2021 June PIA Vermont by PIA Northeast

June 2021 • Vermont

PAGE 18

THE CUSTOMER

EXPERIENCE Build the relationship and listen to your clients and prospects

IN THIS ISSUE 9

Art of insurance promotion

Add the extra to ordinary

Are clients carrying adequate limits?

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DEPARTMENTS 4 June 2021 • Vermont

In brief

9 Tech 13 Sales 29 E&O 31

Ask PIA

Readers’ service and advertising index

COVER STORY 18 The customer experience Build the relationship and listen to your clients and prospects

FEATURE 25 Add the extra to ordinary Great customer service should be more than just lip service

Statements of fact and opinion in PIA magazine are the responsibility of the authors alone and do not imply an opinion on the part of the officers or the members of the Professional Insurance Agents. Participation in PIA events, activities, and/or publications is available on a nondiscriminatory basis and does not reflect PIA endorsement of the products and/or services. President and CEO Jeff Parmenter, CPCU, ARM; Executive Director Kelly K. Norris, CAE; Communications Director Katherine Morra; Senior Magazine Designer Sue Jacobsen; Editor-In-Chief Jaye Czupryna; Advertising Sales Executive Susan Heath; Communications Department contributors: Athena Cancio, Alexandra Chouinard, Patricia Corlett, Darel Cramer, Roberta Lawrence, Zack Littrell, Crystal Ringler and Calley Rupp. Postmaster: Send address changes to: Professional Insurance Agents magazine, 25 Chamberlain St., Glenmont, NY 12077-0997. “Professional Insurance Agents” is published monthly by PIA Management Services Inc., except for a combined July/August issue. Subscription rate for members is $13 per year, which is included in the dues; subscription rate for nonmembers is $25 per year. Professional Insurance Agents, 25 Chamberlain St., P.O. Box 997, Glenmont, NY 12077-0997; (518) 434-3111 or toll-free (800) 424-4244; email pia@pia.org; World Wide Web address: pia.org. Periodical postage paid at Glenmont, N.Y., and additional mailing offices. ©2021 Professional Insurance Agents. All rights reserved. No material within this publication may be reproduced—in whole or in part—without the express written consent of the publisher.

COVER DESIGN Zack Littrell

IN BRIEF

FIVE MINUTES WITH …

Ethics and the customer experience There are different components that factor into the customer experience. What is the value of ethics in the agent/client relationship? While an unethical person will think that it doesn’t hurt anyone to be unethical, your relationships with others, including the companies you work with, are affected by your behavior. When most of the business that we write with the carrier meets or exceeds the underwriting appetite, it is more likely to look at something that may not qualify exactly for its underwriting.

to see if there is coverage for the picture window her daughter broke when she was playing ball, you want to be able to tell the client that it sounds like her homeowners policy will cover the loss.

Mishell K. Magnusson Vice-President KJM Consulting & Training Inc. Munnsville, N.Y.

What are an agent’s obligations to his or her clients? The agent needs to uncover his or her insured’s exposures and suggest the proper coverage. This is more than a five-minute conversation. So, an agent needs to tell the client, “No, I can’t quote your insurance in five minutes. I want to provide you with coverage for your risk, so that in the event of a loss, you will have coverage. If you have it, we want to cover it (when we can).” How do agents have honest conversations when clients know how to answer specific questions in order to get discounts? Let’s use a common example. The insured calls and says, “My son just got his driver’s permit, do I need to add him to my insurance?” Yes! Of course, we can’t leave it at that. Now that the son has his permit, this is an additional risk for the insurance carrier. I don’t know many carriers that charge for a permitted operator, but once he receives his license, it’s going to be an additional premium. You want to make sure the insured has the proper coverage if the child has an accident. This also is a good time to talk to your insureds about any umbrella policies you’ve written for them, and possibly increasing the limits. How do agents handle situations when clients ask them questions about their policies or claims ‘off the record’? Insureds need to understand that we are also an agent of the company—so what we know, the carrier knows. Plus, E&O carriers tell us to report all claims to the carriers. However, it’s important to have deductible conversations with insureds. For example, if an insured calls the agency

You want to be able to explain that the deductible is $500, therefore, the insurance should pay for any damage exceeding $500. You want to be able to ask if the client has a repair estimate. You also must ask if anyone was hurt.

When the insured replies that, according to the estimate, it will cost $600 to fix the window and no one was hurt by the accident, you are going to want to discuss the $500 deductible and the fact that the policy is intended for catastrophic losses not maintenance. You also need to explain that insurance carriers can nonrenew policies that have had multiple small claims. However, you want to be able to tell your client that you will submit the claim (if that’s what she wants), but the goal of the policy is to protect her after a catastrophic loss. When the agent/client relationship has an ethical foundation, how do clients benefit? Agents have a standard of care to clients that is for their benefit. This includes adequate coverage to help them determine the appropriate amount of property insurance to meet their needs; to explain the benefits and/or advantages of adequate amounts of insurance as well as to identify their exposures to loss and to recommend the appropriate limits of coverage. There is duty to provide proper coverage to help them understand the differences in coverage among the different policies available; to use various tools to identify clients’ exposures to loss and to keep current with changes and innovations in the insurance marketplace. Agents need to place coverage in the best interest of the clients (which does not necessarily mean the lowest cost); to understand the differences in coverage among the policies; and to not place coverage with a carrier solely on the basis of a sales contest or higher commission. Finally, agents owe clients prompt communication about all aspects of their insurance transaction, which includes but is not limited to, changes, exclusions, limitations, claims, cancellations and nonrenewals.

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BY THE NUMBERS

Happy customers remain loyal customers A customer’s experience with an agent can make a huge difference. Was she just involved in a car accident? Did he lose his house to a fire? How you respond to customers when they need you will determine how their insurance needs are met, and whether they choose to employ your services again.

THE CUSTOMER EXPERIENCE Are you engaging? Do you have a social-media presence?

Are your customers satisfied?

A customer who is satisfied with an experience will tell

9 people But a customer who is unsatisfied with an experience will tell

Do you share valuable insight about the services you offer, tips about insurance shopping, how to protect yourself, etc.? Companies with engaged customers outperform their competition by 147%

15 or more people Do you make your insured feel like they are the only person in the world?

70% of customers value proactive customer service Ways to be proactive:

Send email notifications Do you ask them what they think?

Give them a call Engage on social media

44% of consumers will use a product or service if their experience is personalized

77% of consumers favor brands that seek feedback and apply it

They shouldn’t feel like you’re on a mission to sell them something. Ask how they’re doing—talk to them like old friends

Your customers are the lifeblood of your agency. Without them, you couldn’t do what you love. So, make sure you’re showing them some love, too. You don’t need to do actual cartwheels for them, but if that’s what they see when you help them—you’ve already done half the work. PIA.ORG

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Attract and retain good customer service representatives Independent insurance agencies are only as unique as the people who run them. Do you know what your agency is looking for in a good employee? Just like no two agency owners or their agencies are alike, no two customer service representatives are alike. However, most people lead by example. When an owner takes pride in his or her agency, so will the employees. It is important for CSRs to take pride in what they do. Customer service representatives are the backbone of the insurance agency. The degree to which they succeed will affect the entire organization. Their success can be driven by their desire to help others. We want those employees who want to be with us and who have a desire to succeed. Peak performers If you have ever wondered what separates peak performers from average performers, you are not alone. A combination of traits we are born with—as well as those we learn along the way—define our performance. This, in addition to specialized technical knowledge, can help make the CSR a powerful person within the agency. Successful CSRs have a firm grasp on the agency’s procedures, the companies’ requirements and the clients’ needs; as well as the discipline to manage their time to complete tasks in an appropriate, accurate and prioritized manner. Time management Successful employees manage their time well. Steps to good time management include: • organizing and prioritizing work, • utilizing a to-do list, • obtaining quality continuing education, • completing similar jobs at the same time, and • taking short, occasional breaks. The best fit Each person has characteristics that define him or her. Studies indicate that the CSR position is best filled by a person who is emotional and who can make decisions. Additional characteristics of a successful CSR can include being cooperative, loyal and possessive. The person also should be able to handle pressure situations. Traditionally, the independent agency system has attracted certain people to the industry. There is more to the customer-agent relationship than the insurance policies that are written. Potential customers look for people with whom they can build a personal rapport. Ideal CSRs 6

can make insureds feel accepted and relaxed. Once this is done, the relationship can become even stronger. Customers need to feel welcomed. People will do business with you if their comfort level is higher with you compared to the competition. Everyone feels that they are distinctive, and customers need to feel understood. That makes each situation unique, which needs to be recognized and acknowledged with your employees. Leadership There are many publications written about leadership and effective management—one is The One Minute Manager by Kenneth Blanchard, Ph.D., and Dr. Spencer Johnson. A few of their thoughts are worth sharing: “People who feel good about themselves produce good results.” Set goals for yourself. Have others set their own goals. Check these goals to see if you (and they) are on track. Give praise. Tell people you will let them know how they are doing. Give immediate praise as well as being specific. This encourages them to do more. Give reprimands when necessary and be specific. Tell people how you feel about what they did wrong, at the same time remind them that you value them. Let them know you like them, not their performance. Remember, when the reprimand is over, it’s over. Keep good employees When an employee comes to you with a problem, you have a unique opportunity. If an employee feels free to complain, and the complaint is resolved, the employee becomes even more loyal to the agency. Also, if the relationship is strong, the employee will give you the opportunity to correct the issue rather than leave. Asking the employee how he or she would resolve the issue can enhance the relationship as well. Final thoughts Have a mission statement and make sure your employees know it. Have job descriptions and make sure your employees know them. These are just some ways that you can help keep the lines of communication open in your agency. Communicate so every employee understands how the agency works. This will lead to a happy workforce, which will help your agency retain its employees. Adapted from QS90774, which can be found in the PIA QuickSource library (pia.org).

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The art of an insurance promotion On her most recent album, Taylor Swift opens with a (fictional) song about the complexities of wanting someone in a relationship. In the case of the song “willow,” the man is hardly an “open-shut case” paramour, but one who pulls multiple bait and switches. As she sings in the song, “every bait and switch is a work of art” in that it does nothing to stop her from bending to his wind and coming back stronger than a 90s trend.

property and other risks. Conveying this to clients—especially now that so many have grown accustomed to shopping for themselves online— never ceases to be a challenge for independent agents.

Independent insurance agents may not find themselves in the position of being “lost in [the] current like a priceless wine,” but frequently bring up frustrations when clients are swept up by insurance company advertisements that promise to offer policyholders lower insurance premiums. As industry experts, independent agents know that changing carriers and policies based on an advertisement is a sure way for clients to wreck their plans to protect their

Insurance advertising consistently obscures the fact that insurance is a distinct industry. There are no Memorial Day or end-of-season sales. Carriers and agencies do not have inventory to clear before the

TECH

CLARE IRVINE, ESQ. Government affairs counsel, PIA Northeast

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next shipment. Instead, the industry is highly regulated and state regulators must approve all rates for policies in the admitted market. These ratings are publicly available, allowing each carrier’s competitors to review the approved filings. This transparency and close regulations help preserve the stability of the industry while forcing carriers to compete in other ways. These other ways do not necessarily mislead potential clients, but the influence of lawyers is clear. It all creates a dynamic in which independent agents trying to find the best policies face goliath companies trying to attract clients. Agents have access to numerous carriers—many not broadly known to consumers—and they have far more options when it comes to finding the best policies for consumers. So, how does an independent agent explain to his or her consumers why they should not believe everything they hear when bombarded with potential savings for insurance?

The bait and switch One of the best teasers for insurance are low prices for automobile insurance. This makes sense as most people need automobile insurance and it can be expensive—especially if you have multiple drivers and cars on the policy. Some carriers provide quotes upfront based on a few questions and then bind the policy without running the motor vehicle reports with key underwriting details. When the MVR turns up hits against the drivers on the policy, the rate may suddenly go up in a straightforward bait and switch. For agents who actually consider every underwriting factor when they quote a policy (or at least enough to quote the policy fairly close to the final premium), this creates a difficult situation. How can you compete with low rates? To begin with, auto insurance is highly competitive and even more highly regulated. Sometimes the regulations may frustrate everyone in the industry, but they also preserve a competitive market by eliminating trade secrets. Carriers must file rates with state regulators and become publicly available. Rates still vary, but not nearly as drastically as some policyholders may believe. This can prove challenging to explain, especially as consumers increase their knowledge by making large purchases online. In comparison to online shopping deals, a policy quoted after the MVR is effectively the free-shopping option—the price stated is the price paid without additional charges for a college-aged driver who forgot to mention his or her speeding tickets. A quick quote may look cheaper, but does not include the shipping and handling costs, which could cost significantly more than the original quote. Suddenly, the product that seems like a good deal balloons to an unaffordable premium.

Piecing a bundle together Generally, anyone who shops knows that buying products together saves money, at least in theory. It is the entire business model of wholesale stores such as Costco and Sam’s Club. So, when a policyholder hears that he or she can save money by buying insurance bundled together, it rings true based on his or her other buying experiences. Insurers that advertise frequently and directly to consumers do not have a monopoly on bundling discounts. Just as the public nature of auto insurance 10

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rates eliminates trade secrets, this also makes it possible for insurers to know what other companies do on bundling. Not surprisingly, carriers that write with independent agents also may offer bundling discounts for policyholders who purchase certain combinations of home and auto insurance. If your carriers have never mentioned these options, it may be worth asking what is available. And, if you know you have bundling options, it may be worth noting to policyholders that you already have incorporated discounts into their quotes. However, just because people may believe that they save money buying a bundle of items, it is important to let clients know when that may not be the best options for them. There are the policy specifics that may need to be explained to a policyholder, noting why a separate homeowners insurance policy better protects his or her investment than any of the bundling options. Even simpler, the customized package an independent agent puts together for the policyholder could have a lower premium than a bundle, even with a discount. Discounts and sales are great unless you end up paying more than you would have just buying the best quality product. Independent agents offer something that fits every policyholder—a customized bundle that fits his or her actual needs rather than what the carrier offers.

Savings, savings People love saving money, but many of the ways people find ways to save money when purchasing other products simply do not exist in insurance. No one can buy a gently used automobile insurance policy off eBay or pick up a homeowners policy in an end-of-season clearance. Do not

waste time rewriting policies on Black Friday when deals cannot be found due to the necessary approval of rates. Promotional sales do not actually exist in automobile insurance. The regulation of rates eliminates these as an option, which means promoted savings only compare different policies across different carriers. Unlike other industries, in which companies can accumulate debt to offer significantly lower rates to undercut the competition, insurance regulators closely scrutinize the financial statements made by insurers on applications. This keeps the industry stable for policyholders, even if it makes it difficult for individual consumers to shop around for the best deals.

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Promoted savings in insurance are comparative; estimates are based on the publicly filed rates and what companies know about each other. The close regulation of the financial stability of companies limits how low a premium can go. In order to provide a reduction on the premium, carriers promote savings options such as a higher deductible. A higher deductible does reduce the premiums, making the advertisements about saving money true until the driver has a claim. The higher deductible could eliminate any savings and cost the client, even more that simply paying a bit more in premium each month. Other saving options may be available across most carriers, such as discounts for taking a defensive-driver course, multivehicle discounts, and bundling as discussed earlier in this article.

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Nothing guarantees an advertisement’s statement that a customer can save money with a specific carrier. At the same time, the lack of sales and Black Friday deals in insurance usually give a policyholder time to shop around. Even when purchasing a new vehicle, the standard ISO 4 Personal Auto Policy standard form covers the vehicle for enough time to allow policyholders to add the vehicle to their existing policies or to discuss their options with an agent. And, it is the shopping around that independent agents can do for their policyholders, using expertise to cut through the advertising language to find the best option for each client with a deductible that will not eliminate any savings on premiums.

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Let the agent do the shopping Long story short, independent agents often can find the best deals for policyholders by simply being able to do the shopping with the benefit of their expertise. While loud promotions about savings may seem like an open-shut case when it comes to buying insurance, it also may be a surefire way for a policyholder to end up with hollow, insufficient coverage.

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The challenge of communicating these obstacles will never let up, but independent agents repeatedly have the opportunity to break apart the artfully built bait and switch. Irvine is PIA Northeast’s government affairs counsel.

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Fundamental components for sales success Almost every time I get a new client and start to look at what the business’s sales team is doing, I see the same patterns and mistakes repeatedly. Often there are a plethora of things to fix, but what I’ve found is that if you can just focus on two key areas, a lot of other things align and allow a business to increase its sales significantly. Instead of overwhelming the client with everything he or she needs to fix, I break it down, and tell the client to focus on two steps. Step 1: Make many new-business sales calls. Every time I share this one, as it is coming out of my mouth, I think, “C’mon, everyone knows this is the fastest way to increase sales, right?” It is as simple as that: make many newbusiness sales calls. If you just follow that directive and make numerous phone

and in-person sales calls, you’ll sell more. Maybe there is a little bit of explaining, but not much.

SALES

JOHN CHAPIN President, Complete Selling

To get a little more specific, we give each salesperson a set number of new-business calls to make each week. To use round numbers, let’s say it’s 50 calls per week. All calls have to be in-person (if possible), and if not, they have to be phone calls. If you have suspended all in-person

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meetings because of the pandemic, the number of new-business phone calls should be higher than 50 per week. The only calls that count are in-person cold calls or outbound cold phone calls that the salesperson has initiated. This is important. I’ve had people count a call-in as a new call, a follow-up call as a new call, and someone they met while out networking as a new call. Those don’t count. The only calls that count are the ones in which you intentionally ring the phone—or knock on the door—of a stranger. Behind the scenes, you need to do the math to figure out how many calls each of your producers need to make to hit their annual sales goal and track contact rate, first appointments, second appointments, proposals, closed sales, etc. The bottom line is, even without those contacts, if you focus on making numerous in-person and phone new-business sales calls, you’ll significantly increase sales at your agency. Do you want a simple way to double sales at your agency? That’s easy: Double the number of new-business calls. If sales representatives are making 10 new business calls a week, and they double their goal to 20, sales will double. Why? Their skills and results at each level of the sales process remains the same, but they are doubling the number of opportunities they have, and if everything else remains the same, by the law of averages, sales will double. Step 2: Practice and continually improve sales skills. This one is almost as obvious as Step 1, but people usually need some help and direction with the execution of this one. Also, this step takes some time. Unlike Step 1, when you can simply better manage your 168 hours a week and make more calls, acquiring improved sales skills isn’t a light switch you can turn on. While you can double your sales calls this week, doubling your sales skills takes weeks or even months of hard work. Going a step beyond that, becoming the absolute best you can be takes years and is an ongoing, never-ending process of learning and improving.

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This is why I would say 98% of salespeople don’t do the latter, and 80% of them don’t even put in the initial weeks and months. Yes, this step takes self-discipline, patience and stick-to-itiveness even at the weeksto-months level, but if you can get yourself to hunker down with some really good content for a few months, the increased sales will be well worth it.

However, you don’t have to be a perfectionist to start making sales calls. Don’t wait the few months to improve your skills before you start making lots of calls; start making lots of calls right away. Improving sales skills starts with having quality sales content (i.e., what to say and do, and when to say and do it). Next, you need to practice, role-play, and otherwise become highly skilled with that quality material. Finally, before, during and after learning your new sales skills, you need to go out and use it on lots of potential customers. Once you combine these two steps, the magic happens. Increased calls alone lead to increased sales, but when you add the second step you’ll also be a lot more effective on those calls, which will lead to even more sales. Of the two steps, making many sales calls is vital. Because while you can increase sales by increasing the number of calls you make, you can’t increase your sales if you only make a few calls a week (even if your delivery is perfect). You can have the best sales skills in the world, but if you don’t talk to anyone, you won’t sell anything. Chapin is a motivational sales speaker, coach and trainer. For his free eBook: 30 Ideas to Double Sales and his monthly articles, or to have him speak at your next event, go to www.completeselling.com. He has over 33 years of sales experience as a No. 1 sales representative and he is the author of the 2010 sales book of the year Sales Encyclopedia (Axiom Book Awards). Reach him at johnchapin@completeselling.com.

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DOUG COOMBS Executive Vice President and Chief Marketing Officer, SIAA

THE CUSTOMER

EXPERIENCE Build the relationship and listen to your clients and prospects

n independent agent’s skill at ensuring every client interaction is positive, whether the agent is writing new coverage, answering questions, or facilitating a claim—is key to improving retention, increasing referrals, and adding value and trust to the relationship.

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Today, with our increasing dependence on technology, these interactions are no longer just face-to-face or over the phone. Clients now demand fast, seamless transactions, and agents must utilize technology to offer the best experience and engagement. Removing pain points for clients and prospects is part of growing the agency.

that collect basic information and policy needs in addition to booking appointments. These tools add convenience and are essential to providing the best customer experience.

In a recent customer experience report, KPMG studied businesses to understand what has most often helped their success during the pandemic. “Digitally prepared companies that responded to the COVID-19 crisis with innovative customer experiences made dramatic leaps upward in the 2020 rankings. Some remained open during shutdowns and leveraged technology to improve the physical experience. Others did not have physical presence under stay-athome conditions yet were able to accommodate new online customers with a human touch or become more deeply embedded in their customers’ lives with new relationship-building programs.”1

Within calls to action, ask how and when it will be convenient to contact them. According to PC Magazine, texting is the preferred method of contact for customer service; be sure to keep the audience in mind since a more mature individual may prefer a phone call or in-person visit.3

Relationship building How do agents know if they’re doing everything within reason to strengthen the agency’s client relationships? Begin by reviewing the clients’ journey from the first interaction to when they purchase policies and then have claims. Use that data as the basis to create a customer experience strategy for the agency— an initiative to improve customer service and communication. Consider these simple steps: Communicate with all agency staff members about customer experience and engagement. Share the reasons that offering a better customer experience helps retention, starting with the first impression of the agency brand and continuing through ongoing policy purchases, renewals and referrals. According to Forbes, “… internal communication is vital in creating an excellent customer experience. Information needs to flow freely between employees, teams, and departments.”2 Or in this case, throughout the agency. Make it simple for clients and prospects to learn about your agency. While clients may recognize the agency by its brick-and-mortar office and local reputation, online information should be available 24/7. Share the agency history, along with brief staff bios, information on product lines, and calls to action on a mobile-ready website and social-media channels. With transparency, clients and prospects can do their research ahead of time and trust their decisions. Be where agency clients are, and reach out to them proactively. Prioritize fresh customer-centric content for the agency website and social-media channels, check navigation methods, and confirm that there are no delays while viewing pages, filling out forms or getting responses. Take an interest in what your target audience is talking about and join the conversation, creating campaigns to inform and educate people on insurance products. Ensure the agency is present in the community’s discussions in person and online. Enable clients to contact the agency in multiple ways. This could be through a phone call, text, app notification response or scheduled video conference. Review the ways the agency can be contacted and confirm that these options align with clients’ preferences. Give clients and prospects calls to action through multiple channels (e.g., website, social media and mobile apps). Add general inquiry forms 20

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Understand that insurance quotes are available instantly in the realtime marketplace. Set a reasonable turnaround time for answering clients’ questions and providing quotes to prospects. A comparative rater on the agency’s website can offer clients instant pricing for those who prefer to research options before talking with an agent. Offer convenient times for clients and prospects to discuss policy options, details and address any questions. Review the renewal process time frame. Alert clients ahead of time to any changes (such as increases to premiums) before their renewal and discuss updating other existing policies simultaneously. Time is precious—for your clients and your agency.

Take time to listen While we live in a technology-driven era, consider the customer experience from a holistic perspective. Whether it’s in your office or talking via a video conference, agents should help clients to appreciate proactive service and recognize their value as an independent agent who regularly improves their client journey. Remember, a poor customer experience may explode quickly on social media, damaging the reputation of the agency and its brand.

One way to build quality relationships and show clients you care is to give professional advice proactively, serving in the role of a trusted adviser. Regularly check in to determine if any changes to clients’ personal lives or small businesses require new policies or additions/reductions to existing insurance coverages. Don’t communicate just at renewal time or only to make a sale. Reach out to clients regularly through various communication channels and for any number of reasons— wishes for a happy birthday, encouragement for a good holiday, etc.

opportunities to demonstrate agency empathy, professionalism and expertise to your clients. Be sure to reach out to clients to gather feedback, especially after each sale. Reviewing feedback is an excellent way for independent agents to assess their strengths and weaknesses and make corrections to client experiences as needed. Encourage those who offer positive comments to refer the agency to their friends or family members. An easy way to do this is to follow up a sale (or service situation) with a brief survey. Again, use the correct channel to engage each client, and follow up. Some clients may be more forthcoming if they have the option to give feedback remotely.

Email> Each PIA department has its own email address.

You also can take those communications a step further. Agents who deliver timely and informative insurance advice and service will engage their clients and gain their trust. The staff members’ professional demeanor and ability to respond with empathy, personalization, and integrity are keys to creating long-lasting client trust and loyalty. Without periodic positive experiences, the clients may find a higher quality of service elsewhere.

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That is one reason why it is important to encourage all staff members to treat clients as if they were friends or family members.

Review the feedback Some interactions may provide valuable opportunities to post positive feedback (with the client’s permission) on social media and other online channels and get a conversation started. For any negative feedback, assess the damage and address the issue immediately, apologizing for the inconvenience. Let clients know you appreciate their input and that you wish to retain their business. Mistakes happen. Use them as

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Soft skills matter After you’ve ensured ease of contact and prepped the team for positive customer engagement, qualities like attitude, empathy, and integrity will continue to matter. Agents who keep their word and are transparent with clients will gain new referrals and grow their businesses. According to KPMG’s recent Customer Experience Excellence Report, attitude, integrity, and empathy matter to every customer relationship. KPMG stated, “It was their attitude toward customers—and employees— that provided winning experiences. Each of these companies is founded on understanding their customers’ circumstances and acting in customers’ best interests.” It continued, “Integrity comes from consistent organizational behavior that demonstrates trustworthiness.”4 This advice may sound like it’s directed to bigger businesses, but these same factors are applicable to smaller insurance agencies as well. Having a team work together to solve problems is integral to keeping agency clients happy. Delivering on the expectations of clients and prospects is the reason the agency retains its clients. These positive qualities should shine through in each conversation or exchange. It is essential to ensure the agency’s team communicates with clients well, building relationships to improve retention in the years to come. Agency staff members may need additional training to master these soft skills. When conflicts arise with clients, staff members who need help should share any significant issues with the agency principal. It may be best to diffuse frustration by having two people working together to solve the problem rather than losing a client.

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Empathy is important as well. Agency staff members need to understand that it is part of relationship-building. Listening to clients in both good and bad times is important in building relationships. When a client files a claim, independent agents should take the time to be empathetic. Finally, having the integrity to be honest and transparent with the client is critical to relationships. Manifestations of this approach, such as keeping one’s word (e.g., telling clients you’ll get back to them by the end of the day with an answer), will keep clients happy and in the relationship with your agency. Once an agency creates a higher level of awareness around its customer service, the team’s ability to deliver quality experiences using technology and communication effectively should improve and become a top priority. Sometimes, simply staying in touch can make a world of difference. Coombs is the executive vice president and chief marketing officer at SIAA (Strategic Insurance Agency Alliance). He leads all marketing initiatives for SIAA, focusing on strategy, communicating the corporate vision, as well as brand awareness and value. He has ultimate responsibility for all marketing and communications, including advertising, web marketing, channel integration, and public relations. Reach him at dougc@siaa.com. 1

KPMG, 2020 (bit.ly/32rNSyi)

Forbes, 2020 (bit.ly/3gnwz9P)

PC Magazine, 2020 (bit.ly/3em1Fwe)

KPMG, 2020 (bit.ly/32rNSyi)

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Add the extra to ordinary

Great customer service should be more than just lip service

“We provide great customer service” is a consistent refrain that I hear when I ask business owners what helps to differentiate them from their competition. The biggest issue with that is, it is the same response I get when posing the same question to their competition. Well, if everyone provides great customer service, what is the actual difference from a customer’s perspective? Should our goal be to be the same as our peers, or is there an opportunity to be extraordinary in the realm of ordinary? To provide extraordinary customer service, independent agents should focus on the following: • knowing the products, • developing client needs, • demonstrating situational empathy, and • creating a culture of extra.

Attention to the interconnectedness of each component will help to establish a customer-centric culture in which actions will speak louder than any corporate motto, mantra or mission statement.

Know the products When it comes to a way to differentiate your agency from the competition, there is no substitute when it comes to understanding the product your clients are purchasing and, having an intimate knowledge of how its features will benefit your client. When traveling on business a few years ago, I went into an independent sporting goods store about half an hour before closing to browse its inventory of sleeping bags. The salesperson found me staring at a display wall of more than three dozen different bags and, after the usual cordialities, he started asking me a series of questions, about:

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• my expected camping conditions—to determine if the weather would include snow, rain or be hot, and to determine the most durable materials for the bag’s exterior. • how much of a factor the weight of the bag would be—to determine whether I would be driving, hiking, biking or canoeing to get to my campsite. • whether I was allergic to any materials or fibers—to determine if any of the sleeping bags’ linings would be a problem for me. • if I was a restless sleeper—to determine if I would need a mummy or standard-shaped bag. • if I was over six feet tall—to determine whether the length of the sleeping bag should be standard or long. Once he collected my responses, he approached the wall of dozens of products and selected the one bag that met all of those needs and stretched it out on a specially designed counter and he suggested I try it out while he got things ready to close the store for the evening. I slipped off my shoes, got in the bag and rested in various positions to test its comfort (think Zoolander poses). After I finished and was putting my shoes back on, the clerk returned and, as he was stuffing the bag back into its compression sack, asked me the same questions as before, but in a method that solicited an affirmative response: • Was the bag long enough? • Was it wide enough? • Does it seem like a packable weight? • Do the materials seem durable and comfortable? After I responded with a “yes” to each question, he handed me the sleeping bag and asked if I felt there would be room enough in my luggage to take it back home with me. In response, I immediately exited the store, but only long enough to retrieve my wallet from the car and return to make the purchase. While I hadn’t planned on purchasing a sleeping bag that night, the salesperson’s knowledge of his products, and his willingness to provide me with quality help right before closing time, made making the purchase of the sleeping bag that much easier.

Develop client needs During the time that I was a personal-lines producer, one of the first questions I would ask a prospect was, “What will your expectation for this coverage be when you have an accident or need to file a claim?” Invariably, the prospect would respond that he or she would expect to be fully covered. This question would then start a spirited discussion with regard to limits and deductibles at the end of which, the most common response I would get would be, “Why don’t other agents tell you this?” After over three decades in the business, I know that we think we say these things—but to what degree have we engaged clients in the discussion to better gauge their understanding of how our product works?

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Questioning techniques allow for a discussion of the product and promote engagement of the client in the process. Each time that I responded with a “yes” during the sleeping bag sale, I was acknowledging a different feature of the product and the benefit it would provide me after the sale.

Demonstrate situational empathy Empathy is the ability to understand what other people are experiencing from their perspective. Currently, I am consulting with an agency in a state in which homeowners insurance rates are increasing on average by more than 27%, and each phone call brings its own special issues the property owner is dealing with. Whether it has been the physical, emotional or financial impact of the pandemic or the constant barrage of political or legal messaging as to who is to blame, clients have just had enough. Now imagine yourself taking dozens of those calls daily, and it can make you wonder why you do this work. So, what can you do when you get calls from clients who start off screaming about the increase in premiums they really can’t afford? Respond with a hearty, “mine too!” After the initial shock wears off, a conversation about why the premiums are increasing can start to emerge. Then, you can share how you—as both a fellow homeowner and a licensed, independent agent—have worked to ensure you are getting the best value with a financially stable company for your own insurance. One of our agents even shared a situation in which her own frustration of not being able to do anything more for the client

brought her to tears, and she found the client not only renewed the policy with the increase, but ended up comforting her in the process.

Creating a culture of extra One of my pre-consulting questions for agency staff is, “What is a ‘great day’ for you?” and the most common response is, a day when the phone doesn’t ring. While you think about the implications of that and how your staff might respond, I’ll share a situation that came up when working with a national carrier’s call center. Each year, the call center would answer more than a million calls from personal insurance clients calling about issues with their home and/ or auto policies. On average, clients called about once a year, but it had one instance in which a client had called 17 times in the 90 days prior to canceling his policies. As part of our consultation, we printed out the call logs from each of those interactions, and then challenged the managers to respond to, “What could have been done in each of the prior calls to eliminate the following one?” In other words, what could have been done to anticipate an issue and then make that a proactive part of client communication— making the ordinary, extraordinary.

relative to the importance of insurance (providing risk management to protect a lifetime of assets), we always are looking to exceed the expectations of our guests. We once had two sisters who were coming to the area to try to find some cottages their grandparents used to rent so they could memorialize their mom who had died when they were still young. When they checked in, not only did we cover the required paperwork for their stay (think insurance ACORD forms, applications and supplementals), but we then presented them with information from the local historical society about their grandparents’ cottages as well as directions from our inn to their mom’s grave. Those extra elements were added to what typically is an ordinary and transactional interaction. Providing extraordinary service may start with one person and, through his or her example and subsequent affirmation, can become the way your agency does business. Often, I have encouraged individuals to love what they do or do what they love. In other words, if what you’re doing is only ordinary, then you’ll really never be able to give that extra, and it becomes something of a self-fulfilling prophecy of client reactions. Your clients can sense whether this is something that is important to you, as it will come across in the service they receive from you. Fear has worked in the independent agency profession for more than 30 years in a variety of roles and business areas. He works with companies, associations and individual agencies in the areas of agency operations, process improvement and sales proficiency to provide outstanding service for their clients. As a member of PIA and its Circle of Consultants, he can be contacted either through the PIA website (pia.org) or JohnFear.com.

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As another example, my wife and I own and operate an inn and we regularly get feedback on how clean everything is—which makes us think about how low the bar has been set that not being dirty has become something special. Even though we operate in a fairly mundane industry (“heads in beds”)

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Are your clients carrying adequate limits? There is a good chance that the answer to the question in the headline is “maybe, maybe not,” or “I’ll tell you after a claim whether their limits were adequate.” Needless to say, after a claim occurs, it is impossible to do anything about the limits. When looking at errors-and-omissions claim statistics, most E&O carriers will report that 6% to 8% of all E&O claims involve the issue of inadequate limits. For the purpose of this article, the focus is on liability limits, including umbrella coverage for personal and commercial customers. Suppose your agency is faced with an E&O claim. While each situation and fact pattern is likely a little different, the goal is to have a strong defense that protects your agency. There are two E&O claim buckets: one is filled with the issues that will be part of the agency’s defense; and the other is filled with

Your Clients are Getting Back to

Business

E&O

CURTIS M. PEARSALL, CPCU, CPIA

the issues that the plaintiff’s attorney will be looking to use to find your agency negligent. Make sure that the agency bucket is overflowing with strong defense items. A good starting point when dealing with liability limits is acknowledging that it is extremely difficult, if not impossible, to predict what the proper limits are. Benchmarking data is available for many commercial industry classifications and,

As work environments shift and evolve, our member-exclusive market access can entertain hundreds of class codes, offer a low minimum premium, and provide quick turnaround for you and your small-business clients. PIA’s NumberONE Comp market is now entertaining artisan classes, such as:

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while this has benefit, you should exercise caution. Benchmarking data advises others about what clients of a certain size (e.g., revenue, sales) are carrying. This data does not mean that the limits noted are appropriate for your client. Below are several suggestions on how to address limits and to include in your defense bucket at the time of an E&O matter. Do not just duplicate current coverage. For new customers, make a concerted effort to understand their insurance needs better, and to determine the potential liability issues and ramifications. Every day, we hear stories of events occurring in our country that were probably not considered at the time an insurance policy was purchased, and which may redefine the worst-case scenario. Fortunately, this should help agents to navigate the issue of liability limits

through discussion of what a typical liability claim looks like, as well as help customers understand what the worst that could happen to them could be. Do not just agree to the same limits. If customers insist that you just give them the same limits they have now, you should include in the proposal either some additional limit options (e.g., additional umbrella limits) or a statement like: “higher limits are available upon request.” The objective is to advise the customer of options to consider. If limit options are provided, require them to sign off on the limit they are choosing and those limits they are rejecting. This customer accountability can be a strong element of an agency’s defense. Do not recommend a specific limit. Recommending a limit implies to the customer that this limit will be adequate at the time of a claim. Since claim size is impossible to predict, avoid recommending a limit. Once again, it is better to provide options for the customer to consider. Do not assume the customer does not need higher limits or an umbrella. There have been numerous stories involving agency staff members who did not address the issue of an umbrella because they did not believe the customer had the assets worth protecting. A common misconception is that somebody can’t sue you for what you don’t have. However, they can and will—and this may include garnishing wages for years to come. Consider the following example: A customer asked an agency staff member for his thoughts on securing higher limits. The customer had a $1 million umbrella and he was interested in securing higher limits. The agency staff member advised him that the $1 million umbrella was more than sufficient. However, it is impossible to predict the size of a liability claim, so the statement of the staff member is inaccurate, and it could put the agency in jeopardy in the event that a liability claim exceeded the available limits. Do not forget to document the availability of higher limits to your customers. Consider including language on the availability of higher coverage limits in the cover letter to the customer. Include language such as: “Please note that the policy limits are those you have chosen and we cannot guarantee they will be sufficient at the time of a claim.” Although it might sound harsh, technically it is true. Bottom line, predicting the size of a liability claim is impossible. Following a few best practices could play a key role in your agency’s defense should a problem develop.

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This information is provided solely as an insurance risk management tool. Utica Mutual Insurance Company and the other member insurance companies of the Utica National Insurance Group (“Utica National”) are not providing legal advice, or any other professional services. Utica National shall have no liability to any person or entity with respect to any loss or damages alleged to have been caused, directly or indirectly, by the use of the information provided. You are encouraged to consult an attorney or other professional for advice on these issues. © 2019 Utica Mutual Insurance Company

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Electrical currents, theft of lawns and more Foreign exposures Q. For clients who have employees traveling outside of the U.S. (e.g., Canada, Mexico, Israel or England), at what point does coverage cease? Is there a solution? Some companies will not provide international coverage. Would I find this answer in the workers’ compensation manual or actual state law? A. The extent of coverage outside the state of hire is governed by that state’s Workers’ Compensation Law and the interpretation rendered by its courts. The laws in most states cover workers while in their employers’ service anywhere in the world, at least for a temporary period of time. Sometimes, a foreign voluntary coverage endorsement can be obtained to supplement the statutory coverage with the payment of repatriation expenses, endemic disease protection, coverage outside the U.S.—for up to 90 days (if the statutory coverage is more limiting) and coverage for lawsuits brought under the laws of foreign countries. For more information on foreign exposures, see QS90880—Workers’ compensation endorsements that need clarification in the PIA QuickSource library (pia.org).—Dan Corbin, CPCU, CIC, LUTC

Damage from electrical current Q. Our client has an Insurance Services Office Inc. HO-3 policy. The insured’s tree fell on power lines leading to his house, which caused a power outage. When the electricity came back on, the power surge damaged the insured’s appliances. Is this damage covered? A. The peril is covered, but payment of the loss is restricted to nonelectrical components of the property damaged. “Sudden and accidental damage from artificially generated electrical current” is a covered peril under the HO-3 policy. First, though, we must get past the Power Failure exclusion under Section I Exclusions, which states: “Power Failure means the failure of power or other utility service if the failure takes place off the ‘residence premises.’” In this case, the power failure originates from a tree falling on the premises, so the policy will respond with coverage for the appliances damaged by the ensuing power surge. Unfortunately, there will be limited coverage for this loss. In its 2000 edition of the policy, ISO gutted the peril that covers “sudden and accidental damage PIA.ORG

from artificially generated electrical current.” Previously, this provision excluded from coverage only tubes, transistors or similar electronic components. Now, all electronic components and circuitry are excluded. That leaves only the shell of electronic apparatus covered for damage from such causes as arcing, power surges or brownouts.—Dan Corbin, CPCU, CIC, LUTC

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DOL overtime regulation: commission Q. We have a customer service representative who works 40 hours a week and makes $40,000 in salary. In addition, she earns commissions of $10,000 in the year. Would this person be entitled to overtime if she works more than 40 hours in a week or would she be an exempt employee? A. The customer service representative would not be considered an exempt employee, and she would be required to be paid overtime for any hours over the 40 she works. Under the U.S. Department of Labor overtime regulation, employees may use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the $47,476 standard salary level, provided these payments are made on a quarterly or more frequent basis. 31

So, in the example given, the CSR would fall just short of the minimum salary threshold, as only $4,767.60 of the $10,000 commission is permitted to be used to satisfy the standard salary level. As such, this employee would have to be paid overtime for any hours over 40 that she works.—Bradford J. Lachut, Esq.

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Theft of a lawn Q. I was reading a news article about a woman who had her lawn stolen. It seems that her neighbors reported a white truck and trailer parked at her house. No one thought it was suspicious. They thought it was just another landscaping job, but what happened was that someone stole her lawn. I was wondering how a homeowners policy would respond?

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A. As strange as this may sound, the ISO Homeowners Policy does address this.

the Agency Staffing

Assistance Program— an online member

service that helps you find and keep good employees.

E. Additional Coverages

3. Trees, Shrubs And Other Plants

We cover trees, shrubs, plants or lawns [emphasis added], on the “residence premises.” We will pay up to 5% of the limit of liability that applies to the dwelling for all trees, shrubs, plants or lawns. No more than $500 of this limit will be paid for any one tree, shrub or plant. We do not cover property grown for “business” purposes.

However, the covered perils are limited to just:

a. Fire or lightning;

b. Explosion;

c. Riot or civil commotion;

d. Aircraft;

e. Vehicles not owned or operated by a resident of the “residence premises”;

f. Vandalism or malicious mischief; or

g. Theft.

As you can see, theft of a lawn actually is covered under the HO-3 policy (subject to the deductible, of course). The policy will pay up to 5% of Coverage A for the cost to replace the lawn due to the theft of it.—Dan Corbin, CPCU, CIC, LUTC

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Reservation of rights

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Q. Please give some insight as to how to respond to and protect our insureds when a carrier sends a reservation of rights letter on a claim. A. Information about reservation of rights letters and nonwaiver agreements can be found in QS90438—Reservation of rights letters and nonwaiver agreements, which can be found in the PIA QuickSource library (pia.org). Included in this resource kit are some tips on producer involvement.—Dan Corbin, CPCU, CIC, LUTC

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