2022 June PIA New Jersey by PIA Northeast

June 2022 • New Jersey

Customer loyalty

PAGE 20

A strategic advantage in the world of insurance

IN THIS ISSUE 9

Social media outreach and E&O

Retirement plans, fiduciary liability

Small business doesn't mean small expectations

•

OVER

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DEPARTMENTS June 2022 • New Jersey

In brief

Legal

Learn

E&O

Ask PIA

Officers and directors directory

Readers’ service and advertising index

COVER STORY 20 Customer loyalty A strategic advantage in the world of insurance

FEATURE 27 Small business doesn’t mean small expectations Five ways to improve customer satisfaction

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, David Cayole, Alexandra Chouinard, Patricia Corlett, Crystal Ringler and Calley Rupp. Postmaster: Send address changes to: Professional Insurance Agents Magazine, 25 Chamberlain St., Glenmont, NY 12077-0997. “Professional Insurance Agents” (USPS 913-400) 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. ©2022 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 David Cayole Vol. 66, No. 6 June 2022

IN BRIEF

FYI

Dealing with difficult customers Dave Kahle

Difficult customers come in a wide variety. There are those whose personality rubs you the wrong way. And then, there are those who are difficult for everyone: picky people, know-it-alls, egocentrics, fault-finders, constant complainers, etc. Perhaps the most common are the angry customers— people who feel they have been wronged, and who are upset and emotional. These customers complain, and they are angry about something you or your agency did. An angry customer can be worth keeping There are some sound business reasons to become adept in handling an angry customer. Research indicates that customers who complain are likely to continue doing business with your company if they feel they were treated properly. It’s estimated that as many as 90% of customers who perceive themselves as having been wronged never complain, they just take their business elsewhere. So, angry, complaining customers care enough to talk to you, and they have not yet decided to take their business to the competition. They are customers worth saving. Not only are there benefits to your agency, but you personally gain as well. Become adept at handling angry customers, and you’ll feel much more confident in your own abilities. While anyone can work with the easy people, it takes a real professional to be successful with the difficult customers. Your confidence will grow, your poise will increase, and your self-esteem will intensify. Use the right tools to defuse the anger So, how do you handle an angry, complaining customer? Let’s begin with a couple of tools you can use to defuse situations with customers who have problems. Respect. It can be difficult to respect a person who may be yelling, swearing or behaving like a two-year-old. I’m not suggesting you respect the behavior, only that you respect the person. Keep in mind that 99 times out of 100 you are not the object of the customer’s anger. Remember that unlike the customer, you are not angry, rather you are in control, and your only problem is how to help the customer. If you start reacting to the customer in an emotional way, you’ll lose control, you’ll lose your power, and the situa-

tion will be likely to escalate into a lose-lose for everyone. So, begin with this mindset: No matter what, I will respect the customer. Empathy. Put yourself in the customer’s shoes and try to see the situation from that perspective. Don’t try and cut him or her off, don’t urge the customer to calm down. Instead, listen carefully. Your job is to let the customer vent and to listen attentively to understand the source of that frustration. When you do that, you send a powerful unspoken message that you care about the customer and the situation. Often, as the customer comes to realize that you really do care and that you are going to attempt to help resolve the problem, the customer will calm down and begin to interact with you in a positive way. Here’s how you can use these tools in an easily remembered process for dealing with angry customers. Crack the egg Imagine a hard-boiled egg. The yolk at the center of the egg represents the solution to the customer’s problem, the hardened egg white represents the details of the customer’s situation and the shell represents the customer’s anger. To get to the yolk and resolve the situation, you must first crack the shell—that is, penetrate the customer’s anger. Then, you’ve got to cut through the congealed egg white. That means you understand the details of the customer’s situation. Finally, you’re at the heart of the situation when you can offer a solution to the problem. Here’s a four-step process to help you get to a solution: No. 1: Listen. Let’s say you stop to see one of your regular customers, who doesn’t even give you time to finish your greeting before he or she launches into a tirade. At this point, about all you can do is listen. And, that’s what you should do. As you listen, you begin to piece together the story. Once you have the basic story, there should be a pause because once the customer has had an initial chance to vent his or her rage, it’s going to die down a little and that’s your opportunity to step in and say something like: “It sounds like something has gone wrong and I can understand your frustration. I’m sorry you’re experiencing this problem. Let’s look at the next step.”

PROFESSIONAL INSURANCE AGENTS MAGAZINE

(continued on page 6.)

BY THE NUMBERS

Your agency on social media: What your customers want Social media is an essential tool to connect businesses with their customers. When your agency uses it effectively, your customers can connect with you easily, their loyalty to your agency’s brand increases, they stay in-the-know about insurance and how you can help them, and they can connect you with prospective insureds.

What consumers want want to connect with people who think like them want to meet people who are different from them want to learn something new want to build a sense of community

What businesses think consumers want How to prioritize customers online Engage with customers on social media. of consumers who engaged positively with businesses online are more likely to recommend the business to others.

Businesses and consumers ranked seven social-media marketing traits in order of importance.

1st

Customer prioritization

3rd

4th

Reputation for innovative content

1st

5th

Cultural relevance

2nd

2nd Reputation for high-quality products/services

Be easy to find. of consumers rely on social media for product/service recommendations. Stay transparent. of consumers want trustworthy information and action from businesses on social media.

4th

3rd

Instant brand recognition

5th

7 th

Conversation driving

6th

Number of followers

7 th

Your insureds need you to tell them about the insurance that can protect them most, in a trustworthy and timely manner—and they need it quickly. When they want to learn more, they need to be able to find you.

When you integrate social media into your agency’s business strategy, all of these will be easier for you—and your insureds.

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FYI

(continued from page 4.)

When you empathize with people, it can have a calming effect on them. Remember, anger is a natural, self-defensive reaction to a perceived wrong. If there is a problem with your business’s product or service, some frustration and disappointment is justified. This is so important, let me repeat it. First, you listen carefully and completely to the customer. Then, you empathize with how the customer is feeling, and let him or her know that you understand. This will almost always calm the customer down. You’ve cracked the shell of the egg. Now, you can proceed to deal with the problem. No. 2: Identify the problem. Sometimes while the angry customer is venting, you’ll be able to latch right on to the problem because it’s clear-cut. Something is broken. Or late. Or the customer thinks a promise has been broken. But sometimes—in the middle of all that rage—it’s tough to comprehend the bottom-line issue. This is a good place for some specific questions. Ask the customer to give you some details. “What exactly was promised? What is customer’s situation right now?” These kinds of questions force the customer to think about facts instead of his or her feelings about those facts. So, you interject a more rational kind of conversation. Think of this step as cutting through the white of the egg to get to the yolk at the center. It’s important, when you think you understand the details, to restate the problem. The customer probably will acknowledge that you’ve sized up the situation correctly, or the customer will tell you that you are missing necessary pieces, and then he or she will proceed to explain the situation further. In either case the outcome is good, because you eventually will understand the situation correctly and have the customer tell you that you are right. Once this happens, you can apologize. Some people believe that an apology is an acknowledgment of wrongdoing. However, you can appreciate and apologize for the customer’s inconvenience without pointing fingers. Just say, “Mr. Brady, I’m sorry this has happened.” Or, “Mr. Brady, I understand this must be very frustrating. Let’s just see what we can do to fix it, OK?” No. 3: Avoid blame. You don’t want to blame the customer by saying something like, “Are you sure you understood the price and coverage correctly?” This will just ignite his or her anger all over again because you are questioning the customer’s credibility and truth-telling.

And, you don’t want to blame your agency or your companies. Never say, “I’m not surprised your invoice was wrong. It’s been happening a lot.” Or, “Yes, our backorders are way behind.” In general, you avoid blame, which is different than acknowledging responsibility. For example, if you know for a fact that a mistake has been made, you can acknowledge the error and apologize for it. “Mr. Brady, clearly there’s a problem here with our performance. I can’t change that, however, let me see what I can do to help you out because I understand how important your account is to our agency.” No. 4: Resolve the problem. Now you’re at the heart of the egg. You won’t always be able to fix the problem perfectly. And, you may need more time than a single phone call. But it’s critical to leave the irate customer with the understanding that your goal is to resolve the problem. You may need to say, “I’m going to need to make some phone calls.” If you do, give the customer an idea of when you’ll get back to him: “Later this afternoon,” or, “First thing in the morning.” Then do it. Make the phone calls. Get the information you need to address the problem. Find out what you can do for the customer and do it. Then follow up with the customer when you said you would. Even if you don’t have all the information you need, call when you said you would and at least let him or her know what you’ve done, what you’re working on and what your next step will be. Let the customer know that his or her business is important to you, that you understand the customer’s frustration and you’re working hard to get the situation fixed. Use the tools of respect and empathy and the crack-theegg process, and you’ll move your professionalism up a notch, and help some frustrated customers out at the same time. Kahle is one of the world’s leading sales authorities. He’s written 13 books, presented in 47 states and 11 countries, and has helped enrich tens of thousands of salespeople, and transform hundreds of sales organizations. Sign up for his free weekly Ezine, and access his training, insights and tools online at: The Sales Resource Center. Reached him at (616) 451-9377; or via email at info@davekahle.com; or on the web at www.davekahle.com. This article is adapted from QS90443, which can be found in the PIA QuickSource library (www.pia.org).

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Communicating with your clients via social media This is an article about using social media effectively—but not in the way you are thinking. I’m not going to give you advice on how to promote your agency through social media. Frankly, I’m not qualified to do that. Full disclosure: My social-media following is roughly the size of a large (okay medium) school of fish (In fact, a few of my followers may actually be fish), and I follow an alarming amount of athleisure companies. Instead, this article is going to be about how to use social media to effectively protect yourself from errors-and-omissions issues. Using social media effectively is often about increasing the engagement your followers have with your social-media page. That engagement, while important to growth, can open an agency to E&O/legal issues. If this was an article about building a following on social media, I would probably start by saying something like, “It’s important to build relationships,

not just connections!” However, the lawyer in me wants to say: “Don’t build relationships on social media!” Well, not exactly.

LEGAL

BRADFORD J. LACHUT, ESQ. Director of government & industry affairs, PIA Northeast

Insurance agents should work to create and maintain a social-media presence that fosters relationships with clients and the community at-large. However, agents need to be aware of some of the inherent E&O dangers that may go along with building those relationships. To illustrate this point let’s use two examples.

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Example No. 1: During the recent social-media meeting of the Tom Anderson Agency—a weekly meeting in which Sue from Accounting always suggests the agency post pictures of her dog, Daisey, on the agency page—the socialmedia manager proudly announced that the recent Facebook promo on auto insurance resulted in 10 prospective clients direct messaging the agency to ask for quotes. Example No. 2: During the recent social-media meeting of the Tom Anderson Agency the social-media manager announced that the recent Facebook promo on auto insurance resulted in 10 current clients direct messaging the agency’s Facebook account to report claims and/or make changes to their current insurance policy.

The first scenario would be greeted with cheers in most meeting rooms, while the second is more likely to produce a cold sweat. By creating an online presence and inviting the community to interact with an agency, it runs the risk that the community might actually do that! Of course, this doesn’t mean that an agency should not have a socialmedia presence. It only means that the agency needs to take care to ensure that interactions with the community at-large—and especially clients—are done in a uniform way to ensure that proper documentation procedures are followed.

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All agencies should have a socialmedia policy. The goal of the policy is to ensure that communication with clients or potential clients is done in a manner that allows agency personal to easily record the communication and retrieve it when that becomes necessary. Agency processes work most effectively when they run automatically. Chances are your agency management system is set up so that relevant documentation like phone calls and emails are coming directly into the system. This automation ensures that all client communications are properly catalogued and can be referred to quickly and easily. But, what about social-media posts, DMs, or follower comments? Likely not. What does that mean practically? It means that any time your agency shares information via social media or anytime clients share information with the agency via social media, there is a chance that interaction and information is missed at the time or lost later. To avoid things falling through the cracks an agency needs to either inte-

grate its social media into its existing documentation systems or create new ones to address communication using social media. Agencies should limit the amount of agency personnel who have administrator access to social media. Those who have access should record any communications that take place on social media, so they are reflected in your agency management system properly. Again, the key to these policies is to ensure that information gathered on social media does not get lost and can be retrieved when needed as easily as more traditional agency information. The social-media accounts of the agency are not the only concern. Agencies also need to be concerned about the personal social-media accounts of agency staff. Why? Raise your hand if your agency insures any friend and family of agency staff. I am going to guess most people are raising their hands (and anyone around you is wondering why you are doing that). Now ask yourself: Is your customer service representative’s friend—who just got into an accident—more likely to call or email the agency to report the accident or to message the CSR on Instagram like he or she does on a daily basis (when they talk about everything else that is not insurance related in their life)? This scenario is at least plausible and that should be enough reason to create policies to prohibit employees from using their personal social-media accounts for agency business. If clients do reach out to staff members on their personal accounts, staff members should be required to report the contact to the agency as soon as possible, put all relevant information into the agency management system—or whatever

system an agency uses to keep track of client communications—and ask that the clients contact the agency directly to file the claim/request a change in coverage/get their policy question answered, etc. In short, all company business should be done through company tools that are linked directly to your agency management system to ensure a full record of client interactions is kept. While there is no way to eliminate all E&O risks and exposures, agents who take the time to develop and implement effective social-media policies will find themselves in a better position to both avoid these risks and mitigate them if they do emerge. Lachut is PIA Northeast’s director of government & industry affairs.

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Retirement plans: Impact of fiduciary liability In a traditional 401(k) plan, many plan administration tasks fall on the plan sponsor. These can include designing the plan, depositing contributions, keeping documents updated, complying with testing requirements, and providing required notices and information to plan participants. On top of running your business, all this extra work could be overwhelming. These are only a few of the duties plan sponsors oversee. However, they are personally liable for all the administrative tasks to ensure that the plan is IRS compliant. Efficiently managing this could be difficult, especially while running your business. When considering the duty of a fiduciary, you not only have to ensure that the plan is running well and compliant with IRS rules, but also operating in the best interest of its participants. This includes periodically benchmarking the plan to make sure fees are reasonable and monitoring the investment lineup to identify any poorly performing funds.

With large employers, many key decision-makers of the business come together to delegate the responsibilities. Any employee who takes part in this committee is also a fiduciary. Smaller employers may not have this opportunity. Luckily, there are other ways to reduce your liability.

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An Employee Retirement Income Security Act of 1974 bond is required by all plans governed by ERISA, a set of laws that creates standards for qualified employer retirement plans,

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and regulates fiduciary action. While this bond protects the assets in the plan, it does not protect the plan administrator or fiduciaries. It covers the assets against theft, fraud, forgery, and other financial misuses. This bond aims to ensure that the retirement savings of plan participants are protected.

Protections To understand how to reduce fiduciary liability, you need to know what a fiduciary is. A fiduciary must act to provide benefits to plan participants, ensure that plan expenses are reasonable, and operate with prudence and

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For the plan administrators/plan sponsors to protect themselves, they would need fiduciary liability insurance. It protects the sponsor from accusations of asset mismanagement and liability regarding fiduciary duties. When it comes to ERISA, fiduciaries are held personally liable for any breach of duty. While ERISA does not require this insurance, the sponsors will benefit significantly from having it if they ever fail to uphold their fiduciary duties. On top of this, another level of coverage could be provided by an employee benefits liability policy. This type of policy is like fiduciary liability insurance in that it protects the sponsors if they make mistakes. However, this insurance policy also protects if employee benefits are not provided correctly.

our industry!

insurance agents who support

caution. It is essential to be aware of your plan responsibilities, so you can better work out ways to reduce your liability.

amount can have a substantial impact.

Now more than ever, it is essential to maintain the safety and security of personal information online. As a plan sponsor, it would be considered a breach of your fiduciary duty not to implement the appropriate protection if something went wrong. As a fiduciary, acting in the best interest of plan participants includes protecting their private and personal information. With all the personal information contained within your plan, it is essential to have something in place to protect it.

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The passing of the SECURE Act in 2019 opened the door for a more modern 401(k) plan that makes offering a plan much more feasible.

These new plans are pooled plans with bundled service providers. Being a pooled arrangement, it paves the way for driving down the cost for small businesses looking to offer a retirement plan. However, more importantly, they also aim to reduce the liability that plan sponsors have when starting up and running a plan. There are three main types: • multi-employer plans, • pooled employer plans, and • multiple employer aggregation plans. While these plans differ slightly from each other, they share a similar framework. They all have a group of employers who combine their assets to match the economies of scale of much larger businesses—enabling small businesses to access new opportunities and offer advanced benefits to employees.

A new benefit for PIA members

tional materials and retirement readiness tools to help participants better prepare themselves. The fund menu for the plan is controlled by the 3(38) Investment Manager, Fiduciary-Plus. These funds are the same for all businesses within the plan, and the sponsor does not have to worry about monitoring and changing out any underperforming funds. The last service provider within the plan is DiMatteo Group Financial Services, the plan’s financial adviser. DiMatteo Group assists with the plan design, provides education on plan features and investments to participants, and monitors the other service providers within the plan. All service providers within the PIA 401(k) Plan work to ensure that the plan operates efficiently and within the IRS guidelines, while still providing the maximum benefit to plan participants. Having these different providers working in the plan also relieves the sponsors of most of their responsibilities—lessening their liability to the plan. Most business owners feel they need to offer a retirement plan to their employees to help attract and retain them, but they are hesitant because of the high costs and difficulty running and remaining compliant. Now, there is a solution with the PIA 401(k) Plan. This program includes lower costs, easier operations, and the lowest possible fiduciary liability. If you are interested in learning more about the PIA retirement plan solution, or if you have any questions visit www.tagcobrand.com/pia/. Want to know more about how to minimize your fiduciary liability on retirement plans? Earlier this year, DiMatteo lead a PIA class: Understanding and Minimizing the Impact of Fiduciary Liability on Retirement Plans for Business. You can access the education session on-demand at www.pia.org/EDU/schedule.php?classtype=Webinaron-demand.

The PIA 401(k) Plan is a multiple employer aggregation plan, so many businesses already are in the plan with their assets pooled together. This plan drastically reduces the sponsor’s fiduciary responsibility to the plan by delegating responsibilities to different service providers. TAG Resources is the 3(16) Plan Administrator, as well as the 402(a) Plan Operator. It is responsible for handling plan compliance, yearend data collection, setting up plan documents, and the day-to-day plan operation. Transamerica is the plan’s recordkeeper, which provides participants with a call center and website so they can view and manage their retirement accounts. They also provide participants with different educa-

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TAMMY KOHL and DOUG BROWN

Customer loyalty A strategic advantage in the world of insurance

hat can make your agency unique or different? Why should an individual or family do business with your agency instead of another one within a 20-minute driving radius? Are your products and services wildly different from your local or internet competitors? For many professional insurance agents, differentiation has been difficult to achieve as commoditization of offerings has become more commonplace.

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Perhaps your agency’s best long-term strategy is to develop an obsession for creating and retaining loyal customers and implementing positive emotional connections across the entire customer experience. This strategic initiative can separate your agency from your competition. Acknowledge others’ findings that say agencies with high numbers of loyal customers enjoy growing revenues, thus surpassing their competition. We suspect agencies only achieved those results after a strategy of developing loyal customers became ingrained throughout the agency’s culture. Here is an example of when customer loyalty was not part of an agency’s culture: The insureds had some water damage in the lower level of their house. As a national insurance carrier’s customers, they worked with their local agent to file a claim. The adjuster did a site visit. The claim was denied based on the determination that groundwater caused the damage. Not liking the decision, the customers asked the local agency to submit a second claim. After a second adjuster did a site visit, the claim was denied again for the same reason. The customers were angry, but there was more to their frustration. What was it? After being customers of the local agency and the national insurance carrier for over 16 years, they received no phone call to convey the sentiment that: While we can’t do anything about the determination, we still value your business and hope you will stay with us.

Advantages of customer loyalty

This lack of compassionate follow-up was the last straw. Ultimately, the insureds moved all their insurance policies to another agency.

There are many requirements to building a successful and sustainable agency, such as:

When implementing a competitive strategy that deals with creating loyalty, note what Janelle Barlow and Paul Stewart said in their book, Branded Customer Service: The New Competitive Edge. “The customer service experience must be aligned with your agency’s promises.” When the customer’s experience does not reflect what has been advertised, promised, or expected, every instance further undermines trust (and happiness) in the agency’s performance. Lost revenues or opportunities to grow the relationship are the inevitable results. Agents need to create strong relationships through frequent points of connection that are emotionally positive and deliver the service experiences promised by the agency’s marketing and advertising campaigns. Examine the immediate impact on your profitability by providing such an exceptional experience based on promises made.

Your customer’s wants “Quality in a service or product is not what you put into it. It is what the client or customer gets out of it.” —Professor Peter Drucker Drucker understood the power of the customer experience far before others started to embrace the concept’s value. Before answering the question, “What does your customer want?” Consider this broader question: Have you adequately defined your customer?

When you define your customer using specific terms, you make it much easier to identify and execute what experience your customer wants. Generally, customers want hassle-free experiences and to be individually recognized, respected, and emotionally engaged. Customers want positive experiences, and they want to deal with insurance providers who have empathy and understand how they feel. They want insurance providers who creates strong points of connection. A powerful point of connection creates a bond that ensures a high level of trust. Trust builds solid relationships—which ultimately, creates customer loyalty.

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• the ability to manage the agency effectively, • the ability to create financial growth, • the ability to innovate, and • the ability to develop and sustain a loyal customer base. When these four components work in sync, an agency experiences sustainable success. Take a moment and compare the value and significance of a loyal customer to your agency—a customer who has had a satisfactory, but average experience may or may not come back. Creating multiple and consistent revenue opportunities has a positive financial effect on businesses regardless of the industry. Agencies benefit from the strong word-of-mouth advertising, ratings, and social-networking reviews generated from their loyal customer base.

They know that their customers are less likely to be swayed by discounted pricing or other incentives from the competition. For example, think about your own experience and thought process when you anticipate purchasing an unfamiliar item. Do you usually buy purely based on an advertisement you saw about a store, a product, or service, or do you instead choose a store, a product, or a service based on the recommendations of someone you know and trust? Do you simply rely on Amazon for recommendations? Did you choose your current physician or specialist by selecting a random name from the phone book? Probably not. In other articles for PIA Magazine, we have written that referrals from existing customers present a better quality and qualified customer for an agency. [EDITOR’S NOTE: The article “When it comes to selling, a sophisticated approach is not always better” is on PIA Northeast News & Media (www.blog.pia.org).]

Creating loyalty Creating the best customer experience and understanding customer loyalty is essential. However, learning how to develop and measure loyalty is critical for sustaining agency success. Here are the components for driving customer loyalty: • Establish trust with every customer at every point of connection. Identify all your potential points of connection— those involving both passive and active vehicles (examples of passive vehicles: your website and signage). Active connections involve interaction and activities (e.g., phone calls and email exchanges).

• Create an emotional tie with your customer at every point of connection. • Utilize empathy to strengthen customer relationships. All three components are necessary; however, developing trust is the No. 1 priority. You already know that people buy from others they trust, and your customers are more interested in your suggestions and guidance when you’ve established trust.

Maintaining trust To build and maintain trust in every service interaction, internalize the following steps: Always put your insureds’ interests and needs ahead of yours. Your first concern is their question, purchase or request. Do the right thing—consistently make the insured’s agenda your priority. We acknowledge that this position will not always be easy for you or your organization to fulfill. Be yourself. We often model other people’s behavior, but understand that what works for some insurance providers may not work for you. Be yourself and let your strengths and personality shine. Always give customers your full and undivided attention. Today, we can find ourselves in many customer service situations and circumstances with little time to make a positive impression and develop relationships. The quickest way to start is to make immediate eye contact and appropriately focus your full attention on your customer. When you are on the phone and you can’t make physical eye contact, pay close attention to everything your customers say. Assess their mood from their tone of voice. From time to time, repeat back or paraphrase something they said so they know you are engaged. Demonstrate knowledge and authenticity about your products or services. Increase insureds’ confidence about your ability to provide the serve for their needs and solve their challenges. Maintaining current subject-matter expertise allows your agency to bring the most relevant solutions to all your clients. This move is both proactive and defensive simultaneously. When clients recognize that their trusted insurance provider is truly an expert, they naturally conclude that they won’t receive better advice from anyone else. Eliminate their need to switch to another insurance agency. This mindset can help protect what your agency already has built! Remember, integrity and authenticity are increasingly crucial to people today. Only promise what you and your agency can deliver. Resist the tendency to over promise and under deliver—especially in times of stress or fatigue. It can come back to haunt your agency for years. Never put off dealing with an upset customer. Think of your experiences as someone’s customer. We suspect that you have had some experience with being left hanging when you had a problem or a concern. When the clock is ticking, it never feels good to be ignored. While every situation may dictate a different solution, the common thread is that the condition needs to be dealt with quickly. Start every interaction with an upset customer by expressing regret and thanking the customer for bringing the problem to your attention. These two simple things, apologizing PIA.ORG

and thanking them, can go a long way to developing and maintaining trust. An upset customer who has his or her problem resolved is more likely to become a loyal customer than one who was merely satisfied.

Measuring customer loyalty

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Holding onto a customer has never been more challenging—or more critical. Usually, the key to winning customers isn’t price or even product. It’s doing the right thing; it is doing the right things correctly and doing the right things with a heart that creates the best customer experience. Measuring loyalty was a challenge in the past, mainly because most businesses didn’t understand loyalty. We now know that loyalty is tied to consistently positive points of connection. Yes, it does take skill and emotional intelligence to handle emotions appropriately. If they ever could, agencies can’t ignore this critical ingredient anymore. A positive emotional connection with a customer is the basis for creating and building loyal customer relationships. In his book, The Ultimate Question: Driving Good Profits and True Growth, Fred Reichheld indicates that companies need to know how their customers are feeling and how to create accountability for the customer experience. He believes all agencies should ask their customers one ultimate question: “How likely is it that you would recommend this agency and our products or services to a friend or colleague?” The question and measurement system, albeit relatively simple, has become timeless. From the answer to this question, customers fall into one of three categories: promoters, passives and detractors. Promoters are loyal, enthusiastic customers who continually buy from your agency and tell their friends to do the same. Passives are satisfied with their experiences, but they are unenthusiastic customers who may or may not revisit your agency. Detractors are unhappy customers who would probably not provide your agency with good word-of-mouth advertising, rating or reviews. If you want to find out who your loyal customers are: 1. Find out how likely they are to recommend your agency to someone else, perhaps on a scale of 1 to 10.

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2. Remember, one of the critical measurements of loyal customers is their desire to recommend your agency. Always listen to everything promoters and detractors tell you. They will provide you with great insight into how your agency can continuously improve. Treat this information like gold. Be concerned when you are not getting this feedback and crucial measurement. There is a direct and strategic correlation between an agency’s revenue growth and customer-loyalty score. Focus on increasing your loyalty score, and your business will grow exponentially. Kohl is a partner in Trusted Advisors Network. Reach her at (484) 507-9641. For more information, visit www.trustedadvisorsnetworkllc.com. Brown is chairman/ CEO of Paradigm Associates LLC. Paradigm Associates can add value to your business through strategic, executive, and sales development processes, whether you are on the insurance industry’s agency or carrier side. Visit Paradigm Associates on the web, www.paradigmassociates.us, or call (908) 276-4547.

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ZACK YURCH Head of revenue, Semsee

Small business doesn’t mean small expectations Five ways to improve customer satisfaction The stakes have been raised. Small-business customers are demanding not only faster, better responses, but they want a digital insurance experience, too. Some agencies are falling short. According to a survey by JD Power, small-business customers’ satisfaction with insurance agents declined for the second year in a row.1 In fact, the number of customers who say they had to exert a great deal of effort to interact with their agents increased to 32%—up from 10% a year ago— according to the survey.

Instead, a confluence of events is making what used to be adequate service less acceptable to small-business owners. The introduction of customer-facing InsurTech companies that deliver a fully digital and fast insurance experience has helped to shift expectations. While on-demand service used to be focused on personal lines, it’s now spilling into commercial lines as well. Agents compete with companies that provide immediate responses, including real-time quotes.

Customer service is critical to every agency. It’s a big reason that customers turn to agents instead of buying insurance from companies directly. Consumers want the advice and guidance agents offer to make sure their risks are covered at the best possible price. However, agents who don’t upgrade services to meet evolving customer demands risk getting left behind.

That means independent agents need to shift from phone calls and paper transactions to digital communications. However, meeting clients’ customer-service expectations is easier said than done. High-touch service requires more time. And, workloads can be large—especially in smallcommercial lines of business. Risks are more complex, and it can take hours for an agent to handle a single client request.

The perfect storm

Customers want more

There are several reasons for service declines—however, it’s not because agents are putting in less effort or they are not trying as hard to provide service to their customers.

Today, small-business owners want insurance from their agents, but they also want trusted advisers who share relevant information and advice. Consumers are looking for

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guidance coupled with the on-demand and seamless customer experience that they get in other industries. These requirements are becoming more important as tech-native generations like millennials and Gen Zers enter the insurance market. According to a recent study, more than three quarters of millennial and Gen Z small-business owners want to speak with their agent multiple times a year, and over 80% want their agents to shop coverage before it renews.2 However, there’s good news for agents. There are solutions that not only help you provide a digital customer experience, but they also can make workloads more efficient—which gives you more time to advise clients.

1, 2, 3 … Here are five ways independent insurance agents can increase their small-business customer satisfaction: No. 1: Meet your customers where they are. Great customer service is about making the insurance process easy and convenient. Look for ways to adapt to consumers’ schedules and preferences—rather than asking them to conform to strict 9-to-5 schedules. Consider a client who’s the owner of a take-out restaurant who is on the phone taking customer orders for a good portion of the day. When the owner finally gets around to talking to the agent, it is after 5 p.m., and the agent has left the office. In the past, this game of phone tag could delay service. However, if the agent adjusts communications to include email or text, the issue can be solved more quickly. To find out how your customers want to work with you, just ask them. Clients will be more than happy to share their preferred modes of communication. And once you find out, follow through in the ways that work for you. Make sure your agency management system or customer relationship management system has a field in which you can input your clients’ preferred communication methods, and keep records of texts and emails. No. 2: Automate routine tasks. There isn’t enough time in the day for agents to do everything that they would like to do. But automating routine tasks can give you more time to work on complex insurance needs and provide advice to clients. It can help for agents to think about the processes that are taking the most time. Perhaps you are still sending out paper policies for signature, going to carriers for claims information, or quoting new risks by entering information into carrier portals. Implementing tools such as e-signature, download, or using a quoting platform can save you hours that can be spent providing service to customers. Consider tools that will enable you to take your service to the next level. For example, using automated email platforms can enable you to communicate regularly with clients without having to reach out individually. These systems also can segment clients, so they receive the information that is most relevant to them. This could mean sending retail shop owners a list of their most common risks, or construction businesses most frequently-asked-questions about workers’ compensation coverage for carpenters. These platforms also enable you to personalize communications so they are targeted and not generic. No. 3: Team up with carriers. Agents are one piece of the puzzle. Carriers also need to improve inefficiencies and enhance the customer experience. 28

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Agents should have good communication channels with each of their carriers. Small commercial insurance can be complex and unique. And, carriers have different criteria when covering certain risks and businesses. It’s important to have responsive contacts when client questions arise. Small delays can quickly turn into long delays when no one’s around to answer a question. Adapting workflows speeds up response times. For example, some carriers have implemented a chat feature to address agents’ questions. Carriers can make even more changes to better serve agents, so they can provide better service to their customers. If an agent currently is using a solution that’s embraced by only a few carriers—but not all of them—this can create significant extra workload. It’s important for agents to evangelize the benefits of solutions with all carriers, whether it’s download or quoting platforms. Agents should partner with their carriers, talk to them about why they are using specific tools, how they are helping them provide better service to customers, and why it would be beneficial for them to be on it. Most agent-facing technologies want to work with as many carriers as possible and are eager to partner with insurers. No. 4: Be proactive. Consumers don’t want to hear from their insurance agents only at renewal and payment time. Today, they’re looking for reassurance that their agents are continually making sure that they are getting the best deal. It’s important to take advantage of tools that make it fast and easy to compare policies. Some solutions will pull policy information directly from your agency management system and remarket that to

different carriers. Consider this example of a small salon owner. You could set a reminder in your agency management system to alert you when it’s three months before renewal. When the alert comes through, use a quoting solution to not only requote with the current insurer, but consider other carriers that might have the appetite for that risk. Then, you can send the client a reminder about the renewal with the latest market and coverage information, and then offer to walk the client through the options. This shows a value-add service. You are continuing to work for your client, without being asked, and it offers a wow-factor that should increase retention. It shows your clients you care and are actively making sure they are getting the best option possible. No. 5: Prioritize training. Having technology is just the first step. It’s important for agency staff to use the tools. Convincing team members to adjust workflows can be a challenge. It’s important to be upfront with them, but also give them a voice in the process. Let them know why you want them to use the tool and how it might impact the way they work. Make sure there is adequate training with any new tool to enable employees the time to get familiar and feel comfortable with it. Select solutions that have a customersuccess team dedicated to making sure their clients get the most out of the technology. The success team should be willing to conduct training with each agency member and provide refresher courses as needed. Often, they will alert you to new features that are added. The customer-success team also will help

your employees utilize the technology’s full functionality and help integrate it into workflows.

A smart use of technology There’s an important thing happening among today’s small-business customers. They want and expect more service—when they’re making the decision to buy, to when they file a claim. It’s harder than ever for agents to process the type of volume they need in this market. So, what’s the solution? A smart use of technology. Technology is making it easier for agents to elevate their customer experience, while at the same time making the additional workload more manageable. By taking advantage of digital solutions, agents can spend less time on routine tasks and more time on advising customers, which ultimately will increase customer satisfaction. Yurch is head of revenue at Semsee, the go-to platform for selling commercial insurance. He has spent a significant portion of his career helping independent agencies thrive in the digital age. Prior to joining Semsee, he was director of new business at Forge3, the insurance website and marketing platform. He also was a senior digital marketing consultant at Smart Harbor, the digital technology solutions provider that was acquired by ITC. 1

JD Power, 2021 (bit.ly/3Mir753)

Semsee, 2021 (bit.ly/3xDr7sk)

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Failure to give accurate information/advice If you do not effectively communicate about what you are selling, clients may believe they weren’t provided with adequate information to make an informed coverage decision. What can you do to avoid these claims?

Know what you’re selling One of the easiest ways to misinform your clients about their coverage options is to not know the insurance products you are offering them. When you are writing a policy for your clients, keep the following in mind: • If you don’t fully understand the coverage or risk, pass on writing the business. • Don’t depend on a wholesaler or managing general agent to supply knowledge you don’t have. • Products, such as cyber insurance, evolve quickly, so keep up to date on industry news, take courses and ask questions.

Market effectively Misinformation can happen before you even talk to a prospective or current client. To prevent this: Review and update your marketing materials regularly. Inaccurate materials can be used against you if there’s a claim. Avoid using language such as expert or specialist. When you use words that present you as an expert you will be held to a higher standard if there’s a claim.

Limit considerations Make sure your clients understand all the coverage options available to them— even if they are focused on the lowest price. Multiple options. Offer multiple limit options and advise clients to review them. You can offer guidance, but clients must assess if the limits are sufficient for their risks. Additional limits. Make sure clients acknowledge that additional limits were offered, and they have independently chosen the option they believe best meets their needs. Documentation. Document discussions about limits in your file and email the client a summary of what was discussed.

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E&O

TABITHA L. DE GIROLANO, RPLU Executive commercial lines underwriter, E&O risk management specialist, Utica National

Insurance-to-value tools. Be cautious when using insurance-tovalue tools, which may be outdated and not reflect current conditions.

Present terms and conditions of coverage Make sure you point out coverage gaps, limitations, and restrictions to your clients. Explain co-insurance provisions. And, provide clients with the form and endorsements and recommend that they review them thoroughly. Have them confirm they understand the coverage and don’t have any questions. You also need to know if there are specific rating requirements for the coverage your client needs and have the client acknowledge the rating if you’re placing coverage with a carrier not rated by AM Best or Demotech.

Could this happen to your agency? Consider the following two scenarios: Scenario No. 1: An agency wrote commercial general liability and commercial auto policies for a client. The CGL had a $1 million limit, and the commercial auto had a $300,000 limit. One of the client’s vehicles struck and killed a motorcyclist, who died 30

days after the loss. The value of the underlying death claim was in the $1.5 million to $2.5 million range. After the client was sued by the motorcyclist’s estate, the client alleged the agent told him that the CGL would respond in excess of the $300,000 auto limit, and further alleged the agency should have recommended higher auto limits. The agency denied ever telling the client that the CGL would be excess for an auto loss, and further stated the client had been informed numerous times in the past to the increase the auto limits. Unfortunately, there was no paper back up of those discussions and due to the long-term relationship with this client, the claim against the agency settled for $500,000. Lesson: Always document in writing any limit discussions you have with your clients.

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Scenario No. 2: The agent wrote property coverage for a client who was in the business of refurbishing railroad cars. A hurricane destroyed one of the client’s locations, and a claim for business interruption was made with the carrier. The policy was placed through an MGA and had a 90% co-insurance clause for business interruption. The agent was confused about how to calculate the proper limit of coverage for business interruption and assumed the proper limit for business interruption was merely profits. In actuality, the proper method to calculate limits for that coverage is profits plus continuing expenses. Following the loss, it was determined the agency’s client was drastically underinsured, resulting in an 82% co-insurance penalty. The loss to the client due the co-insurance penalty was around $160,000 and the case was settled for $135,000. Lesson: When in doubt concerning how to calculate the proper amount of coverage, don’t guess—consult various resources, including the carrier. Utica National Insurance Group and Utica National are trade names for Utica Mutual Insurance Company, its affiliates and subsidiaries. Home Office: New Hartford, NY 13413. 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. © 2022 Utica Mutual Insurance Company

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Employee data theft, lost policies and more Acceptance of client gift Q. I came in on a vacation day to take care of an issue for a client’s personal auto policy. He was so thankful, he sent me a gift basket—one that would be valued at $50. Can I accept this?

Employee theft of client data

However, trouble arises when the client may be seen as offering a referral fee. Suppose your client—who is pleased with this service on his personal auto policy—is the owner of a glass shop to which you refer clients. If this is the case, a court may see this as a violation of commercial bribery laws—which flow from an attempt to thwart common-law principles of agency, in which the “agent” (the producer or insurance agency) owes a duty of undivided loyalty to its “principal” (the insurer).

Q. I’m looking for coverage information to provide proper insurance coverage for an insured whose employee steals the identity of the customers—whether it be information taken from a physical file or information taken from a computer, file server or the internet. What coverage would be needed for the insured to protect those clients whose information was stolen?

It could be seen that by accepting the gift from one to whom you refer business, you—or the agency—is accepting a personal benefit, one not approved by or intended to influence his or her conduct in relation to his or her employer’s or principal’s affairs.—Bradford J. Lachut, Esq.

A. This is a significant problem. Liability for the theft of electronic data is an element of broader cyber liability exposures.

A. This scenario poses an unusual situation, the opposite of most inquiries we receive. Absent any special relationship between the client and the agent, you can accept the gift.

Disruptive client—agency refusal to write coverage for him Q. We have an insured who is disruptive when he comes into the office to make a payment. What do you do with a client who you don’t want anymore? A. New Jersey Insurance Law contains no requirements governing a producer’s termination of service to a policyholder. In accord with N.J.A.C. 11:1-20 and 22, the terminating producer should advise the policyholder of the right to continue coverage with the insurer, unless canceled or nonrenewed. Tell the policyholder that he needs to choose another producer to represent him and notify the insurer that you no longer want to be the producer of record.

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Many insurance products exist, or are in development, to cover these exposures; some are currently being offered in the surplus-lines market. They go by such names as cybersecurity, cyber risk, cyberliability, data breach liability, e-commerce liability, network liability, media liability, internet liability, etc. Data breach committed by employees is just one of the potential coverage modules in these cyberpolicies. —Dan Corbin, CPCU, CIC, LUTC

For more information on how to terminate a relationship with an insured, see How to break up with a client in under 200 words, which can be found in the PIA QuickSource library.—Bradford J. Lachut, Esq.

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Grace period for flood policy Q. My client’s flood policy is expiring soon. Is there a grace period in which he has to pay the renewal or is it due on the effective date? A. All policies expire at 12:01 a.m. on the last day of the annual policy term, but insureds are granted a grace period following the expiration. Claims for losses that occur in this grace period will be honored, provided that the full renewal premium is paid within 30 days of the policy expiration. A policy with an expiration date on or after April 1, 2022, is subject to the lapse rules outlined in the NFIP Flood Insurance Manual, Risk Rating 2.0 Edition 2021, Section 5: How to Renew (bit.ly/3LE3ZgW). If premium payment for a policy is received on or after 30 days following the policy expiration date, then the policy cannot be renewed, and a new application process is required to reinstate coverage. The lapse in coverage may affect policy rating; in particular, continued eligibility for statutory discounts. —Bradford J. Lachut, Esq.

Lost policy Q. We have a client who is involved in a dispute with an insurance company over pollution coverage. The issue involves an old policy; our client no longer has the contract. The company destroyed its records long ago and it is denying any coverage. The company is putting the burden of proof on the client to produce a policy. What are our client’s chances of collecting? A. Generally, courts that have dealt with the issue of a lost policy require the policyholder to prove by a preponderance of the evidence that the policy was issued and the material terms of the policy. This standard requires the policyholder to prove that it was more probable than not that the policy was issued. This is a lower standard of proof than the “clear and convincing evidence” standard that would require the policyholder to prove beyond a reasonable doubt that a policy was issued. If a policyholder has proven that it was more probable than not that a policy was issued, then typically courts place the burden upon the insurer to prove any restrictions on the coverage, such as exclusions or limits of liability. Some courts have eased the policyholder’s burden of proving the policy was issued by allowing secondary evidence—such as past claim checks written by the insurer and copies of other policy forms that are used in the industry. For more information, see Indemnity Jones and the raiders of the lost policy in the PIA QuickSource library.—Bradford J. Lachut, Esq.

Changing an application based on an oral conversation with a client Q. Is it legal for an insurance producer to make an additional change to an application—which already has been signed by the insured—with the insured’s verbal consent? A. This is a particularly dangerous practice because it is an easy way to incur an errors-and-omissions exposure. PIA strongly advises that you should not

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make this a business procedure in your agency. If the insurance producer mishears, misunderstands or marks the application incorrectly—and it leads to an insured not getting the coverage the insured expected and a loss occurs— it could be an E&O exposure for the insurance producer. In the event of a dispute, all there will be is the producer’s markedup version of the application in the producer’s handwriting and maybe a record of the request. To protect from this exposure, if the insured really wants to change the application, the producer should fax or email the insured a new application to complete. Or, the producer can fax or email the insured the old application and the insured can initial the changes. Or, the insured could send the producer a note detailing the changes the insured wants to make to the policy. Legally, an oral contract, like making a change to an application pursuant to a phone request as described above, is every bit as valid as a written one; however, they are nearly impossible to prove the existence of without proper documentation—so the strongly recommended business practice would be, as always: get it in writing.—Clare Irvine, Esq.

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Now Is The Perfect Time To Earn More CE Earn CE and brush up on professionalism, ethics, and equal access to justice, to help you succeed.

Online CE Courses to Consider

This month, you have a multitude of opportunities to earn continuing-education credits that will help you develop and strengthen your skills as an independent insurance agent. The way we see it, when you invest in yourself, you invest in your agency and your insureds—you simply can’t afford not to. Register today on the PIA Northeast education schedule.

June 1 | August 16 | November 10: Implicit and Explicit Bias; Equal Access to Justice (Approved for the new N.Y. state regulation for diversity, inclusion & the elimination of bias.) June 1 | July 28: Ethics and Professionalism (Approved for the new N.Y. state regulation for ethics & professionalism.) June 7: Things to Consider When Insuring the Commercial Tenant June 28: Innovations in Long Term Care Funding with Life Insurance June 29 | August 16: Flood Insurance Licensee and Sale through NFIP (Approved for the new N.Y. state regulation for flood insurance.) June 29 | July 10 | November 10: New York Insurance Law and Regulations (Approved for the new N.Y. state regulation for insurance law.) July 12 | September 22: New York Law 2022 (Approved for the new N.Y. state regulations for flood insurance, insurance law, ethics & professionalism; diversity, inclusion and the elimination of bias.)