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Contents August 20, 2018 • Vol. 96 No. 16 • West
West
National
W1 Jury Backs Man Claiming Roundup Weed Killer Caused Cancer
8 Workers’ Comp Results Likely to Weaken Next Year: Fitch
Idea Exchange 37 Minding Your Business: Why Profit Center Accounting Is Important
9 IRS Proposals Clear Way for Trump Tax Cut for Insurance Brokers
W1 JURY BACKS MAN CLAIMING ROUNDUP
WEED KILLER CAUSED CANCER
40 The Wedge: Prospecting and New Production 42 Closing Quote: When Small Business Needs Specialty Insurance
11 Spotlight: Getting Personal in Today’s High Net Worth Market 13 2018 Corporate Profiles Special Advertising Supplement 14 Exdion 16 The Hartford Insurance Group 18 Safety National 20 SmartChoice Agents Program 22 EZLynx 24 Safeco Insurance 28 Special Report: 101 Sales & Marketing Ideas for Agencies
9
IRS PROPOSALS CLEAR WAY FOR TRUMP TAX CUT FOR INSURANCE BROKERS
Departments W2 People 10 Declarations 10 Figures
40 PROSPECTING: THE NO. 1 SOURCE OF
NEW PRODUCTION
4 | INSURANCE JOURNAL | WEST AUGUST 20, 2018
26 Business Moves 36 MyNewMarkets INSURANCEJOURNAL.COM
A Better Bottom Line Starts With Better Training The Institutes Agency & Brokerage Center for Advancement is the single source for agent and broker training at every career stage. We offer training programs for producers, account managers and CSRs, to help agencies, brokerages and insurers increase their productivity, retention, efficiency and profitability. Visit ABtraining.TheInstitutes.org to see how we can help your agency or brokerage reach its goals.
OPENING NOTE
Write the Editor: awells@insurancejournal.com
Auto Accidents and Workers’ Comp
A
‘41 percent of fatal workers’ compensation claims were the result of a motor vehicle.’
Publisher Mark Wells mwells@wellsmedia.com
EDITORIAL
SALES
Editor-in-Chief Andrea Wells awells@insurancejournal.com
West Sales Dena Kaplan (800) 897-9965 X115 dkaplan@insurancejournal.com
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Chief Content Officer Andrew Simpson asimpson@insurancejournal.com
Southeast Editor/MyNewMarkets Amy O’Connor aoconnor@insurancejournal.com South Central Editor/ Midwest Editor Stephanie K. Jones sjones@insurancejournal.com West Editor Don Jergler djergler@insurancejournal.com International Editor L.S. Howard lhoward@insurancejournal.com
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Advertising Coordinator Columnists Erin Burns (619) 584-1100 X120 Catherine Oak, Bill Schoeffler, Randy eburns@insurancejournal.com Schwantz Insurance Markets Manager Contributing Writers Kristine Honey (619) 584-1100 X132 Emery P. Dalesio, Alex Derosier, khoney@insurancejournal.com
Bryan Salvatore
IJ ACADEMY OF INSURANCE Director Patrick Wraight pwraight@ijacademy.com
ADMINISTRATION
Chief Financial Officer Mark Wooster mwooster@wellsmedia.com
MARKETING
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DESIGN/WEB
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NEW MEDIA
Senior Web Developer Chris Thompson cthompson@insurancejournal.com
New Media Producer Bobbie Dodge bdodge@insurancejournal.com Videographer/Editor Ashley Waldrop awaldrop@insurancejournal.com
CIRCULATION
Circulation Manager Elizabeth Duffy eduffy@wellsmedia.com
lthough there has been an overall decline in workers’ compensation claims, the frequency of claims for motor vehicle accidents has increased in recent years, reports the National Council on Compensation Insurance (NCCI) in a new report. Auto accidents can be very severe and are responsible for a significant portion of fatal workers’ compensation claims. “While workers' compensation claims have been declining, motor vehicle accidents have been on the rise over the last five years,” said Jim Davis, author of the paper and NCCI director and actuary. “These often involve very serious injuries that can take their toll on injured workers and their families.” NCCI actuaries found that from 2011 to 2016, the frequency of all claims declined by 17.6 percent, while the frequency of motor vehicle accident claims increased by 5 percent. Additionally, 41 percent of fatal workers’ compensation claims were the result of a motor vehicle. While numerous factors may explain the rise in accidents, the NCCI report notes that it is “striking how the increasing popularity and use of smartphones coincides with this growing trend” of motor vehicle accidents. By the end of 2010, approximately 27 percent of all cell phones were smartphones, but by the end of 2016, that figure had tripled to 81 percent, the report notes. According to NCCI, motor vehicle accident claims cost 80 percent to 100 percent more than the average claim because they involve severe injuries. These claims also tend to represent a higher share of the costliest claims. Over a five-year period, motor vehicle claims accounted for 28 percent of workers’ compensation claims above $500,000 versus just 5 percent of all claims. Distracted driving is a key contributing factor. “It’s time for all stakeholders to better understand and work together to address this important societal issue,” said Bill Donnell, president and CEO of NCCI. The increase in motor vehicle accidents is not limited to workers’ compensation. NCCI found a similar pattern in the general population, with accidents generally increasFOR QUESTIONS ing over the same time period, along with REGARDING SUBSCRIPTIONS: Call: 855-814-9547 an increase in the number of traffic accident Outside the U.S., call 847-400-5951 or you may subscribe or change your address online at: fatalities. insurancejournal.com/subscribe Over the same period that motor vehicle Insurance Journal, The National Property/Casualty Magazine (ISSN: 00204714) is published semi-monthly by Wells Media accidents increased, smartphone use grew. Group, 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 According to the National Safety Council, a per special issue copy, $195 per year in the U.S., $295 per year all other countries. DISCLAIMER: While the information in this pubminimum of 27 percent of crashes involve lication is derived from sources believed reliable and is subject to reasonable care in preparation and editing, it is not intended drivers talking and texting on their phones. to be legal, accounting, tax, technical or other professional advice. Readers are advised to consult competent professionals for application to their particular situation. Copyright 2016 Wells However, driver cell phone use is likely highly Media Group, Inc. All Rights Reserved. Content may not be photocopied, reproduced or redistributed without written permission. underreported and underestimated. Insurance Journal is a publication of Wells Media Group, Inc.
Web Developer Jeff Cardrant jcardrant@insurancejournal.com Web Developer Terrance Woest twoest@wellsmedia.com
Andrea Wells Editor-in-Chief
6 | INSURANCE JOURNAL | NATIONAL AUGUST 20, 2018
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National
Workers’ Comp Results Likely to Weaken Next Year: Fitch
A
fter three banner years, the U.S. workers’ compensation market will face increasing pricing pressure and an erosion in results heading into next year. That means 2019 will be closer to a break-even combined ratio rather than a profitable one, Fitch Ratings said in a new report. “Pricing pressure will continue going forward, although near-term premium volume will likely benefit from exposure growth as employee payrolls are expanding from higher wages and employment in a period of moderately improving economic growth,” the report stated. “Fitch believes that workers’ compensation will experience some erosion in results going forward.” Fitch noted that the U.S. workers’ compensation market in 2017 produced a 92.3 combined ratio, the third consecutive year
of combined ratios below 100 instead of previous periods that produce long-term underwriting losses. The workers’ compensation combined ratios were 95.4 in 2015 and 95.6 in 2016. This winning streak won’t change in 2018, during which Fitch said the market can still produce underwriting profits. That’s because there are a lot of positive performance drivers in play at present, including underwriting exposure growth, a continued decline in claims frequency rates, and also conservative reserve levels. Fitch said that favorable loss reserve redundancies will happen over the next few years, but less than they did in 2017. Fitch said that there are also factors in play that can negatively affect future performance, such as premium rate pressure, increasing medical loss severity and
8 | INSURANCE JOURNAL | NATIONAL AUGUST 20, 2018
the erosion of past reform benefits in key states. The ratings agency noted that market direct premium volume in 2017 dipped by 30 bps from the year before, to $56 billion. This was the first year of lower market premiums since 2010, the report stated. Net written premiums fell by 1.3 percent over the same timespan because of larger reinsurance cessions, Fitch said. “Premium revenue weakness, along with greater technology-related spending, has led to higher expense ratios, which have risen two points since 2014 for the industry,”Fitch said in its report summary. Fitch said it is keeping a negative sector outlook for U.S. commercial lines insurers, “based on competitive factors and nearterm profit expectations.” Most, however, have stable outlooks, according to the ratings agency. INSURANCEJOURNAL.COM
News & Markets | NATIONAL
IRS Proposals Clear Way for Trump Tax Cut for Insurance Brokers By Andrew Simpson
T
he Treasury Department has moved to clear up some confusion in the Trump tax cut law by proposing that the full 20 percent deduction for pass-through businesses be made available to a broad spectrum of small businesses, including insurance agents and brokers. Many small businesses that are organized as pass-throughs, such as S-corporations, limited liability corporations and partnerships, including insurance agents and brokers, have been waiting for clarification on their eligibility. The Treasury’s guidance on the tax deduction was necessary because the language of the Tax Cuts and Jobs Act (TCJA) indicated that the full tax break would not be available to certain specified service trades or businesses, but left some question whether insurance businesses were considered part of that group. The Treasury and Internal Revenue Service have now proposed that insurance agents and brokers, as well as real estate agents and brokers, not be included in the definition of the specified businesses that face limits on their eligibility. In the words of the proposed guidance, the meaning of brokerage services not eligible for the deduction include services INSURANCEJOURNAL.COM
provided by stock brokers and other similar professionals “but do not include services provided by real estate agents and brokers, or insurance agents and brokers.” According to the IRS, the Trump tax law allows owners of eligible sole proprietorships, partnerships, trusts and S-corporations to deduct 20 percent of their qualified business income. The deduction is generally available to
Eligible taxpayers can claim it for the first time on the 2018 federal income tax return they file next year. Qualified business income includes domestic income from a trade or business. Employee wages, capital gain, interest and dividend income are excluded. The 20 percent deduction was designed to target small businesses that don’t benefit from the Trump tax law’s reduction in the top corporate rate from 35 percent to 21 percent. While these proposals are subject to review and could change, insurance agencies, many of which are passthroughs, wel-
eligible taxpayers whose 2018 taxable incomes fall below $315,000 for joint returns and $157,500 for other taxpayers. However, the law limits deductions for taxpayers with higher incomes if they are in certain specified service trades or businesses. The IRS said insurance agencies and brokerages are not among the services facing limitations. The deduction — referred to as the Section 199A deduction — is available for tax years beginning after Dec. 31, 2017.
comed them. “Our initial read of the draft regulations is that agents and brokers are not a specified service trade. While these are draft regulations and not yet final, we see this as a very positive development,” Charles Symington, Independent Insurance Agents and Brokers of America (Big “I”) senior vice president of External, Industry & Government Affairs, said. According to the association, two-thirds of its member agencies are pass-through entities.
Symington said his group has “been spending a great deal of time on this issue on the Hill and with the Administration arguing that insurance agents and brokers” organized as pass-throughs should receive the 20 percent deduction. Symington said that the Big “I” is currently reviewing the draft and will provide comments to the IRS. Congress passed the Trump tax act in December 2017. Treasury officials had hoped to issue clarifying rules earlier this summer. About 90 percent of U.S. businesses are organized as pass-throughs. They range from mom-and-pop stores to private equity funds. “The pass-through deduction is an important tax cut for small and mid-size businesses, reducing their effective tax rates to their lowest levels since the 1930s,” said Treasury Secretary Steven T. Mnuchin. “Pass-through businesses play a critical role in our economy. This 20 percent deduction will lead to more investment in U.S. companies and higher wages for hardworking Americans.” The proposed rules also set forth safeguards to prevent employees from becoming reclassified as independent contractors to qualify for the tax break. According to the IRS, taxpayers may rely on these proposed regulations until final regulations are published in the Federal Register. The public has 45 days to comment on the proposals. The IRS issued a Q&A on the deduction after announcing its proposals.
AUGUST 20, 2018 INSURANCE JOURNAL | NATIONAL | 9
Figures
Declarations Green Teeth
“We’ve been hanging on by the skin of our teeth.” — Marijuana retailer and cultivator Donnie Anderson, who
25
In the first half of 2018, Maryland Insurance Administration (MIA) investigations led to the issuance of this many civil fraud orders and the criminal prosecution of 12 people for insurance fraud. These enforcement efforts resulted in a combined total of $68,092 in fines and penalties, as well as $146,400 in restitution to insurance carriers.
586
$500 MILLION
Wage Theft
“Time and again, we’ve seen how wage theft is symptomatic of an overall disregard for workers’ well-being on work sites where companies regularly defraud their employees. We have also seen them playing fast and loose with their workers’ lives and safety.”
— Manhattan District Attorney Cyrus R. Vance Jr. commenting after CRV Precast Construction LLC (CRV) and six of its employees were indicted for misclassifying workers, underpaying them and falsifying information about payroll and employees, including a worker who was killed at a company job site. The defendants were charged with insurance fraud, grand larceny and scheme to defraud, among other charges.
Employee Harassment
“Employers must take appropriate action to stop employees from harassing other employees.”
— Kara G. Haden, acting regional attorney for the Equal
How much taxable sales Nevada regulators and industry insiders say they expect from the state’s first year of broad marijuana legalization, netting total tax revenue in the neighborhood of $70 million.
$2.2 MILLION The number of citations issued by Ohio’s State Highway Patrol from July 22 through July 28 in an enforcement and awareness effort focused on the Move Over law. The law requires drivers approaching any vehicles with flashing or rotating lights that are parked on the roadside to move over to an adjacent lane. If that’s not possible, motorists should slow down and proceed with caution.
has been paying thousands of dollars of rent for months on commercial space he hasn’t been able to use without a cultivation license, was happy to hear that Los Angeles began accepting license applications from marijuana growers, manufacturers and testing companies after months of delays that left many businesses in the state’s largest legal marketplace struggling to survive.
The amount of a proposed settlement with CSX Transportation by the U.S. Environmental Protection Agency, the Justice Department and the state of West Virginia to resolve the company’s liability for water pollution violations from a 2015 oil spill caused by a train derailment. The CSX train was carrying crude oil when 27 cars derailed on Feb. 16, 2015, in Mount Carbon, causing explosions and fires.
10 | INSURANCE JOURNAL | NATIONAL AUGUST 20, 2018
Employment Opportunity Commission’s Charlotte, N.C., District, said in response to an employee lawsuit against a Golden Corral restaurant franchisee in Matthews, N.C. The EEOC said the operator of the franchise discriminated against an employee by subjecting him to a hostile work environment based on his disability (autism) and his sex (male). The EEOC settled the suit for $85,000. The franchise is required to hold annual sexual harassment and disability training for employees and managers.
Rare Indictments
“Indictments against corporations are rare … Those who poison our environment will be prosecuted when the evidence justifies it.”
— Harris County (Texas) District Attorney Kim Ogg com-
menting after Arkema North America, its CEO Richard Rowe and plant manager Leslie Comardelle were charged with “recklessly” releasing toxic chemicals from Arkema’s plant in Crosby, Texas, into the air in the wake of Hurricane Harvey. The charge carries up to $1 million in fines and five years’ imprisonment.
Duck Boat Tragedy
“The Coast Guard will conduct a thorough and detailed investigation to identify all potential causal factors associated with this tragedy,” — Capt. Wayne Arguin, chairman of the U.S. Coast Guard’s
Marine Board of Investigation, said an investigation into the July 19 sinking of a Ride the Ducks boat on Missouri’s Table Rock Lake near Branson, will cover regulatory compliance of the boat, crew member duties and qualifications. The boat was on the lake despite wind speeds far exceeding allowable limits when it sank, killing 17 people, according to a certificate of inspection made public on Aug. 1.
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West
Jury Backs Man Claiming Roundup Weed Killer Caused Cancer
A
San Francisco jury has ordered agribusiness giant Monsanto to pay $289 million to a former school groundskeeper dying of cancer, saying the company’s popular Roundup weed killer contributed to his disease. Dewayne Johnson’s lawsuit was the first of thousands of cases filed in state and federal courts alleging that Roundup causes cancer, which Monsanto denies. Johnson said he hoped his verdict would bolster the other cases. Jurors in California superior court agreed the product contributed to Johnson’s cancer and the company should have provided a label warning of the potential health hazard. Johnson’s attorneys sought and won $39 million in compensatory damages and $250 million of the $373 million they wanted in punitive damages. Monsanto has denied a link between the INSURANCEJOURNAL.COM
active ingredient in Roundup — glyphosate — and cancer, saying hundreds of studies have established that the weed killer is safe. Monsanto spokesman Scott Partridge said the company will appeal. Partridge said scientific studies and two government agencies have concluded that Roundup does not cause cancer. Johnson used Roundup and a similar product, Ranger Pro, as a pest control manager at a San Francisco Bay Area school district, his lawyers said. He sprayed large quantities from a 50-gallon tank attached to a truck, and during gusty winds, the product would cover his face, said Brent Wisner, one of his attorneys. Once, when a hose broke, the weed killer soaked his entire body. Johnson read the label and even contacted the company after developing a rash
but was never warned it could cause cancer, Wisner said. He was diagnosed with non-Hodgkin’s lymphoma in 2014 at age 42. But George Lombardi, an attorney for Monsanto, said non-Hodgkin’s lymphoma takes years to develop, so Johnson’s cancer must have started well before he began working at the school district. The U.S. Environmental Protection Agency says Roundup’s active ingredient is safe for people when used in accordance with label directions. However, the France-based International Agency for Research on Cancer, which is part of the World Health Organization, classified it as a “probable human carcinogen” in 2015. California added glyphosate to its list of chemicals known to cause cancer. Copyright 2018 Associated Press. All rights reserved. AUGUST 20, 2018 INSURANCE JOURNAL | WEST | W1
WEST | PEOPLE
Dallas Otter
Brian Cushard
Heffernan Insurance Brokers has opened a retirement services location in Seattle, Wash., to be overseen by Blake Thibault, managing director of Heffernan’s financial services division. Also located in the office are Dallas Otter, executive vice president, and Matthew Pearson, vice president. Thibault has been with Heffernan since 2006. He was previously a wealth advisor with Morgan Stanley. Otter has more than 35 years of experience in the retirement plan consulting industry, most recently working with a local insurance and financial services firm in the Seattle area. Pearson has experience in both investment advisory and retirement plan consulting. Woodruff Sawyer named Brian Cushard a senior vice president in its property/casualty practice in Southern California. Cushard previously was with Beecher Carlson as senior vice president and West coast sales leader. He also served as district vice president for CorVel Corp.
San Diego, Calif.-based Cavignac & Associates named Jasmin Divino Cortez an account administrator within the agency’s professional liability department. Cortez was previously a commercial auto underwriter for Arrowhead General Insurance Agency Inc., where she was employed for 12 years. Cavignac & Associates is a risk management and commercial insurance brokerage firm. Lafayette, Calif- based Stone Creek has named Joe Bornstein a commercial producer in its Spokane,
Wash., office. Bornstein’s emphasis will be on small business on the West Coast. Bornstein comes to Stone Creek by from Liberty Mutual. He worked as an agency services representative in personal lines before moving over to the commercial service center and then to commercial sales. Stone Creek is an insurance brokerage that specializes in property/casualty coverage in the Western United States and in Florida.
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High Net Worth | Spotlight | NATIONAL solutions or generic service. Whether that’s at the beginning with customized risk management assessments, right down to that point of claim.
Michael Taylor, chief claims officer, The PURE Group of Insurance Companies
IJ: The high net worth market has attracted newcomers in recent years, including a growing body of agents and brokers seeking to specialize in this space. Why do you see that trend occurring? Taylor: There’s increasing
Getting Personal in Today’s High Net Worth Market
T
he personal lines market gets very personal in the high net worth segment, according to one of the market leaders. PURE Insurance Group’s Chief Claims Officer Michael Taylor says that to excel in this market, agents, brokers and insurers must understand the special needs and expectations of affluent customers, offer solutions and services that meet their needs, and be prepared to provide hands-on claims service. In this interview with Insurance Journal’s Andrea Wells, Taylor discusses expectations, coverages, claims and the competition for high net worth clientele.
Insurance Journal: When it comes customer expectations in the high net worth market — whether it is in purchasing, managing risk, claims, or overall customer experience — how do expectations differ from a typical personal lines client? Michael Taylor: There are good INSURANCEJOURNAL.COM
examples of how expectations are different in this segment. … A few years back when I had a former colleague with a mass market personal lines company call me and he was the claim manager for their business on the West Coast. He happened to be handling a claim for a Hollywood power couple. His and her actors, both very wellknown actors, were insured by a mass market insurance company versus one in the high net worth segment. My former colleague called me and told me, “I have a claim for these folks. How do you deal with them? They have really high expectations.” I said, “Well, that’s the point.” They were in a market that’s not designed to service those expectations. Mass market companies provide more of a generic response versus a personalized response and that’s the key for carriers operating in this space with businesses designed to serve those clients. The operating models offer personalized solutions, personalized service, not generic
awareness and interest in this segment of the market, whether it be on the carrier side or on the broker-producer side. There’s continued soft commercial market conditions. There’s been the commoditization of mass market personal lines where it’s just commoditized to a point where it’s all about price and so, this is a segment that presents a unique opportunity to compete on value, not just price. It then allows you to define value by whether it’s innovative products to fill gaps or risk management expertise, consultative sales expertise on the broker side, or emphasis on service at time of claim on the carrier side. I think there are so many different ways you can compete on something more than just price in this space, as opposed to mass market personal lines or the soft commercial market. High net worth is a very attractive market for carriers and producers right now. It’s evidenced by new entrance in the high net worth segment. In the past two to three years, I’ve seen a number of folks start putting a toe in the water, new carriers interested in trying to penetrate this market, and I don’t think that’s necessarily a bad thing for us.
In fact, I think it’s a good thing. Overall, it raises awareness of the segment. The estimated size of this market segment, being somewhere between $35 billion to $40 billion, with probably only about $10 billion written by carriers who specialize in high net worth. That tells you there’s tremendous opportunity for continued growth.
IJ: Do you see areas in this market that are often under-insured? Taylor: Absolutely. I think there
are two areas of particular interest and/or vulnerability that we see. … One of them is cyber and the other one is higher limits of liability insurance. Cyber is first and foremost a risk that businesses across the country and around the world are trying to counter right now. … I think the focus has been largely commercial-based and we’re somewhat blissfully naïve if we believe it’s not equally pervasive on the personal side. We’ve seen instances where, particularly in this segment, attractive targets are presented for those nefarious cyber criminals to lurk and look to exploit. We had two relatively recent examples of real estate transactions where it was clear that cyber criminals were monitoring the email traffic of high net worth individuals. In one case, they actually went in and took over an individual’s email account. Another case, they got involved with someone in the chain of commerce and mocked their email. They didn’t actually take over their email, but just had an email that looked so similar that it wasn’t recognized at the point
continued on page 12
AUGUST 20, 2018 INSURANCE JOURNAL | NATIONAL | 11
NATIONAL | Spotlight | High Net Worth continued from page 11 of funding these transactions. One case involved a nearly $2 million real estate transaction and another involved just under $1 million. They actually got into the chain and gave instructions to direct the money to go somewhere other than its intended location. Just like that, the money was gone. … Previously, most carriers have offered solutions around identity theft. If somebody compromised your accounts, we’d help fund the expense of cleaning up your accounts and restoring your identity, but there had been no coverage to indemnify you for the actual loss, if in fact you lost real money. Late last year we introduced PURE Starling which is our program that we can actually provide from $100,000 up to $1 million in coverage to indemnify you for actual loss associated with a bad actor stealing your money in a cyber theft scenario.
IJ: You also mentioned higher limits in liability as well? Taylor: Yes, there hasn’t been
within the mass market, the availability of higher limits and most of those personal lines carriers, if they sell an excess or umbrella product, they had offered $1 million in coverage; $5 million would be extremely high for some of those, if it’s available at all. Clearly, as you look at the assets held by high net worth individuals, we realize that is not nearly adequate. Pricing was also prohibitive for higher limits. Even those carriers and markets that did provide the ability to buy coverage in excess of $5 million, the pricing methodologies for those higher limits was disproportionate to the actual risk.
IJ: What role does the surplus lines market play into today’s high net worth segment? Taylor: The surplus line space is
a growth area for the high net
12 | INSURANCE JOURNAL | NATIONAL AUGUST 20, 2018
worth segment because let’s face it, high net worth individuals and families have means to own properties in highly coveted locations that afford privacy or exclusive views, but often also means they’re on the fringe. Those properties are either extreme coastal, or on the edge of the urban/wildland interface, which then brings them a wildfire risk. And while those properties are coveted and in exclusive locations, they certainly have proven a higher risk to insure and in some cases, those risks are beyond the appetite for the standard offerings of most carriers, even high net worth carriers. Because of that reality, some of those risks look for solutions in the surplus line space. Realizing that while the surplus line space may give us more flexibility to write those with terms that make sense from an insurer’s bottom line perspective, the customer’s expectations and needs for service were still the same as if they had a place/property that held less extreme risk. PURE Programs is a platform that we introduced to extend our underwriting exper-tise and our service platform to customers who had risks with complexity or exposures that
don’t fit in our standard market, but still want that standard market treatment. It’s been a tremendous success, growing at a rate approaching double year-overyear.
IJ: The PURE Group of Insurance Companies has seen substantial growth in recent years. What are a few of the reasons behind that growth? Taylor: I think the primary
fuel for our growth is satisfied members. One of the unique things about our business model is this [is a] member-owned insurance company. The old American Express tagline of “membership has its privileges,” I think that’s certainly the spirit that we like our member-owners to feel. They are part of a unique insurance solution for like-minded individuals who are conscientious about protecting their homes and other personal property, and thoughtful about that.
IJ: Is there a particular threshold of what you consider a high net worth client? Taylor: Pretty simply, we are a
market for the conscientious homeowner of high value properties with a replacement value of $1 million or greater. INSURANCEJOURNAL.COM
Dear Readers:
We are blessed to be supported by sponsors & advertisers who help us bring you the award-winning editorial you’ve come to expect from Insurance Journal. Many of these sponsors have incredible stories of their own. We’re pleased to present the following corporate profile section featuring some of those stories. Throughout our years of offering this section, sponsors have used the space to highlight their history, their people, or their products and services. It is their opportunity to introduce themselves to you in whatever way they like. We hope you enjoy it! Julie Tinney Chief Marketing Officer, Wells Media Group Inc. jtinney@wellsmedia.com
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AUGUST 20, 2018 INSURANCE JOURNAL | NATIONAL | 13
Reshaping the Insurance Industry with AI, ML and BOTs The Insurance industry is dominated by large national brands and legacy products that have not evolved much in decades. Insurtech companies are the emerging players in this business who are expected to disrupt the established norms. To thrive in today’s insurance marketplace, incumbent insurers need to offer differentiated products, available through numerous channels, to customers who want convenience and personalized services. At the same time, insurers need to bring down costs, closely manage risks, and ensure compliance with a wide array of regulations. Many insurance activities are repetitive and prone to manual errors. Many a times, lower cost and high-volume policies are missed or delayed due to manual intervention, leading to lapsed coverage or customer abrasion. The initial data entry process, data integrity and nonstandard processes also contribute to high turnaround and customer efficacy gaps.
Artificial Intelligence (AI) in Insurance Industry: The widespread adoption of AI, Blockchain, ML (Machine Learning) and other solutions have just started making their mark. Insurance companies are mostly using these technologies in three broad areas: 1. Insight led personalized offerings To succeed in the next decade’s Insurance markets, insurers will have to rapidly evolve from cohort-based pricing to personalized pricing and build efficient customer facing, middle and backoffice operations. Insurtech companies using IoT are capturing personalized data and helping in designing usage-based insurance policies. Safer drivers pay lesser for an auto insurance and people with healthier lifestyles pay lesser for health coverage. Insurance carriers are coming out with completely DIY on-demand insurance and peer-to-peer insurance models allowing customers to select the appropriate premiums. The Insurance industry’s ability
to leverage technology is aimed at delivering sustainable growth. This has multiple implications -Insurers can offer innovations even before the customer asks for it and at a time when he needs it the most. AI, ML and other technologies give insurance companies the added advantage of being flexible and driving transparency.
2. Build a beautiful customer experience Customers often wait for long hours to get their queries addressed which could lead to dissatisfaction. AI powered chatbots facilitate users to interact directly with the business and address their queries in a more personalized manner. Chatbots are replacing humans to deliver efficient and timely customer service. They assist customers in answering basic queries and guide them to buy the right products. This reduces cost to customer and serves their needs optimally. Insurance companies are realizing the benefits of deploying chatbots to enable a seamless automated customer experience.
3. Smooth & efficient Policy Life Cycle processing Speed and accuracy in settling claims will become more pronounced in the coming years. Although less reliant on manual processes than they once were, Insurers still rely heavily on the same to collect, update and analyze information. Automated policy processes can be used to enable self-administration and enhance customer delight. With more than 70% of the policies being automatically renewed each year without additional documentation, automated policy checking, and renewal can be beneficial for both policy holders and insurers. Newer technologies like Robotic Process Automation (RPA), machine learning (ML) and rule-based algorithms can seamlessly automate the renewal process. These technologies also enable companies to use analytics to deepen customer engagement and process management. Digitization of middle office and interfaces with AMS (Agency Management Systems) will help insurers save more money. RPA, AI, ML and Cognitive Science can drive smarter automation and help insurers reallocate their human capital to new elements of business. Process automation leads to elimination of human effort and error proof the process. AI and other technologies enable people and processes to accomplish more, win back customers through better and faster services at lower price points.
ExdionPOD: A smart, affordable disruptive innovation Exdion has developed an Artificial Intelligence led solution to offer seamless policy review. Exdion Policy Checking on Demand (ExdionPOD) involves Cognitive Computing, AI, ML and NLP to transform the “manual” renewal process to an errorfree intelligent and automated process. Exdion has developed these technologies to automatically match the current term policy against the prior term or proposal. Tech driven automatic approval enables codedriven continuous delivery of policy renewal, eliminating the need for a dedicated FTE (Full Time Equivalent) to manage the same. ExdionPOD offers brokers the flexibility to customize their policy renewal process and issuance to accomplish a complete end to end business-specific policy renewal. ExdionPOD enables brokers to configure custom business process for renewal, including the capability to configure selection criteria for policy for renewal, one-time or multi-year recurring execution with comprehensive auditing and error-free capabilities. With ExdionPOD, insurers gain a channel to serve low value high volume policies and pursue right cost-based delivery mechanisms to target different customer segments. This would enable brokers and underwriters to spend more time on higher risk and more profitable business. With ExdionPOD, policy administration and renewal stops being just a system of record but a system to engage customers. On a closing note, the exponential growth in technology has myriad applications in the Insurance Arena. AI and BOTs will not replace people but shall complement the high-level tasks in customer engagement. With increased adoption of AI in everyday activities, disruption of the conventional policy service engine is happening rapidly. Digitally active organizations now need to think of effective change management to be able to realize the digital transformation benefits.
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NATIONAL | Business Moves
TrueNorth, Gateway Insurance Services
TrueNorth Companies has acquired Iowa-based Gateway Insurance Services, which will adopt the TrueNorth name and brand. With locations in Ames and Iowa Falls, Gateway Insurance Services has been committed to providing quality insurance products to both communities for nearly 35 years. Like TrueNorth, John Langeland and the Gateway team have established a strong reputation built on faithful service, strategic insight and personalized solutions. Throughout the transition, Langeland will work closely with TrueNorth Risk Management Specialist Lane Danielsen, to expand the TrueNorth name and firm presence in the Central Iowa area. Headquartered in Cedar Rapids, Iowa, TrueNorth has offices spanning six states.
Alliant, CLS Partners
Alliant Insurance Services has acquired the Austin, Texasbased employee benefits and
risk management consulting firm, CLS Partners. The Austinbased firm brings more than 50 professionals to Alliant, bolstering the firm’s presence in the state and continuing its national expansion. Established in 2008 and led by CEO Clint Scott, CLS Partners provides employee benefits, risk management, retirement, and technology consulting services. Scott, along with the CLS Partners management team and staff, will join Alliant and continue to service clients from its offices in Austin and Dallas. Terms of the agreement were not disclosed. Headquartered in Newport Beach, Calif., Alliant Insurance Services provides property/ casualty, workers’ compensation, employee benefits, surety, and financial products and services nationwide to public entities, tribal nations, healthcare, energy, law firms, real estate, construction, and others.
BKS Partners, Midsouth Benefits
Baldwin Krystyn Sherman
26 | INSURANCE JOURNAL | NATIONAL AUGUST 20, 2018
Partners, an insurance brokerage and risk management firm headquartered in Tampa, Fla., has partnered with Midsouth Benefits of Atlanta. The merger was finalized on June 22, 2018, and marks BKS-Partners first office in the Georgia market. Midsouth Benefits specializes in employee benefits including design, marketing, communications and compliance, and has delivered custom benefits programs to Georgia employers for more than 25 years. BKS-Partners has clients nationwide and has been expanding its footprint across the Southeast. Also in June, BKS-Partners acquired Cadence Insurance which took the company from Florida into Texas and Alabama. Chris Timpson, managing director of Employee Benefits at BKS-Partners said the company will make significant investments in Midsouth Benefits. Midsouth Benefits will inherit the BKS-Partners name upon completion of the transaction.
Federal National, FedNat Insurance Co.
FedNat Holding Co., formerly known as Federated National Holding Co., has rebranded its largest insurance subsidiary to FedNat Insurance Co. FedNat was founded in Florida in 1992 and through its wholly owned subsidiaries, is authorized to underwrite and place homeowners multiperil, federal flood and other lines of insurance in Florida, and underwrites homeowners’ and dwelling fire policies in Alabama, Louisiana, South Carolina and Texas through
its partnership with SageSure Insurance Managers. The company markets, distributes and services its own and third-party insurers’ products and other services through a network of independent and general agents. FNIC, formerly known as Federated National Insurance Co., changed its name after receiving approval from the Florida Office of Insurance Regulation. FNIC, with operations in several coastal states, has filed notice of the name change for processing with the insurance departments in the additional states where it serves policyholders. According to Michael H. Braun, CEO and president, the name change will match the company’s branding initiative, which includes aligning its holding company, largest insurance company and managing general agency with the same FedNat name that is known to its partner agents and staff. The company received approval to change its name at its most recent annual meeting of shareholders.
Clegg Insurance Group, Advanced Insurance Brokerage of Florida
Clegg Insurance Group and Advanced Insurance Brokerage, both in the Tampa, Fla., area, signed a deal that will merge the companies’ property and casualty coverage portfolios. Together, the two companies will offer a wider range of products, greater efficiency and improved customer service. AIB will retain its team of insurance professionals and its Anna Maria Island, Fla., location. INSURANCEJOURNAL.COM
NATIONAL | Special Report | Agency Management
1. RTSP! Read the Stinkin’
Policy! Don’t guess about coverage. Your prospects and clients depend upon you and your knowledge. When in doubt...read the stinkin’ policy! Too often agents rely upon what they think - rather than the actual facts of how the policy language will apply. –
Casey Roberts, Laurus Insurance Consulting 2. Always Assume the Sale. If
I’m in your office, never say, “But take some time and think about it” as if I’m going to do so. – Matt Curless
3. When Claims Get Denied. Never accept a claim denial of a customer’s loss that: 1.) is not in writing, 2.) doesn’t
cite specific policy language on which the denial is based, and 3.) explains WHY the language precludes coverage. – Bill
Wilson, InsuranceCommentary. com 4. Right Coverages. The best
way to increase sales, protect customers and protect from E&O claims is to sell the right coverages. – Chris Burand,
Burand & Associates 5. Carrier Know-How. Know
how to submit and sell to a carrier. You will move your submission to the top of the underwriter’s desk, plus get better pricing and a quicker response. That’s what your clients want. It’s a lost art that’s a great marketing differentiator for your agency. – Jocelyn Rineer, Agency
Network Exchange, ANE 6. Gen X Not Forgotten. Don’t
ignore the Gen X employees. Everyone is so focused on the Baby Boomers retiring and hiring, retaining and trying to please every whim of the Millennials. We seem to be the forgotten workers and are completely off the radar. –
Anonymous 7. Other Professionals.
Producers should ask their key accounts who they use for an attorney and their CPA. Often, they will find that many clients use the same professionals. Then, the producer can call that CPA or attorney and mention that they have several key accounts in common and can ask for referrals. –Catherine
Oak, Oak & Associates 8. Go Organic. The most prof-
itable and reliable leads are organic. Stop going to random networking events with a revolving door. Join a group that meets regularly and make real relationships to see growth in your book of business. –
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Paula Stubblefield, C.T. Lowndes & Co. 9. Ongoing Training. Take
the time to become an expert when you come across a risk you haven’t seen before. Ask the insured as many questions as you can about their operations, until you have a thorough understanding of the risk. Do some research online after speaking with the insured and expand your knowledge even more. – Jenny Kolan, Insurance
Shop LLC 10. Recurring Payments.
Assume recurring payments are option No. 1. Forgotten payments are the most common reason for cancellations.
– Matt Curless 11. Be an Emerging Topics Sponge. It’s
your business to understand our business and to be able to discern what’s important to customers and what’s not. New issues arise almost daily; stay current and be prepared to assist customers with managing these issues to increase your value to them. – Ann Myhr, The Institutes 12. Secure Emails. They are
the most valuable piece of marketing data you have. Ask for an email address with every prospect and every client you talk to. Use it to look them up in your agency management system. Then you know you have an accurate email address, which you can use to send lead nurture emails, cross sell emails and customer communications like newsletters or renewal reminders. – Becky
14. Many Formats. Agents
Schroeder, ITC 13. YouTube. Create a
– Patrick Wraight, Insurance Journal’s Academy of Insurance 15. Create a Client Journey.
YouTube channel with informative and/ or instructional insurance-related content. This works especially well for niche agencies. For example, an agency that focuses on restaurants can post videos discussing risk management, loss control and suggested coverage. Next, post it on the agency website, promote it on LinkedIn and Facebook and share the link in newsletters or emails. – Bill Schoeffler, Chrysalis
Financial LLC
should have the ability to send out helpful information in as many formats as possible. A mobile app that provides customers with agency and carrier contact information means the customer doesn’t have to go looking for it when they need it. Text messaging to provide customers with helpful links and content gives the customer a friendly and familiar feel.
Help your client understand what to expect throughout the process. Anticipate the frustration points and overcommunicate the process and timing. A client who is in the know is much more understanding than if they make assumptions.
– Laura Sherman, Baldwin Krystyn Sherman Partners 16. Human touch. There’s a relatively simple, low-cost way to increase satisfaction and keep small commercial lines customers from running off to a competitor. It's the human touch. Customer satisfaction is 100 points higher for firms that talk to people to explain issues than for those who inform via email. – David Pieffer, J.D. Power
17. Handwritten Thank Yous.
How retro. How rare. But how nice when clients receive a personal note. 18. Broker Fees. Broker fees can make a huge impact on income but there are several things to consider. How much time is it going to take to gather all the information, reach out to the appropriate carriers and get a quote back to the insured?
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AUGUST 20, 2018 INSURANCE JOURNAL | NATIONAL | 29
NATIONAL | Special Report | Agency Management continued from page 29 Will this account need constant servicing after issuance? How much competition? Will you lose the account if your broker fee is $50? – Jenny Kolan,
Insurance Shop LLC 19. Trade Show Lists. Be sure
to get the attendee registration lists from any conferences where you are a sponsor or exhibitor. 20. Call More. The best way to increase your sales opportunities is to make more sales calls and build more relationships. – Chris Burand, Burand &
Associates 21. Online Presence. Develop an online presence and give it continued attention – that is the future (and present) of insurance sales and service.
– A.J. Schrage, Insurance Shop LLC 22. Be Cool and Authentic.
Consider advertising that focuses on the originality and nonconformity of your firm and product. (e.g., Apple’s "Think Different") But think hard about how your communications will come across to consumers. Many companies come across as cool or hip in all-too-obvious ways. Be natural and authentic. –
24. Trust the Process.
Continuous learning and diligently applying best practices will put you ahead of the crowd. Focus on the right activities and the numbers will take care of themselves. – Ann
Myhr, The Institutes 25. Convert Cynics. Not
everyone is going to love your brand. That’s human nature. But don’t ignore your non-believers. If you can move the needle on your brand cynics by engaging with them, they are then going to promote your brand with great gusto. – Kevin
Wellfare, Insurica, at IMCA 26. Client Expectations. The
future of insurance is about meeting client expectations. It is not about insurance.
– Chris Burand, Burand & Associates 27. Advocate.
Determine and advocate for your client to choose the best insurance solution, which may not always be for what they are asking. – A.J. Schrage,
Insurance Shop LLC 28. Communication is Key.
If you have an account you are excited about, chances are there are other agencies with
Lalin Anik, Johnnny Mils, Ryam Hauser, University of Virginia Darden School of Business 23. Build a Community.
Brand ambassadors talk about evangelism. The idea is to be in the hearts and minds of people, and that’s beyond the product you're trying to sell. Product is a commodity. The community will never become a commodity. – Sangram Vajre,
Terminus 30 | INSURANCE JOURNAL | NATIONAL AUGUST 20, 2018
the same submission sitting on their desk. Communication can certainly set you apart from other agencies. The quoting process, especially for complex accounts, can take several days or even weeks. Don’t “ghost” the insured until you hear back from all your carriers. Send them updates. It can make all the difference. – Jenny Kolan,
Insurance Shop LLC 29. Drip Marketing. Agents
can provide a continual ‘drip’ of information to their customers. Short email newsletters throughout the year help build trust and confidence. Example emails include a back-to-school issue that might include links to local school district packing lists or tips to avoid fire or theft at Christmas. Be a resource throughout the year. – Patrick
something new and learned from it. The next time you try something, use what you learned. We are not curing cancer. No one will get hurt if you don’t get a big response from your marketing approach. Regroup and try again. – Dan
Sommer, MiniCo Insurance 31. Partner with Insurtech.
Find insurtech partners that can help your firm become more customer-centric. –
London-based Managing General Agents' Association (MGAA) 32. Expand but Localize.
Explore serving a niche market in another state, region or even another country. But be especially mindful of cultural and language customs, differences and sensitivities.
Wraight, Insurance Journal’s Academy of Insurance 30. Be Bold. Do
things differently. If it does not work, so what? You tried
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33. Keep it Simple. At its core,
selling insurance is not rocket science. Don’t let sophisticated sales processes get in the way. If the basics are not working, making the system more complex is not the solution. – Chris
Burand, Burand & Associates 34. Speak the Culture. Hire sales and
your product. They care about their problems, their trials, their issues. If you can figure out what it is they are trying to solve, that would be amazing.
– Sangram Vajre, Terminus 39. Inclusive Sales Planning. Too often there is too little
service people from the community you wish to serve whether that be a geographic, ethnic, social, business or other community.
ing. – Becky Schroeder, ITC 42. Personal Tidbits. Get to personally know your centers of influence. Learn the names of their spouse and family, their alma mater, hobbies, favorite sports team, vacation spot, etc. Save these personal tidbits for future reference. –
35. Align Sales and Marketing. Some
think sales is from Mars and marketing is from Venus. Thus, these departments too often do not see eyeto-eye. But a positive alignment between marketing and sales promises “potentially the largest opportunity” for proving business performance today. – Emily Hathcoat, CNA
36. Prioritize Privacy.
Become an expert on the GDPR and California privacy laws so you can properly advise clients on their cyber exposure and solutions.
37. Three Questions.
Marketing and sales have one shared goal: to enable sales that generate a profit. The culture must answer three basic questions to make it clear what the roles are in achieving that goal: 1.) Who is the customer? Broker? Buyer? 2.) Who makes the sale? Business development manager? Marketing? Mass media or social media? 3.) How can others support the people who are making the sales? – Steve Hood, Westchester
Insurance 38. Forget Product; Solve Problems. Nobody cares about
Laura Sherman, Baldwin Krystyn Sherman Partners 43. Events. Host events in
understanding of why a company has chosen the direction it wants to go. Marketing folks may not be included early and don’t understand what’s going on. Sales planning for the year should include open dialogue from the beginning with as many people as possible. – Lisa
Sanders, Starr Companies 40. Go Mobile. Agencies must
embrace mobile technology now for both clients and staff. Agencies that provide customers with a digital app see 37 percent higher revenue per employee. – Applied Systems
Digital Agency Report 2018 41. Track Everything. The
traffic to your website. How your email marketing is doing. Any online advertising you’re doing. Engagement with your social media profiles. Where your leads are coming from. Your close ratios, both total and by lead source. If you don’t track, you don’t know whether or not your marketing is work-
collaboration with local organizations. The great thing about collaborative events is that your costs will be minimal because you won’t have to pay for a venue or marketing.
– Chris Mayernik, Start Some Marketing 44. Download. Agencies
using download services see 18 percent higher revenue per employee. They have greater access to markets and automated servicing, providing instant access to the latest client information – from quotes to policy details to claims management – at a moment’s notice and when clients need it most. –
Applied Systems Digital Agency Report 2018 45. Agent Resources. Use your territory manager as a resource. A seasoned
territory manager will provide you and your staff the initial and continued training, resources and feedback to grow your business. They will help your team increase product knowledge, stay abreast of market trends and help you design a unique, targeted strategy specific to your business needs. – Kerrie Ruland
46. Paperless Time Saver. By going paperless, agencies save at least one hour per employee per day. – IVANS Annual AgencyInsurer Connectivity Report, 2017 47. Don’t Phone Millennials.
For millennials, a phone call is an interruption. Use digital tools including Facebook, Twitter and Instagram. –
Melissa Stallings, Stallings Insurance Agency 48. Be a Leader. Employers
don’t know what they don’t know and are almost certainly and unknowingly facing significant risks. Lead decision makers through a process to assist them in self-discovering threats to their business and personal assets and how they can address them. – Frank
Pennachio, Oceanus Partners 49. Share the Love. Having
a passionate internal culture and a deep connection to the local community is the best kind of experiential marketing...when clients
continued on page 32
NATIONAL | Special Report | Agency Management it destroys my confidence in them. Each one of your carriers offers you online education tools about their products, so use them. – Matt Curless
52. Deploy Agency System Capabilities. Agency
management systems have prospect
Armstrong, ReSource Pro 55. Be Present. While you
are in the sales discussion, be present and conversational. Note any of the important outtakes from the conversation on your tablet or on paper that share something unique about the customer. – Charla Martin
Bloodsaw, Kent State University 56. Respond to Every Review (Good or Bad). You
information tracking capabilities and integrated marketing that can create sales opportunities, but not all agencies use these features. – and prospects feel your love for what you are doing and where you are, they are drawn to that energy and want to engage with you. – Rachel Carr, Baldwin
Krystyn Sherman Partners 50. Back to the Basics. Don’t
underestimate the importance of knowing the fundamentals through training and planning. Have a plan and make conscious decisions. Be mindful of the process throughout the transaction. – Ann Myhr, The
Institutes 51. Know Your Product. I’ve
spoken with too many agency owners who go through a “cheat sheet” with me at their table to see if their products offer what I’ve requested, and
can’t allow any reviews to be online without a response, especially a negative review. If you messed up, then own up to your mistake and show some character and professionalism in your response. – Chris Mayernik, Start Some Marketing
Applied Systems Digital Agency Report 2018 53. Start on the Right Foot.
You’ll find the rest of the journey will stay on track. Plan carefully, making sure you have the right tools and resources in place, and always do the prep work to properly manage and mitigate risk for your clients. – Ann Myhr, The
Institutes 54. Attitude. Approach every
encounter as an opportunity to serve. Once your heart is right, you can focus on your sales process. – K. Patrick
57. Join Associations. By
joining associations for niche industries, you’ll often have access to the email list for the members. – Jeff Schmidt, Eaton-
Provident Group LLC 58. Digital Benefits. Overall,
agencies that completely transform into a digital agency see 156 percent higher revenue per employee than those that do not. These agents are focused on selling and serving customers rather than performing manual tasks. – Applied Systems
Digital Agency Report 2018 59. Clarity. Use agreements
to make your process and next steps transparent, avoid surprises and create an atmosphere of cooperative engagement. – K. Patrick Armstrong,
ReSource Pro 60. Add Value. Figure out
what you can do better, more of or differently for a client... and deliver on that! Whether it’s service value-adds, resource value-adds or overall program improvements, figure out how you can stand out from the competition. – Kim Shaidle,
Gulfshore Insurance 61. Niche Marketing. Pick two or three industries and try to become the top 1 percent in knowledge and market offering for both. – Jeff
Schmidt, Eaton-Provident Group LLC
62. Coverage Tips. Write a
12-to-15-part weekly coverage tip series that goes out on Tuesday mornings with a resend to anybody who didn’t open on Thursdays. By offering value-added content geared toward industry specific concerns, you establish your credibility as an expert in a niche industry. Plus, email marketing is very inexpensive and delivers a tremendous ROI. – Jeff
Schmidt, Eaton-Provident Group LLC 63. Invest in Media You Can Touch. Business cards are still
very much a part of business. People still prefer to read magazines in print. Email and social will remain an important part of business. But privacy concerns, hacking revelations and regulations mean that more email will hit the junk INSURANCEJOURNAL.COM
just a number. – Charla Martin Bloodsaw, Kent State University 68. Think Beyond Price. It’s easy to get
caught up in the "Price Game" when working with a prospect. Instead, focus on the value you can give. In most cases, prospects will spend more if they see what value the product/service provides. –
Andy Spaeth, Ansay & Associates LLC 69. Ask for Help. Don’t be
folder. It’s time to invest more in items that prospects and clients can hold. – Julie Tinney,
Wells Media Group Inc. 64. Embrace the Inner Tech Geek. You may not ever be the
one to write code, but to win today’s data wars, you should know the language of analytics. Learn how to leverage data, interpret it and use it both in your business and to help your customers. If you don’t, someone else will. – Ann Myhr, The
Institutes 65. Recruit Insurance Talent Everywhere. Look for those
folks who go above and beyond to help others in various ways – this could be in your local grocery store, at a charity event or even the gym. Behaviors such as respect, trust, a willingness to help, taking initiative, problem-solving abilities, a need to
INSURANCEJOURNAL.COM
educate others, a need for continuous learning and creativity equal the best of the best employees. – Sheila Udelhofen,
TRICOR Insurance 66. Advertising on Facebook.
You don’t have to spend a lot of money to reach a large number of people. Plus, the ability to target based on interests, geography, demographics, etc., means you’re spending money to reach the exact people you want. It’s easy to test an ad as well as stop running it if it’s not converting at the rate you want. – Becky Schroeder, ITC 67. Follow-Up. Additional sales can be made by the simple act of following up. You really should be following up anyway just to say thank you and for true customer satisfaction. Following up highlights the customer is more than
afraid to ask for help or to admit that you do not know something. There is nothing wrong with not knowing the answer to a coverage issue. It is far worse to guess or make it up than to admit to someone, "I don’t know, but let me go find out." None of us know it all. – Casey Roberts, Laurus
standard? Try to come up with your own Disney differentiator by creating an experience so special, so memorable that your clients will refer you and never leave you for price alone. – Ann
Myhr, The Institutes 72. Claim Time. Always
remember when selling or advocating on behalf of a customer at claim time that the purpose of insurance is to insure. Assist in risk analysis and matching exposures to coverages. Then at claim time, look for coverage, not a way out. – Bill Wilson,
InsuranceCommentary.com 73. Trust. Actively work to
reduce self-orientation while increasing reliability, credibility and intimacy. This increases trust, which fuels all sales opportunities. – K. Patrick
Insurance Consulting 70. Paid Search.
Armstrong, ReSource Pro 74. Ask Questions. “Does
Camille Bob III, Infinity Leads 71. Create a Magical Moment.
Premier Group Insurance 75. Customer Experience.
Approximately 80 percent of prospects will start their search for insurance with an online search. Use paid ads on Google and Bing targeted to your location, corresponding with your hours of operation to drive live phone calls and quote form fills from online browsers. –
Everyone is focused on customer service or should be. But what are you doing to create magic beyond the established
your truck have a hitch? What do you tow with it?” Asking questions is a great way to find out if a client owns a boat, RV, etc. Also, it’s an opportunity to open the discussion about the adequate level of liability coverages and umbrella policy options. – Robert Sheaffer,
Customer experience doesn’t start when a prospect becomes a client, it starts the first
NATIONAL | Special Report | Agency Management continued from page 33
moment you meet with a prospect. Only customers can tell you whether they found their experience useful, usable and enjoyable. So, make sure you are focusing on an exceptional customer experience. – Andy
Spaeth, Ansay & Associates LLC 76. Email. I still think email
marketing is the best way to market an agency. It is often the client's preferred method of communication. Plus, its ability to be personalized, triggered and measured means you can send the right message to the right person at the right time and be able to know whether it was effective or not. – Becky
Schroeder, ITC 77. Be Specific. Tell your IMO
what you need from them. Oftentimes, they have a wealth of marketing tools or sales ideas that a conversation never led into. From the start, build the relationship beyond the three P’s: processing your business, giving you a product and giving you a payout. – Harrison
Wicker, Capmar Insurance Services 78. Know Your Craft. The best
way to resolve a claim dispute is to prevent the dispute from ever arising. You do that by knowing your craft and putting the proper insurance and/or
risk management program in place to begin with. Then, if necessary, you advocate for the customer by applying proven resolution techniques. – Bill
Wilson, InsuranceCommentary. com 79. Consistency. Have your
client experience be congruent with your internal culture and always treat your employees how you would want them to treat your best clients. –
Laura Sherman, Baldwin Krystyn Sherman Partners 80. Implement a Corporate Social Responsibility (CSR) Program. Multiple studies have shown that both employees and consumers want to be involved with a company that benefits society. Furthermore, almost half of U.S. consumers are willing to pay more for services from companies committed to positive social and environmental impact. – Mikaela
Parrick, Brown & Joseph LLC 81. Referrals. Never underes-
timate the power of referrals: Referrals will have your highest conversion, and they’re free marketing. – Matt Curless
82. Think All Things Mobile, Digital. Your clients are! Local,
transparent SEO reaps great ROI. Investigate using beacons or proximity marketing. There
are affordable options. – Steve Brown, PEO Brokers Group 83. LinkedIn. Commercial
insurance producers should spend 15 minutes every day on LinkedIn: 5 minutes - new target market connections; 5 minutes - offer comment insights on posts of your target market; 5 minutes - engage with LI value-add message to your target market. – Walt Goshert:
creating a mini-educational series or feature weekly local business owners to talk about small business topics in their industry. – Chris Mayernik, Start
Some Marketing 87. Old School. The phone is
your instrument to make beautiful music in sales. Overcome
"Turn-Key Simple" Prospecting for Commercial Insurance Producers 84. Tell Your Story. Customer
testimonials are a great way to tell your story. Keep track of the customer feedback and ask them if you can use their experience to help you find new customers. – Stacy Varney 85. Collaborate. Share the cost and make sure your logo, links and social icons are connected with your insurance providers on marketing messaging for lead generation.
– Ani Matson, Digital Marketing Strategies 86. Personal Videos.
Show off your personality and insurance expertise in a way that is more engaging than generic video ads. Try
call reluctance. – Charla Martin
Bloodsaw, Kent State University 88. Your Own Brand. Create
and maintain your personal brand. Become an expert in a niche, get a designation, create speaking opportunities, publish articles on your niche, and become the "go to" person on your niche in the area. –
Laura Sherman, Baldwin Krystyn Sherman Partners INSURANCEJOURNAL.COM
89. Broaden Risk Protection Solutions. Property/casualty
agencies do not want to create friction with their existing book of business by adding financial planning products. Find an MGA or IMO you trust who can become an extension of your already existing services to educate and provide support. – Harrison Wicker,
Capmar Insurance Services 90. Find a Mentor. Be a men-
tor. Encourage mentorship. This is where creativity, innovation, continuity and results are derived. If you are not feeding all parts of the engine, it won't run. – Ann Myhr, The
The trick is to write finished articles and pitch them to editors on a monthly basis. Even if you have a one-in-50 success rate, that is great. All the articles that were ignored can be published on your blog. – Chris
Mayernik, Start Some Marketing
Institutes 91. Work on Word Choice. Be
earned media by pitching articles to top publications. This isn't easy, but the exposure and web back links can supercharge your lead generation.
resource.
Google reviews are as, if not more, important than referrals. It’s a free 24/7 testimonial. All you need to do is ask for them. People search you/your agency before they ever do business with you. – Bo Bowser 95. Websites. You never get a second chance to make a first impression, so make the most out of having a functional online space. Having a mobile friendly website with online quoting capabilities and client testimonials is a must. Dare to get creative with introducing your staff and telling your personal agency story in a new way. – Harrison Wicker,
your website is fresh and relevant. If it’s been a few years since you had it built, look into updating the design. Website design trends change quickly, so a website can look dated after only a few years. – Becky
94. Get Reviewed.
deliberate in your phrasing to guide the customers through the experience and avoid saying words that may turn people away from purchasing with you. – Charla Martin Bloodsaw,
Kent State University 92. Become an Author. Get
who listen to what you need and actively seek a solution. Transparency, trust and collaboration are key. Strategically choose companies that share your vision and that complement your strengths with technology, expertise and drive for results. – Kerrie Ruland
93. Strategic Partners. Be a true partner, not a vendor. Choose to work with partners
Capmar Insurance Services 96. Make the Contact. The
most underserved customer is the one who goes uncontacted by you – their best
97. Attend a Collector Car Show. People like to talk about
their cars and most participants own homes, newer vehicles for their daily drivers and other toys they need insured.
– Robert Sheaffer, Premier Group Insurance 98. Stay Fresh. Make sure
Schroeder, ITC 99. Be the Customer. The
moment you stop thinking of yourself as your customers’ vendor and more like their business partner, the sooner you’ll find yourself better supporting them in mitigating loss. Think of their failures as your own, and you’re sure to start creating more successes. – Ann
Myhr, The Institutes 100. Customer Thermometers (CT). CT is an email customer
service rating tool that allows clients to give feedback with one click. The ease of the technology encourages clients to write great testimonials when they are happy.
– Chris Mayernik, Start Some Marketing 101. Last Call. When all else
fails, pay for the sales team’s drinks.
NATIONAL | MyNewMarkets the short line railroad industry and its hundreds of members across the United States, providing high-quality coverage, claims handling and loss control services that ensure safe, profitable railroad operations. Available limits: As needed Carrier: Unable to disclose States: All states Contact: Customer service at 800-247-2085
Multi-Line Crane & Scaffold Programs
Market Detail: Ascinsure Specialty Risk LLC (www. ascinsure.com) offers exclusive availability of two multiline programs designed for the crane and scaffold industries. Ascinsure has been a program underwriting manager and wholesaler within the crane and scaffold industries for more than 25 years. Designed with crane and scaffold companies in mind; these two niche, multiline insurance products were created to address the complex risks of their respective industries. The two programs deliver customized insurance products in a comprehensive package. Highlights include: general liability, workers’ compensation, riggers coverage (crane program only), auto, inland marine, property, excess and crime. Ascinsure is a specialty wholesale and underwriting insurance manager with a focus nationwide on the scaffold, crane, inland marine and equipment rental sectors. The Ascinsure team can help place difficult risks within its niche markets and has the pen.
Available limits: As needed Carrier: Call for Information States: All states Contact: Mike Goff at 412-224-
Available limits: As needed Carrier: Unable to disclose States: California only Contact: Aimee Bernadicou at
5510 or email: mike@ascinsure. com
209-670-5754 or email: aimee@ mjhallandcompany.com
Commercial Earthquake
Errors & Omissions/ Professional (including Dental)
Market Detail: RIC Insurance General Agency (www.ric-ins. com) offers earthquake coverage on buildings, business personal property, tenant improvements or betterments, business income/rental value and/or additional property coverage (signs, pools, fences, etc.). Optional coverages include flood, earthquake, sprinkler leakage and ordinance or law. Available limits: Minimum $200,000 Carrier: Various, admitted and nonadmitted available States: All states Contact: Gaylan Cooke at 714786-5231 or email: gaylanc@ ric-ins.com
Flood - Residential
Market Detail: M.J. Hall and
Co., Inc. (www.mjhalland company.com) offers a California residential flood program on admitted paper (www. californiafloodpolicy.com).
36 | INSURANCE JOURNAL | NATIONAL AUGUST 20, 2018
Market Detail: Western Security Surplus Insurance Brokers, LLC (www.wssib.com) offers coverage for accountants, architects and engineers, consultants including computer, lawyers, physicians, surgeons, dentists, healthcare facilities, real estate and insurance agents and brokers, investment advisors, environmental consultants/contractors and expert witnesses. Available limits: As needed Carrier: Unable to disclose, nonadmitted States: All states Contact: Kyle Stevens at 972702-0500 or email: kstevens@ wssib.com
Miscellaneous Floaters - Railroad Industry Market Detail: United
Shortline Insurance Services, Inc. (USIS) (www. unitedshortline.com) is focused
Yoga Teacher Insurance
Market Detail: Insurance Canopy’s (www. insurancecanopy.com) basic general and professional liability insurance policy starts at $129. Yoga teacher insurance covers claims related to yoga business operations such as student injuries or damage to a studio during a training session. Yoga teacher insurance also provides coverages for business personal property, general liability, professional liability and identity recovery costs, among others. Available limits: Maximum $3 million Carrier: Great American Insurance Group States: All states Contact: Joanna Duke at 801763-1375 or email: joanne@ belfastinsurance.com
This section brought to you by Insurance Journal’s sister website: www.mynewmarkets.com
Need a Market? Find it. FAST INSURANCEJOURNAL.COM
Idea Exchange
Minding Your Business
Why Profit Center Accounting Is Important
By Catherine Oak and
Bill Schoeffler
I
s personal lines costing the agency money? How profitable is that new program business? What would happen to the bottom line if employee benefits sales increased by 25 percent? When is it time to hire a new employee for commercial lines? These and other questions can be answered by establishing Profit Center Accounting. Profit Center Accounting is a management tool to assist with strategic decisions. The concept is to allow a closer review of small portions of the overall agency to evaluate how each of these segments are performing. Using the knowledge gained from this tool, resources, especially personnel, can be optimally allocated among the centers. Profit centers may stimulate healthy competition between each unit. INSURANCEJOURNAL.COM
Agencies should perform at least a thorough annual review of the firm using profit centers. Most agencies rely on the traditional profit and loss statement that reflect the overall revenues and expenses, and profit for the whole agency. However, these figures are not broken down into smaller segments or lines. This traditional method provides no insight into the true profitability of individual lines of business, internal departments, branch offices or even individual producers. The lack of profit centers limits the information available to agency owners when making important management decisions. The real issues, opportunities and constraints are hidden in the numbers and might never be understood due to the limitation of using single department accounting.
Establishing Profit Centers
So, what are “Profit Centers?” The first categories to consider should be by line of business (personal lines, commercial lines, benefits, life, etc.). Agencies with a small commercial department or a VIP personal lines department should have separate Profit Centers for these departments as well. Non-commission income, such as premium finance or contingent income, should also be segregated. This will allow management to quickly see revenue, expenses and profit by line of business.
Most firms know the overall agency revenue, but not the expenses and profits by line of business. Overstaffing situations as well as the success of a marketing campaign can be easily determined. Profit Centers by location are also useful. Location “A” might be increasing revenue over time, while location “B” has stagnant growth and increasing expenses. Management needs to have accurate information to make effective decisions. It might make sense to assign Profit Centers to each producer or by producer teams. This way, producers can be held accountable or rewarded for the profitability or lack thereof in their department. Keep in mind that it often makes sense to create a Profit Center for administration as well. For most accounting systems, Profit Centers can easily be established by creating subcategory codes. For example, commission income might be category 4000. Personal lines could be set up as 4010, commercial lines could be 4020, etc. The coding might be a suffix, such as 6200-100 in some cases, or for QuickBooks, it would be unique classes. Each revenue and expense category should be broken down by each of the defined Profit Centers. When done properly, management has a separate financial statement for each of the established profit centers, as well as a consolidated financial statement for the
continued on page 38
AUGUST 20, 2018 INSURANCE JOURNAL | NATIONAL | 37
Idea Exchange continued from page 37 agency overall. The same approach can be used for the balance sheet (but that should be saved for the serious financial geeks). Usually, it is best to make adjustments while entering the data the first time. However, for some situations the agency might find it easier to export the accounting data to an Excel spreadsheet to do final calculations. This is due to the amount of manual calculations the bookkeeper has when entering indirect expenses into the system. For instance, if the agency has a complex formula to allocate expenses, the bookkeeper might find it easier to perform those calculations in Excel rather than manually doing it and then entering the numbers into the agency accounting software. The Excel spreadsheet allows the bookkeeper/accounting manager to preset formulas, enter the numbers, and let Excel automatically allocate the expenses based on the formulas.
Making Proper Allocations
If there is a weak link in Profit Center
Minding Your Business Accounting, it’s in the allocation of income and expenses. When allocations are not accurately assigned, the results will be inaccurate and misleading. Management could make poor decisions based on bad data. The goal is to create an accurate yet efficient allocation process. Once the structure for allocations is established, the process is easy, albeit a little time consuming. Income and expenses can be broken down into two categories — direct and indirect. Direct income and expenses can be identified as belonging 100 percent to a specified Profit Center. Indirect income and expenses can be assigned to multiple Profit Centers. For example, the salary for a personal lines CSR is easily identified as a direct expense to the PL Profit Center, while the cost of office supplies or the bookkeeper would likely fall across several Profit Centers. Commission income is usually specified on insurance company statements by line of business. Subproducer codes can be obtained if refinement is required, such as income by branch office. Contingent
How to Use Profit Centers Once all the income and expenses are properly allocated to the various Profit Centers, the fun can begin. Management can run reports to determine the profitability of each business segment. A quick review of the results will indicate whether that new program the agency has been working hard on is paying off. For example, is personal lines just an accommodation, or is it a moneymaking department? In some cases, the information will confirm a gut feel. But don’t be surprised if the numbers contradict intuitive expectations. Management can now get clear answers to questions posed in “what if” scenarios. How useful is it to know the answers to the following questions: Was the direct mail program for the personal lines department profitable? Are the perquisites paid to the commercial lines producers cost effective? Is the staffing for the service department adequate?
What is the spread for each department? (Spread is revenue per employee minus average compensation costs per employee). How would it affect the bottom line if the firm added a producer paid on a commission basis who brought in $75,000 in commission revenue the first year? Should the agency purchase a book of business? Analyzing a single set of Profit Center financials might not answer all of these questions, but the use of Profit Center accounting will broaden the vision of what questions need to be asked and where the answers might reside. Asking the right questions and then getting answers is a fundamental part of management. A good understanding of income flow, cost structure and the profit potential within a business is critical to establishing and implementing effective strategies. One cannot know which direction is forward, unless the direction of the path already covered is known.
38 | INSURANCE JOURNAL | NATIONAL AUGUST 20, 2018
income is also often broken down by line of business. Interest income is an indirect income source, and it can easily be allocated by prorating it by agency bill premium volume. Today, there is very little interest income, so there is little allocating needed. Indirect expenses can be allocated by commission volume, commissions, number of employees, number of accounts or time spent. After careful analysis, most of the time there is one best approach. But sometimes the choice is murky and may require a little finesse. It is important to keep the whole process in perspective. Do not create a very complex allocation system that is time consuming when a simple approach will do. For example, telephone expenses can be allocated by commissions or by employee. If a more complex formula is created, the time spent figuring the allocation might not be worth the gain in accuracy, because the overall cost for telephone expenses is usually less than 2 percent of total revenue. The biggest expense in all agencies is employee compensation, (including owners and producers), so accuracy counts with these expenses. Service staff is often a direct expense because an agency might have two PL CSRs and three CL CSRs. For service employees that split their time between roles, the salary costs are often best allocated by time. Producer commissions are direct expenses, but if a producer is paid a salary and they handle multiple lines, the salary can be allocated by a ratio of commissions by line handled by the producer. Employee benefits and payroll taxes should match the same allocation approaches used above for property/casualty employee compensation. Administration expenses need to be charged back to each department. The salaries for accounting and the receptionist can be allocated to each department by a ratio of commissions, number of accounts or time spent. If the firm has an HR person or an IT person, expenses for those personnel are split based on a ratio of employees in each Profit Center. Office managers and owners paid a management fee need to assess their time and allocate their cost proportionally. INSURANCEJOURNAL.COM
Indirect overhead expenses are typically allocated by either a ratio of commissions or by a ratio of employees in that Profit Center. Rent and automation expenses are good examples of expenses that are often allocated by number of employees. Use the “full-time equivalent” number of employees, not the actual body count. Someone who splits his or her time at the rate of 75 percent in one department and 25 percent in another counts as 0.75 for the first department and 0.25 for the second department. Office supplies, telephone and postage might be allocated using a ratio of commissions or number of accounts. However, that approach in some agencies might not be appropriate because one line of business might not use the same amount of supplies or postage or have phone charges in the same proportion as the other lines. A weighting factor on top of the ratio of commissions can be helpful in those cases. There are no hard-set rules for how allocations are done, because every agency is unique. Again, there is a need to be accurate, yet as elegant and simple as possible. Review the allocations after the first six months after the firm incorporates Profit Center accounting and then again in another six months. An annual review of allocations after the first year is adequate to ensure the accounting is fair and accurate. It is also important to get department managers involved in the process. This way, managers are both responsible and accountable for the profitability of their department. Bonuses can be tied to Profit Center performance. For a sample of allocating expenses for Profit Center Accounting, contact Catherine Oak with Oak & Associates at catoak@gmail.com or 707-935-6565.
A Parting Thought
help make management more effective, because it will have the tools to know what to change. It also will assist in bringing the agency to the next level. Oak is the founder of Oak & Associates, and Schoeffler
“
Do I need to sell my agency because everyone else is?”
I’m not ready to retire.”
You have built significant value in your agency through years of hard work. InsurBanc can help you to unlock the value to grow your agency to the next level, independently. InsurBanc can provide funding for acquisitions, perpetuations and producer development.
Control your own legacy. Acquisition & Perpetuation Loans Working Capital Equipment Leasing Cash Management Online Banking
Profit Center Accounting requires a certain level of sophistication to establish and maintain. It also requires some commitment and discipline to make the results meaningful. It is however, the difference between looking at a balance in a checkbook and looking at a detailed income and expense statement. Being informed will INSURANCEJOURNAL.COM
is an associate of the firm. The firm has offices in Bend, Ore., and Sonoma, Calif., and specializes in financial and management consulting for independent insurance agencies, including valuations, mergers and acquisitions, as well as perpetuation planning. Phone: 707-935-6565. Email: catoak@gmail.com.
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AUGUST 20, 2018 INSURANCE JOURNAL | NATIONAL | 39 11/1/15 12:39 PM
Idea Exchange
The Wedge
Prospecting: The No. 1 Source of New Production
By Randy Schwantz
I
f you’re a new producer and want to be successful, there is one thing you need to be very diligent about: Prospecting. If you walk around your office and ask for other’s opinions, you’ll get a variety of options on how to go about this task. Be careful who you listen to, especially if they are over 40. I’d ask to see their net worth statement before I started following their direction too closely, and here’s why. There are a lot of 10- to 20-year veterans with a $300,000 book ready and willing to tell you what works and what doesn’t. Most of them do not believe in using the phone to set appointments. They will tell you that no one answers their phone any more. They’ve been saying that ever since voicemail arrived on the scene back in the mid-’80s. They will tell you it’s an intrusive way to grow your business, so don’t do it. When you ask them what you should do, they’ll tell you about a referral they once got that turned into some big dough, but they won’t have a process. They won’t have a system. They won’t have a full pipeline. They don’t win very often except on rinky-dink little accounts. And, their book isn’t growing. So, beware.
Develop a Prospecting Plan
Developing your plan is simple, and it’s never exactly right. That might drive you
crazy, but some things in life you have to be flexible with. Start with how much new business you want to win this year. Let’s use $100,000 to keep it simple. Then, determine the size of account you want in your book. As you do this, be futuristic, meaning if you write it this year, you have to renew it next year. Many new producers write a lot of little accounts that have no potential to grow. In the years ahead, they end up with a lot of little accounts that produce very little money, and they get bogged down in the renewal and servicing of those accounts. A nice, average size account is $8,000 in revenue. If you go much smaller, they will see insurance as a pure commodity. You could easily get stuck in that price/coverage mode that two-thirds of most producers are stuck in. Not a fun place to be if you want to be a “million-dollar producer” someday. When you divide $100,000 by $8,000, you need to write 12 new accounts this year. Now, look at your closing rate. If you are a value seller, you could have a closing rate in the 50 percent to 70 percent range. If you are a commodity seller, you could be as low as 15 percent to 25 percent. It pays to be a value seller. Twelve wins divided by your high-end close rate of 70 percent means you need to propose 17 accounts. If you are a commodity seller, 12 wins divided by a 25 percent close rate means you need to propose 48 accounts. This is integral to your planning. Once you get this figured out, you can start to concern yourself with how many dials you must make and how big your database of prospects needs to be. There are two views on this. If you do a good job of researching your prospects so you know their relative size, and who the primary and secondary
buyers are, then you can build a database of approximately 200 prospective firms and focus. With that group of firms, you plan your dialing schedule. Do the math. If you plan on dialing 200 buyers approximately 16 times in a year, you will have made 3,200 dials. To break it down even further, that is only 20 dials, 3 days out of the week. If you have the right technology to support that, you can bust through 20 dials in 30 to 40 minutes very easily. The next challenge is planning what are you going to say to them to get their attention. If you don’t get them on the phone, are you going to use voicemail as a way to present your brief commercial?
buy, and they are not in the market for changing agents. If you develop an email style that is short and pithy, you can position yourself with your emails and your voicemails.
Wrapping It Up … You Need a Plan:
Getting the Prospect’s Attention
I had a cold-call coach tell me with no uncertainty, “Do not tell them who you are when you get them on the phone. If you do, they’ll immediately stereotype you as a salesman and hang up on you.” Instead, here is what she taught me to do: Ring-ring. Prospect: “This is Jim, how can I help you?” Me: “Hey Jim, Randy Schwantz” (then silence). At that very moment, your prospect will go through a search in their brain, asking themselves: “Do I know this person?” They could just get rude, but most often they don’t, because you could be from their church, their social group, a client… who knows? In most cases, they will give you the benefit of the doubt and they will be friendly. Therefore, do not use your company name. Prospect: “Hi Randy, how can I help you?” Me: “Bold statement.”
What is a Bold Statement?
It’s something simple but gets their attention. For years, I have used this bold statement: “I help insurance agents bust the incumbent relationship. Is this an OK time to talk?” There it is, simple, direct and the essence of what I do: Bust the incumbent relationship. Obviously, if they don’t care about bustINSURANCEJOURNAL.COM
ing the incumbent relationship, they blow me off. If they do, then we engage in a conversation. You need to develop your bold statement. If not, you’ll end up saying something like this: “I was wondering if you are going to be quoting your insurance this year? We have a special program for (industry segment), and I’m not sure you will qualify. When can I come and tell you about it?” “Are you looking for a second opinion on your insurance this year?” How do you develop your bold statement? Ask yourself this: “What is something they really struggle with and probably don’t even know it? ” Here are a few examples: • Make the underwriter beg to get to write your account. • Only hire people that won’t get hurt. • Eliminate the 50 shades of gray in your insurance policy. • Make your vendors pay for 15 percent of your insurance costs. Don’t lie about what you can do. Hopefully, this will get you thinking about something bold. Here is the last piece … if you are working a niche, with buyers with common problems, you need to send emails that position you as a resource. Many times, someone is not ready to
• Who are you going to call and how often? • You need to schedule time on your calendar. • You need to develop a database of people you’d like to have as customers five years from now. • You need something bold to get their attention. • You need an email system to stay in front of them throughout the year. Do these things, and you’ll be a master prospector and make a lot of money, have a great lifestyle and maybe become the next agency owner. Schwantz is founder of The Wedge Group. Email: randy@thewedge.net. Phone: 214-446-3209.
Advertisers Index
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Abram Interstate www.abraminterstate.com W2 AmTrust www.amtrustgroup.com SC3 Applied Underwriters www.auw.com 2, 3, 44 CTC Transportation Insurance Services https://insurancetruck.com 27 Exdion www.exdiopod.com 14, 15 EZLynx www.ezlynx.com 22, 23 InsurBanc www.insurbanc.com 39 Lighthouse Holdings, LLC www.lighthousepropertyins.com SC5, S5 Midlands Management Corporation www.midlandsmgmt.com SC4 Monarch E&S Insurance Services www.monarchexcess.com W3, W4 PersonalUmbrella.Com www.personalumbrella.com 43 Safeco Insurance www.safecoagentsnews.com 24, 25 Safety National www.safetynational.com 18, 19 Smart Choice Agents Program www.smartchoiceagents.com 20, 21 Texas Mutual www.texasmutual.com SC2 The Hartford Insurance Group www.thehartford.com 16, 17 The Institutes www.theinstitutes.org 5 United Fire Group www.ufgsolutions.com 7
AUGUST 20, 2018 INSURANCE JOURNAL | NATIONAL | 41
Closing Quote When Small Business Needs Specialty Insurance solutions that better align with the needs of small businesses.
Mutually Inclusive
By Bryan Salvatore
S
mall business used to be associated with small exposures — simple business risks addressed with simple insurance products. However, changing customer needs and expectations, technology advancements, new regulations and evolving legal environment issues have dramatically changed the way small business owners run their companies. Small business is no longer simple. Small-business owners say employment-related issues, crime risks and professional liability risks are their top three exposures, according to the 2018 Small Business Risk Report by Forbes Insights and The Hanover. In the face of increasingly complex exposures, many small-business owners often require insurance coverage that goes beyond a standard policy. This creates an opportunity for insurance carriers and specialized independent agents to expand their businesses by moving downstream and offering specialty
Servicing small-business accounts with complex needs has been difficult for agents in the past. The industry focused on providing specialty insurance lines for businesses that are large or difficult to place. Most insurance carriers selling to small businesses have concentrated their efforts on more predictable business owner policies (BOP), leaving business owners with complex risks without an effective solution. In turn, agents have had limited options when it comes to serving smaller clients. Those limited options were: • Avoiding the small business market to focus on mid to larger-sized complex accounts; • Sending all small accounts to wholesale partners for placement and servicing; or • Bringing these smaller, complex clients into the agency service structure but then struggling to serve them easily and efficiently. Agents have repeatedly said they need more alternatives. The good news is carriers are evolving to provide better coverage and servicing options for these small businesses’ complex needs, making it easier for specialty agents to capitalize on the opportunity.
Waves of Change
Carriers invested in the spe-
42 | INSURANCE JOURNAL | NATIONAL AUGUST 20, 2018
cialty space are already implementing distinctive changes. First, they’re staying on top of the various specialty risks customers face. Because risks evolve over time, the best carriers are closely monitoring the many trends that drive exposures for small businesses. In addition, these carriers are providing standard and specialty coverage from different underwriting disciplines in a way that is seamless for the customer. For example, a carrier’s small commercial practice can provide a BOP, while its management liability operation can provide directors and officers liability coverage, enhanced employment practices liability limits and a broader crime policy in a seamless fashion, all behind the scenes. To the customer, it appears as though they have one comprehensive insurance program from a single carrier. Finally, these carriers are working to solve coverage needs as efficiently as possible for both customers and agents. Implementing specialty lines
capabilities within their customer service centers is a highly effective way to give small businesses all the insurance coverages they need, while providing them with high-quality service. This also saves insurance agencies valuable staff time. Our industry has made good progress in recognizing that small businesses can have complex exposures. By building a broad portfolio of efficient, small specialty solutions, carriers will ultimately help agents grow their small commercial business and continue to make great strides in developing specialty lines solutions that serve the needs of small businesses with complex risks. In turn, agents are able to better serve their small-business clients with more comprehensive solutions and streamlined service. Salvatore is an executive vice president and president of specialty for The Hanover. In this capacity, he leads the company’s U.S. domestic specialty business. INSURANCEJOURNAL.COM
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