6 What You Do/Don't Do When a COVID-19 E&O Suit Arrives

What's on the Horizon? As the World Faces Forces of Change from a Global Pandemic, What is in Store for Insurance Agencies and Our Industry?

Featuring Chris Boggs, Michael Burt, Frank Cox, Ryan Hanley, Carey Wallace and Bill Wilson

Let's pretend we did a survey in December of 2019 and asked insurance agencies the following question: "Will you implement any work-from-home policies at your agency in the next six months?" My guess is that 90% of Insurors members would have simply responded, "No," and maybe 5% would have said, "Maybe." if asked the question again in March, I would imagine you could flip the numbers around completely.

Change has been forced upon the world. Whether we like it or not, things are going to be different moving forward – and the only question is going to be, "How different?" To get some idea of "how different," we talked to experts inside and outside the industry on sales, coverages, agency operations and more to get their thoughts on what we may see moving forward – pandemic-related or not.

Agency Operations Changes

Bill Wilson, CPCU, ARM, AIM, AAM; Founder, InsuranceCommentary.com: The historian Hegel once said that, “History teaches man that man learns nothing from history.” We tend to have short memories. Unless potentially serious pandemics become a relatively common event, frankly, I don’t think you’ll see a lot of structural changes in how agencies operate. If current conditions pass, the masks will come off and handshakes and hugs will once again be in vogue. We are social animals and I think that desire will marginalize the perceived risks. Given time, things should normalize, but I hope that agencies will recognize the importance and value of a comprehensive disaster plan that incorporates loss prevention and reduction measures.

Carey Wallace, CEO, IntellAgents and a Keynote Speaker at Insurors Agency Growth Conference: Independent agencies are among the most profitable and predictable businesses causing them to be considered recession proof by almost all measurements. Independent agencies have remained strong over the past 15 years which included several epidemics including SARS, Bird Flu, H1N1, MERS and EBOLA as well as the recession in 2008. In fact, during this time period the number of independent agencies remained constant at 36,500 in spite of an increase in mergers and acquisitions. In 2019, the average agency experienced retention rates of over 90% which created both a stable and predictable cashflow stream. In addition, over 75% of agencies reported that they are growing year over year both in personal lines and commercial lines business.

A crisis like COVID-19 shines a bright light on the strengths and weaknesses of all organizations. For those organizations that are healthy well-run businesses, they will continue to flourish as they are designed to measure key performance indicators and adjust as changes occurs. For a lifestyle business, the impact may be significant as that type of organization is not focused on monitoring the data needed to drive business decisions. The reality is that many agencies that were able to operate successfully as lifestyle businesses will struggle to weather this kind of storm. Now more than ever before, agency owners should be utilizing data to create a plan for their agencies.

Coverage and Underwriting Changes

CRIS, AINS; Executive Director Risk Management and Education, Big "I" Virtual University: Insurers will tighten coverage to remove any perceived allowances in exclusionary or limiting language. Currently, policy language can be interpreted differently by different carriers and even different by different courts. It’s not that the language is ambiguous, it’s just situation-based. Going forward, I feel that carriers are going to work to remove any questions of intent or any ability to come to a different conclusion than the one they intend.

Or, in what may be an even worse outcome for consumers, the industry may simply choose to narrow the breadth of coverage – particularly on the property side. If courts or legislatures succeed in broadening the coverage granted under the business income policy, I think it’s possible carriers may consider going as far as limiting coverage to named perils only. This may not be the most likely outcome, but I consider it a definite possibility.

Underwriters will pay closer attention to requests to remove exclusionary endorsements. Carriers will closely review their underwriting rules and guidelines. Required endorsements won’t be inadvertently left off any longer. And there may be more required endorsements as a result.

Carriers using proprietary forms will review all policy wording to make sure there is NO potential for the coverage to be broadened by interpretation.

Underwriters are going to clamp down, at least for a while.

Wilson, InsuranceCommentary.com: I think we’re more likely to see changes in policy form language and underwriting – issues that agencies will have to deal with. Needless to say, we’re going to see stronger catastrophe-related policy exclusions.

There is a need to revisit how tied to described locations property and business income coverage is. There is also a need for property insurance to cover property that is relocated to enable employees to continue working. Likewise, limiting primary business income coverage to losses that occur only on described premises is too limiting and losses that arise from damage off premises, to be covered, requires rewriting the civil authority coverage in these forms.

Sales and Prospecting Changes

Frank Cox, CAWC; Vice President, MarshBerry and a Keynote Speaker at Insurors Agency Growth Conference: Selling in today’s environment is challenging enough without having to deal with a pandemic that limits a salesperson's ability to have any physical face-to-face meetings. Just a short time ago, setting up meetings virtually wasn’t the normal approach for success. With that said, these new challenges have exposed flaws or areas for improvements for many. In fact, a large number of sales professionals have gotten a little complacent with their approach for quite some time. They should have changed their methodologies long before this current pandemic. If you have a strong desire to change your sales approach to evolve during this challenging time, we encourage you to focus on some simple basics to start. As once stated by Tony Robbins, “Change is inevitable, evolution is optional.” We believe it all starts with your prospecting MINDSET. Many ask us, should we be prospecting right now. The answer is clearly – YES. But you must adjust your approach. As you revamp your plan, start with asking yourself the following questions:

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3. Is now the time to be actively prospecting, or is that an insensitive approach? How are you positioning yourself as a Trusted Advisor and Strategic Resource for your clients and prospects? How am I going to adapt my sales process today, and make it fit in a virtual selling environment?

The answers to these questions will involve an improvement in both the Art and Science side of your sales acumen. From the Art side, strong sales skills will be required for you to separate yourselves from the transactional seller. As for the Science side, utilizing technology, setting new activity metrics that tie into your short-term game plan is the first start.

"Coach" Michael Burt, Author/Creator of "Monster Producer," and a Keynote Speaker at Insurors 127th Annual Convention: The key for all business owners is to go to work on the system that works. We teach the system in this cycle:

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4. 5. 6. Activation of "PREY" DRIVE – this is an INSTINCT to go get it daily. How you explain your services. We teach a six step framework to explain your value in a very compelling way. How you work a SELLING SYSTEM to generate leads and new customers. How you FOLLOW UP to secure business. How you EXTRACT REFERRALS from every transaction. How you become a PERSON of INTEREST.

All of this should be MULTIPLIED with EFFORT and EXPANSION during this COVID-19 CYCLE. When pressed most people will “contract and retreat,” meaning they will take the path of least resistance. What they should be doing, especially what big time people do is EXPAND. This is what we teach in my coaching program of “Monster Producer.” We teach expansion. We teach mindset. We teach how to work the system.

This is what people should be doing in their businesses so they can weather any storm.

Wallace, IntellAgents: Determine the areas of opportunity and over communicate with your customers. This is not the time to be quiet, so reach out and let your customers know you are there for them. In times of uncertainty there is great comfort in hearing from our advisors. Be proactive and reach out to your customers to ask them how they are and communicate how their current carrier is responding to this pandemic. It is estimated that 8 out of 10 insureds will shop their insurance during this time. Now more than ever, people want to

support their local community and local businesses. Remind them that you are there for them, are part of their community and that you care.

Ryan Hanley, Industry Speaker & Founder, Rogue Risk: Gone are the days of the dogmatic ideals of how clients should be marketed to, communicated with, and served by an independent insurance agency. The "New Normal" doesn’t care how you got here, what methods your agency was built on – nor do your clients.

Everyone is simply trying to survive. Our world has been grabbed the ankles and flipped upside down, like a TV bully shaking the contents our lives out onto the ground. The COVID crisis is unfair in so many ways, from trivial to morbid. But times like these are why independent insurance agents exist.

Agency Culture Changes

Wallace, IntellAgents: Using data to assess the risk in your agency and plan for your future has never been more important. The agencies that have a plan will be able to adjust and make the necessary decisions to navigate these unprecedented times. We have the tools and resources available to provide you with the resources you need to build a strong plan for your agency. Our business consulting team can provide you with the support and tools you need to help you build your agency’s cashflow projection. In addition, we have com- pensation information (Compensation & Benefits Study) that is relevant to your region and state that you can utilize in your planning as well as the financial and operational benchmarks (RISE Report) based on your size, region, fastest growing and state that you can use to ensure that you are continuing to run a profitable and financially sound agency.

Hanley, Rogue Risk: Today, it is the job of independent insurance agents to prepare and defend their communities from all the unfairness of the "New Normal." But then, this has always been our role, to prepare and defend the sustainability and longevity of our communities.

The difference today is we no longer get to do this on our terms. The bridge to modern insurance distribution has been lit on fire by COVID-19 leaving us only the option to hike up our pants, put faith in our own ability, and jump into the future.

There is no right way to serve clients. Automation, referrals, service centers, paperless, download, agency management systems, social media – none of the specifics matter anymore. We have only one option, to do only and everything your clients need to overcome the unfairness of the New Normal.

What Will You Do About it?

As you can see from these thought leaders, change isn't coming – it's here. How will your agency adapt? u

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