); extended completed ops available on both. Available limits: Minimum $1 million, maximum $2 million Carrier: Unable to disclose, non-admitted States: All states except Alaska and Hawaii Contact: Customer service at 972-484-4100

Explosives Market Detail: Nobel Insurance Services, a division of the Lancer Insurance Co. (www.lancerinsurance.com), has a program focused on the commercial explosives industry. Nobel provides general liability, automobile and excess liability coverages to manufacturers, distributors and users of explosives designed for the construction and mining industry. Limits up to $10 million. Available limits: As needed Carrier: Lancer Insurance Co. States: All states Contact: Charlie Pollard at 800-766-6235 or e-mail: cpollard@ lancerinsurance.com

Reclamation Bonds

Market Detail: Surety One Inc. (www.SuretyOne.org) has reclamation bonds for BLM and all state obligees. The company will provide a fair premium and collateral terms, regardless of operation. All risks are eligible including: coal; petroleum; sand; gravel and quarries; and all kinds of mines and extraction techniques. Hydraulic Subcontractors fracturing “fracking” also is welcomed. Market Detail: Brazos Specialty Risk Inc. (www.brazosrisk.com) IJ Stand Alone in ad.pdf 1 residential 4/8/13 10:38 AM Available limits: Minimum $5,000, maximum $50 million has an exclusive market Texas for and commercial subCarrier: Unable to disclose, admitted States: All states One Submission – Multiple Markets.SM Contact: Customer service at 800-373-2804

We Say YES!

The Stand-Alone Personal Umbrella Specialists NATIONWIDE

On-Line Rate, Quote, Apply and Request Binding 24/7 or Call from 6am to 6pm PST

CMY

Your Independent P&C Wholesaler

(800) 234-6977 x260 www.andersonmurison.com

A n d e r s o n a n d Mu r i s o n

personalumbrella@andersonmurison.com

1 46 ANDERS16689.indd | INSURANCE JOURNAL-NATIONAL August 19, 2013

8/2/13 9:55 AM

MGA/Program Managers Professional Liability Market Detail: Synergy Professional Associates (www.synergy-ins.com) is the program administrator for Beazley Lloyd’s Syndicates 623 and 2623 for professional liability for managing general agents, managing general underwriters, program administrators and specialty insurance intermediaries. The program is focused on insurance intermediaries who derive the majority of their revenue from program business. Guidelines are broad and can consider producers who generate business from single or multiple distribution platforms. Coverage can be individually crafted. Minimum premium starts at $7,500 and coverage is available in all 50 states. Available limits: Minimum $5 million continued on page 48 www.insurancejournal.com

NATIONAL COVERAGE

My New Markets continued from page 46 Carrier: Lloyd’s – Beazley Syndicates 623/2623 States: All states Contact: Ira Drawer at 973-995-0500 or e-mail: irad@synergy-ins.com

Motor Truck Cargo Market Detail: Guardian Insurance Wholesalers Inc. (www.guardian-ins.com) offers a motor truck cargo market targeting truckers with 25 or less power units, more than three years expe-

Advertisers Index Readers, browse, contact, or do product searches on any of our full page advertisers at: www.insurancejournal.com/adshowcase/

ACE Insurance www.acelimited.com 13 American Agents Alliance www.agentsalliance.com 47 Anderson & Murison, Inc. www.andersonmurison.com 46 Applied Underwriters www.applieduw.com 7, 52 Astonish Results www.astonishresults.com 14, 18,19 California Earthquake Authority www.calquake.com 2 Catlin US www.catlinus.com 11 Century National www.cnico.com 29 CNA Insurance www.cna.com 9 CoverX www.coverx.com 20, 21 Demotech www.demotech.com 22, 23 Foremost Insurance www.foremostagent.com 24, 25 Fujitsu www.fcpa.fujitsu.com 31 Insurance Technologies Corp. www.insurancewebsitebuilder.com 26, 27 ISU Group www.joinisu.com 15 M.J. Hall & Company, Inc. www.mjhallandcompany.com 44 Monarch E & S Insurance Services www.monarchexcess.com 3 Pacific Gateway Insurance Services www.pgiainsurance.com 33 PersonalUmbrella.Com www.personalumbrella.com 5 PULIC - Professional Underwriters Liability Insurance Company www.pulic.com 34 South & Western www.southandwestern.com 34a United Contractors Insurance Agency www.ucisg.com 12 48 | INSURANCE JOURNAL-NATIONAL August 19, 2013

rience, and carriers of general commodities with values less than $100,000 per load. Clean, new ventures are welcome. Exclusive in Arkansas, Kentucky, Indiana, Iowa, Illinois, Michigan and Missouri. Available limits: Minimum $25,000, maximum $250,000 Carrier: Aspen Insurance States: All states except Ala., Alaska, Dela., Ga., Hawaii, La., Md., Miss., Ohio, Pa., Va., and W.Va. Contact: Customer service at 800-325-9059

Classifieds Insurance Journal National • 3570 Camino del Rio North, Ste. 200 • San Diego, CA 92108-1747 email: classifieds@insurancejournal.com Fax: 619/584-1200 • Phone: 800/897-9965 x125 For Ad rate and Information

Build a New Future

We seek implementation, education and technical services professionals with experience in insurance software, consulting and training. Join the team. TEAM APPLIED.

appliedsystems.com

August 19, 2013

Occidental Fire and Casualty Co of North Carolina 702 Oberlin Road Raleigh, NC 27605

Boston Indemnity Company, Inc. 2522 W 41st St, #245 Sioux Falls, SD 57105

The above company has made application to the Division of Insurance to amend their Foreign Company License and to transact a Certificate of Authority for Property and Casualty Insurance in the Commonwealth of Massachusetts.

The above company has made application to the Division of Insurance to obtain a Foreign Company License to transact Property and Casualty Insurance in the Commonwealth of Massachusetts.

Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, 1000 Washington Street, Suite 810, Boston, MA 02118-6200, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.

www.insurancejournal.com

You’re the Star Impress Your Clients & Prospects with a Customized Workers’ Comp Booklet

The best sales professionals never leave a client empty handed. Our new booklet, “Answers to 12 of the Most Commonly Asked Workers’ Compensation Questions” is packed with useful information and can be customized with your agency logo. Is $2 too much to invest to gain or keep a client? Give your clients and prospects something to remember you by. Order today!

Customizable Booklets Now Available at

www.ijacademy.com/books

IDEA EXCHANGE

Closing Quote to submit a greater number of contracts for review. And as we’ve poured over agreements, we’ve noticed a common theme: While most contracts recognize the agency’s common law ownership of expirations, many include language in other parts of the agreement that infringes upon that right. Some agreements are simply silent on the issue. Whether these are simple oversights, the result of an increasingly complex regulatory environment or the sign of a growing threat is unclear. But two things are clear: 1) Agency owners are insurance experts, not attorneys. They may not fully comprehend the contracts they sign or do not feel empowered to address them, or in some cases simply do not read them. 2) Failure to address such a vital contractual component as policy ownership is a danger to the future of the agency owner and, to a certain extent, to the independent agency system as a whole.

The Fight for Policy Ownership

By F.E. ‘Rick’ Russel II

here are times when what agents don’t know can hurt them, and this is one of them. I refer to the all-too-often overlooked, and recently targeted, ownership of policy “expirations” — policy, policyholder and account information. At the crux of this issue is the guiding tenet of the independent agency system: independent agencies own the policies they write. They are the principal asset of an agent’s business and their livelihood. Agents must be vigilant. Any threat to usurp that ownership is a threat to the foundation of the independent agency system and to agents’ business. It should be taken seriously — and confronted aggressively. A Gradual Erosion of Ownership Rights? For years, our organization has reviewed agency agreements, sometimes as a favor to carriers, other times as a benefit to member agencies. Last April we initiated a new approach to the process that provides an overview of the core provisions producers should expect to find in an agency agreement, an explanation of the purpose of such provisions and examples of alternate language when provisions do not reflect industry standards or fail to protect agencies’ interests. One of the most significant provisions is an agency’s ownership of expirations. The new analysis has prompted members and carriers

50 | INSURANCE JOURNAL-NATIONAL August 19, 2013

The Threat Affects Other Relationships Beyond agency-carrier contracts, we’ve seen others that also impede upon independent agencies’ ownership rights. One is with wholesalers. The already complicated relationship between agencies and the wholesalers they use to broker business is a breeding ground for contractual confusion. It’s not uncommon for agencies to sign agreements blindly — or not at all. Of those agreements signed, at issue once again is ownership of expirations. Unless ownership is defined clearly in the contract, a wronged agency seeking recourse will face an uphill battle. The ownership infringements we see most often with these agreements are the lack of restrictions for wholesalers to use account information for marketing purposes (which typically leads to direct solicitations from the wholesaler without the retail agencies’ approval — or knowledge) and the lack of restrictions on the expiration list following termination of the agreement. Both of these are dangerous in practice and in principle. A Call for Vigilance This multifaceted threat to agents’ ownership of expirations must not be taken lightly. If left unaddressed, over time it has the potential to upend the founding principle of the independent agency system. Agents must stay vigilant, mind their rights and speak up when necessary. And they can look to their agents’ association for help. This is an issue worth fighting for. And because I know the strength and perseverance of independent agents, I know this is a fight we will win. Russell II is president and CEO of Insurance Agents & Brokers (www.iabgroup.com), the partnership of agents’ associations in Delaware, Maryland and Pennsylvania.

www.insurancejournal.com

ARE YOU AN INSURANCE COMPANY EXECUTIVE? WE’VE BUILT SOMETHING AMAZING JUST FOR YOU.

Critical Info for P/C Insurance Company Executives & Directors

VISIT US TODAY:

WWW.CARRIERMANAGEMENT.COM

A special thanks to our charter sponsors. Support them!

Expect big things in workersâ&#x20AC;&#x2122; compensation. Expect to save a third of your clients 30% or more. Expect broad acceptance and few class limitations nationwide. Expect competitive commissions. For information call (877) 234-4450 or visit auw.com/us.

ÂŠ2013 Applied Underwriters, Inc. A Berkshire Hathaway company. Rated A by A.M. Best.