Contents COLUMNS
FEATURES
4 Where Are We Now?
Paul Z. Martin, CPCU, reviews the impact of the COVID-19 pandemic on the insurance industry and the response by The National Alliance in revising its curricula and delivery methodology. Paul also reflects on the lockdowns and the effects of cars being driven less, educational pods, and other pandemic repercussions in both personal and commercial lines.
8 Positive Mindset Through Mental Health Exercises
J. Karl Sherrill, Jr., CIC, CRM, MBA, discusses the effects of the COVID-19 pandemic on the mental states and attitudes of people in the insurance industry, and people in general. Karl explains and provides examples of four mental health exercises and activities to help leaders and their teams to really know how they are doing.
12 Producer Compensation— A Basket of Snakes
Bill Toll, CIC, provides insight into the complicated world of producer compensation by reviewing the producer compensation goals of providing agency growth and profit, and attracting and retaining great producers. He outlines a step-by-step approach for agency owners and managers to determine how much the agency can afford to pay its producers.
16 How to Get Results from Your New Producer
Diane Masterson, CIC, CPCU, profiles her experience as a sales manager for hundreds of new producers in the producer development program she co-manages. In addition to coverage and sales training, Diane sheds light on the significance of measuring what gets done. She explains the importance of prospecting and establishing accountability, as well as the value of maintaining open channels of communication through consistent meetings between sales managers and producers.
20 Jonathan Thomas, Jr., CISR— Student Success Story
Learn how Jonathan Thomas, Jr., CISR, used the Certified Insurance Service Representative (CISR) designation, in combination with his degree from the University of Georgia and industry internships, prepare a solid foundation for a career in the insurance industry.
23 Characteristics of a Successful Producer—the Insurance Implications
In this feature article, Paul Z. Martin, CPCU, explores the personality and behavioral characteristics that can make a producer successful. The article reveals ten characteristics agency owners and managers should look for in hiring producers, plus—in the sidebar—he reveals the “wingman” secret.
27 The CISR High School Program— An Insurance Certification Program for High School Students
Read about the new CISR High School Program, offering students the opportunity to earn the CISRHS certification prior to their high school graduation. Learn how this innovative curriculum helps these individuals take a significant step in their professional development and prepares them for potential careers in the insurance industry.
NEWS
22 Ask Bettie
Bettie Duff fields common questions from National Alliance participants and designation holders regarding online Ruble MEGA Seminars and dues payments.
30 2020 Elite Women Honors
Each year, Insurance Business America magazine honors exceptional female insurance leaders and preeminent producers. Join us as we congratulate The National Alliance designees who made this year’s list.
ALLIANCE@SCIC.COM • 800-633-2165
TheNationalAlliance.com
Dear Reader: This Winter edition of Resources is dedicated to insurance producers. Managing and developing great producers can be problematic for many agencies, while other agencies have achieved remarkable producer success stories. Obviously, producers comprise the sales function or force of an agency, but all industries in our economy face the same challenge as the insurance industry. The challenge is finding, compensating, and developing a sharp, highly skilled, and productive sales force. Once a producer with these characteristics is in your agency, certainly the agency wants to retain the individual. This type of producer can also be a candidate for perpetuation of the agency, should the agency go the internal perpetuation route. The process of finding, compensating, training, and managing producers is an expensive one. If an agency hires a producer candidate who has little insurance knowledge and no book of business, it may take a period of time—maybe even a couple years—before the agency sees profitable results. That is an investment that is of a size to be a significant concern to both large and small agencies. If a producer fails, then all of that time, energy, and investment is lost. The National Alliance has been aware of this concern over its entire fifty-plus years. As a result, The National Alliance has incorporated skills related to finding, compensating, training, and managing producers into many areas of its considerable curricula. The flagship of this effort is The National Alliance’s Dynamics Series courses. Coupling Dynamics Series training with the product knowledge offered in other National Alliance courses has provided many agencies with a complete toolbox to assist in producer and sales force development. This combination is cost effective and assists agencies in realizing positive results from their investments in producers. It also helps agencies avoid costly and reputation damaging errors and omissions issues. This edition of Resources highlights several of the facets of finding, compensating, training, and managing producers. The current COVID-19 pandemic has complicated this already difficult process, but The National Alliance has responded by converting the Dynamics of Selling course to an online offering and, at the same time, retaining the individualized attention required by sales training. The ardent commitment of The National Alliance to assist agencies with the development of their producers and sales force will continue into the future. With light at the end of the COVID-19 tunnel, agencies can look forward to working with The National Alliance long after this pandemic is behind us and in the history book. It is a true honor to work with you as we head toward a bright and productive future. All of us at The National Alliance wish you a happy and safe holiday season and a prosperous and COVID-19 free New Year. Sincerely, William C. Toll, CIC Editor-in-Chief
William (Bill) C. Toll, CIC, has worked with The National Alliance in several capacities since 1986. In addition to his work with The National Alliance Research Academy and as the new Editor of Resources magazine, he is a National Faculty member and Educational Consultant for both classroom and online courses.
Intermediate
Advanced
*REQUIRES YEAR-LONG COMMITMENT
Winter 2020 | RESOURCES
3
PERSPECTIVE
Where are We Now? By Paul Z. Martin, CPCU
L
ast January, I was intrigued by reports out of China that a new disease was spreading—something that was being called a “novel” coronavirus—COVID-19. It was given the number nineteen because the virus first emerged quietly in the Winter of 2019. I kept checking on the story and paid attention as it grew. There wasn’t much national news on it at the time, but the prospect of something big and awful brewing was captivating, like watching a hurricane form in the Atlantic. In February, I found a continuously
4
RESOURCES | Winter 2020
updated graphic on the Johns Hopkins website that showed numbers of those affected and where the virus was spreading. I started checking the site regularly. I shared it with a few others, and we joked about whether the virus would develop into a pandemic like in the movies (the first known case in the US was still several days away). Well, we all know what happened after that. At The National Alliance, we did what others in the industry were doing; we looked for ways to continue our work—to complete our mission— while adapting to the rapidly changing
environment. After a couple of rocky weeks, we began to get our feet under us, planning some new ways of educating participants, providing CE and updates, and considering how all this would affect the insurance industry. In early April, well into the national shutdown, we gathered our national faculty and friends for a couple of big conference calls regarding the pandemic. We consulted experts from our ranks on various aspects of risk management and insurance. They gave us their best guesses about the kinds of things we could expect from an insur-
ance perspective. What would insurance carriers do? How would insurance policies be interpreted? What kind of claims and arguments for coverage would surface? What would the courts do? How would health insurance be impacted? We discussed all aspects of the growing pandemic and launched a new webpage—COVID-19 Conversations—to keep our faculty and participants informed. Afterward, there was not much to do but see how it all played out. So, where are we, now? And, from an insurance perspective, how has it
gone, so far? In many ways, it’s gone just about as we expected, but then again, there were a few interesting twists. One development that took many by surprise (but with a little creative thought shouldn’t have) was the personal auto insurance markets providing discounts and returns to clients. Customers weren’t driving; their cars were parked at home for weeks. So, accidents and subsequent losses weren’t happening. It was an appropriate and smart marketing move, and a very nice surprise. It was also a true reflection of
what was happening to families. They were at home, and for the most part, stuck there. As the summer progressed, families began to adapt to a “new normal.” Typical summer vacations were off limits, so family “quality time” went in a different direction. Recreational vehicle sales went through the roof, setting records. If the family couldn’t stay at a hotel on the beach, maybe they could camp somewhere in a nice new camper, away from others, and in compliance with the new rules regarding distancing. Insurance professionals stepped in to advise clients on the need for additional coverage for recreational vehicles. But as the summer waned, moms and dads started thinking about autumn and a return to school. The spring semester had been wrecked, so perhaps some fresh approaches to education were in order. Home education pods became a thing, and new insurance worries popped up. Would homeowners’ policies protect insureds for these unfamiliar exposures? What protections would a teacher in this scenario have? Were there exclusions to address? What gaps in coverage would lurk in the background waiting to pop up? From an insurance perspective, these personal lines issues seemed to be the easier side of the coronavirus pandemic to address. The commercial insurance issues were of far greater concern, both in size, financial impact, and complexity. So, how has commercial insurance been impacted by COVID-19? The biggest issues at the outset were workers’ compensation, business income claims on commercial property, and possible immunity from liability. And on these, our faculty experts were on the money. Experts predicted that claims for workers’ compensation would necessarily be handled on a case-by-case basis, since certain occupations would have an easier time making a claim for COVID-19 infection based upon their greater exposure to the disease, as compared to others working from home, or perhaps in an outdoor environment. In fact, workers’ compensaWinter 2020 | RESOURCES
5
PERSPECTIVE tion carriers published their intention to handle claims with precisely this approach. Since the outset of the pandemic, many states have passed legislation or issued executive orders that established a “rebuttable presumption” as it relates to employee infection with COVID-19 for certain occupations, while other states are considering adopting the same approach. This rebuttable presumption maintains that an employee infected with COVID-19 is assumed to have become infected with the illness in the course of employment unless the insurer can show otherwise. The National Council on Compensation Insurance has been tracking these occurrences. Regarding business income claims spurred by the governmental shutdowns, the cases have been fairly predictable. Most insurance professionals thought the language of the property policies was straightforward and clear. The coronavirus didn’t cause direct property damage—a predicate for coverage—so any claim for loss of income due to a suspension would not be a covered loss. Of course, the court cases on those issues were inevitable. State and About the Author: Paul Z. Martin, CPCU Paul Martin is the Director of Academic Content and Team Lead for The National Alliance where he works with Alliance faculty, agents, and other industry professionals to deliver industrybest content and education. During his career, Paul has been an adjuster, underwriter, special agent, company manager, independent agent, and has over twenty years of experience as an insurance educator in Texas. 6
RESOURCES | Winter 2020
federal cases were filed all across the country. One federal case out of Georgia ruled that an interpretation of the policy for coverage “exceeded any reasonable bounds of possible construction.” In a state case in Florida, a beer and wine distributor’s suit [Harvest Moon Distributor, Inc. v. Southern-Owners Ins. Co., No. 6:20-cv1026, Order (M.D. Fla. Oct 9, 2020)] was dismissed because they failed “to allege enough factual matter to plead coverage for lost business income.” Other cases in states such as Michigan and Texas reached similar outcomes. However, one recent case in North Carolina may have given hope to restaurant plaintiffs, where a state court ruled that the language of the specific insurer’s policy provided coverage in that it made a distinction between “physical loss” and “physical damage” to the property. No doubt, these rulings will ebb and flow through the court systems in the months and years ahead. In the area of liability and COVID-19, immunity has been a big issue. Both the federal government and states have been wrestling with who may deserve immunity as a practical matter—such as medical facilities—or as an economic matter, to save industries that could be crushed by litigation. In an election year,
hope for something definitive was, perhaps, too much to ask for, but the issue is worth watching. Finally, how should the industry and the country adapt to the new reality of the impact of future pandemics? Well, people are talking. Industry leaders such as the American Property Casualty Insurance Association, the National Association of Mutual Insurance Companies, and the Independent Insurance Agents of America have been exploring ideas for helping businesses recover and reopen in a future scenario. One idea is a federally funded affordable layer of business income primary coverage that would be available to all businesses, with private excess coverage layered above. Considering that the business income losses of Main Street businesses alone during a shutdown are estimated to be from $200 to $400 billion per month, a federal government program may be the only realistic solution in the future. It’s safe to say that we haven’t seen anything quite like this before in the insurance industry. Perhaps terrorism and 9/11 should have opened our eyes, but here we are. As we always have, insurance and risk management professionals will continue to work on the problem. We may have a long way to go, but I’m confident we will get to a more stable place. We’ll keep watching.
Learn More Earn More The COVID-19 pandemic has impacted all of us in the insurance industry, our country, and all around the world. In the early stages of the pandemic, The National Alliance recognized the concerns of insurance professionals regarding the impact on insurance coverages and their own professional education. In response, The National Alliance has developed several pertinent coverage podcasts by recognized insurance experts, describing innovative management solutions for effective agency and brokerage operations under the pandemic. Several revisions to program curricula have been made to reflect the impact of COVID-19 on property and casualty matters, as well as the industry’s reactions. Visit The National Alliance website at www.scic.com to review and benefit from the number of podcasts related to the COVID-19 pandemic.
Keep Your Fingers on The Pulse of Customer Service! What’s new in
The Pulse?
NEW! Read an overview and statistical information compiled from essays submitted by state and national winners of the 2017 Outstanding CSR of the Year ÂŽ Award Competition. Improve job satisfaction, as well as agency efficiency and productivity. Let the benchmarks, trendlines, and differences between CL and PL personnel help your agency gain insight into personnel who are the frontline and first responders of the agency.
$ 55
$
45
Paperback + shipping & handling
eBook
Service personnel can use the publication to compare their compensation, servicing volume, and responsibilities with their peers from across the country. Chart a future course with checklists, job descriptions, and career paths.
Visit NationalAllianceBooks.com to order this important agency book now!
INSIGHT
Positive Mindset Through
Mental Health Exercises J. Karl Sherrill, Jr., CIC, CRM, MBA
8
RESOURCES | Winter 2020
I
ntroduction “Hello, how are you?” Never before has this simple phrase meant more than it does today as we lead our teams in the midst of an unprecedented pandemic challenge. How is your team doing? How are you doing? How is your
family? Are you regularly asking these questions of those around you? Are you actively seeking to “see” how they are doing in an environment where “seeing” them (in person) is rare— sometimes, nonexistent? The isolation and separation that quarantines and shelter-at-home requirements bring is having a significant impact on our lives. All of us have seen news reports and articles stating that a large number of Americans are experiencing symptoms of depression, acute anxiety, a great degree of loneliness and isolation, as well as a host of other assorted stressors. When combined when the fears associated with human contact and the uncertainty of when an end may be in sight, it becomes obvious there is a high degree of apprehension. There have been a number of current pandemic studies, and many have been published on the Internet. I aggregated several, yielding the following results: • Remarkable levels of depression • Anxiety, ranging from common to serious • Detrimental levels of drinking and drug use • Substantial degrees of loneliness Responding to this crisis is imperative. It is particularly critical for leaders to be intentional in moving from a perspective of “allowing” breaks for mental health to “encouraging” and maybe even “requiring” the team to engage in good mental health practices.
Here are some examples of mental health exercises you can reinforce within your team. Lesson #1: Work/Life Balance—Guarding Against “Always On” Work/life balance is not a new concept. Pre-pandemic, many organizations were actively promoting this balance among their teams. What is new is the pressure that the pandemic has brought to bear on this balance. Teams have been abruptly forced to bring their work home—for the first time, for many. For others, working from home was not new. Whether new or seasoned veterans, the pandemic has brought about a new dynamic to the home office. We have all found ourselves surrounded by others who are also working full-time from home: spouses, partners, and children. The lines between working and home life have become blurred. With no clear delineation between work and home, people tend to feel like they are “always on.” Three suggestions to help bring balance back to this setting are: • Set boundaries Designate and be account able to specific work areas in the home. Be equally accountable to designated personal spaces. Engage and focus on work when you enter the workspace, and mentally unplug when you enter the personal spaces. • Schedule everything With so many things outside of our control because of the pandemic,
we can still control how we spend our day. Take the time to schedule your work and home life activities. This may sound simple, but it’s not necessarily easy. Protect your plan for the day and review tomorrow’s schedule the night before. Studies have shown that knowing what tomorrow holds will help put your mind at ease, which leads to better sleep. Start your day with a quick review so you are better equipped to control the day’s activities. • Schedule healthy lifestyle time As you build your schedule, do not neglect your mental and physical health. Build in the time for walks, exercise, journaling, reflection, reading, etc. Protect this time the same as you would a new business appointment meeting. Lesson #2: Unplug PTO? Vacation? Breaks? These terms may have taken a backseat during this challenging time. This was true for me until I was encouraged by a mentor to unplug. The timing was good because my sons had just completed the most tumultuous fourth quarter in their school lives, and I was feeling the pressure of always being “on” with the home office and to-do lists in view both day and night. We decided we all needed to unplug, and so we headed to South Mountains State Park...with no cell signal... no email...no social media... for three days. (continued) Winter 2020 | RESOURCES
9
INSIGHT
For those who are curious, three days unplugged resulted in 387+ emails unopened in my in-box. Unplugging also gave me an opportunity to lose myself in thought. We hiked close to ten miles in two days, cooked campfire foil packs for dinner, refreshed in the cool mountain river water rushing by our tents, and mostly laid in hammocks and read books between naps. I was amazed at how physically difficult it was to not click on the email app on my phone or check social media. This led me to delete those apps to avoid the temptation. It was MARVELOUS! This was the mental health break that we all needed. Unplugging was not easy, but it was necessary. I can honestly say it was the best that I have felt, mentally, since being sent home by COVID in March. If you are an organizational leader, I heartily recommend that you give some thought to how you can support your team in finding some time to unplug.
Lesson #3: Routines Protect Positive Mindsets It is hard to be positive in normal times. COVID has accelerated the crisis by combining abrupt and longlasting isolation with the real physical health concerns of the pandemic. The isolation can make it dif-
ficult to maintain a positive outlook. It is important that we build in mechanisms that provide guardrails along our daily road which will prevent us from taking a negative path. Daily routines can help guard against negative thought. Regardless of how I feel in the morning, every day starts with the same routine, which includes:
About the Author: J. Karl Sherrill, Jr., CIC, CRM, MBA Karl Sherrill is a National Faculty member of The National Alliance. He is a Vice President at Marsh & McLennan Agency where he leads the National Manufacturing Industry Practice and he also serves on the Board of Directors for the Independent IIA of North Carolina. 10
RESOURCES | Winter 2020
• Tuning out electronics until the routine is done: no checking email and no social media until I have already built up my immunity to negative thoughts. • Morning affirmations: saying something out loud has proven to have a bigger impact on our focus then just thinking it. Each morning I review and say out loud my core values to help me affirm what is non-negotiable in my day. It so happens that joy is one of my values. My belief is that it can be found in any situation, and verbalizing this reminds me to seek it out, instead of focusing on negative thoughts. • Journaling: writing it down has a similar affect as verbalizing affirmations. Develop a basic outline you will follow each day. One of the most valuable parts of my journaling is writing down a list of things I am grateful for in my life and what I am looking forward to that day. This helps re-direct my thinking to the things that are going well. • Review the schedule for the day: by understanding what lies ahead, I am able to prioritize my time and mentally prepare. Understanding what’s next in the day reduces unknowns. This simple certainty provides some positive reinforcement that I am ready to take on the day. Lesson #4: Positive Networks and the Top Five We all spend most of our days building our networks.
Did you know that, for most people, we are a direct reflection of the top five people we spend our time with? These five people shape our viewpoints, which means that we should really think about who is in our top five. Start by writing down the top five people that get your time. Take an honest look at the list and ask yourself questions such as: Do my top five contribute positively to my beliefs? Is there someone who will challenge my viewpoints to help me to see the broader picture? Who could bring new perspectives or ideas? Am I taking care of both my personal and professional needs? Invest your time with people who help you to maintain a positive viewpoint. Conclusion Leaders should be strategically focused on how their team is doing—now more than ever. How they are feeling? Are they consistently finding ways to protect a positive mindset? Is someone suffering from negative thoughts? What can you do to help the team be mentally strong? When seeking physical strength, we turn to exercise. With mental health, exercise is also a way to protect our mental strength. Unprecedented, by definition, means there is no precedent, no guide, no policy manual, etc. In an unprecedented pandemic, everyone is searching for a path to follow to stay positive and strong in this difficult time. Make an additional effort to go below the surface and find the true answer to the question, “How are you doing?”
James K. Ruble MEGA Seminars are respected throughout the industry—offering a variety of market-focused specialty, advanced, and high-interest topics.
BRAND-NEW TOPICS
Topics are added year-round. Select any four 4-hour topics to meet your CIC, CRM, CPRM and/or CISR update.
TWO-PART WEBINARS Each 4-hour topic is covered in two live, instructor-led, 2-hour webinars.
HIGH-QUALITY INSTRUCTION Convenience of a webinar with the spontaneity of a live instructor.
Winter Winter2020 2020 || RESOURCES RESOURCES
11 11
PRODUCER COMPENSATION
A Basket of Snakes President/CEO William J. Hold, MBA, CRM, CISR wjhold@scic.com Editor-in-Chief Bill Toll, CIC btoll@scic.com Designers Guy Boccia Becky Keeling Chuck Lickert Department Editors Dustyne Bryant, MBA, CIC, CISR dbryant@scic.com Paul Martin, CPCU pmartin@scic.com Bob Rogers, CLU, ChFC brogers@scic.com Sarah Warhaftig, J.D., CRM swarhaftig@scic.com Mandy Whorton mwhorton@scic.com Jay Williams, CIC, CRM, CRIS, MLIS, AIP, AAI, ACSR jwilliams@scic.com Marketing Griselda Castillo Jeff Buck Resources is published by The National Alliance for Insurance Education & Research, P.O. Box 27027, Austin, TX 78755-2027, 800-633-2165, Fax: 512-349-6194, Internet: TheNationalAlliance.com, email: alliance@scic.com. At present, Resources is available to dues-paid Certified Insurance Counselors (CICs), Certified Insurance Service Representatives (CISRs), Certified Risk Managers (CRMs), Certified School Risk Managers (CSRMs), Certified Personal Risk Managers (CPRMs), and affiliates of The National Alliance Research Academy. Entire contents Copyright © 2020, The National Alliance for Insurance Education & Research. All rights reserved. Material in this publication may not be reproduced in any form without permission. Authorization to photocopy items for internal or personal use, or the internal or personal use of specific clients, is granted by The National Alliance, provided that the following words are included on any copy: “Reproduced from Resources with permission of The National Alliance for Insurance Education & Research.”
Resources is designed to provide accurate and timely information in regard to the subject matter covered. It is published with the understanding that the publisher is not engaged in providing legal, accounting, or other professional services. If legal advice or other expertise is required, the services of a competent professional should be sought. The publisher has taken all reasonable steps to verify the accuracy and completeness of information contained in Resources. The publisher may not, however, be held responsible for any inaccuracies or omission of information in any article or advertisement appearing in Resources. The National Alliance Standards of Conduct: scic.com/pub/media/docs/Standardsof Conduct.pdf
12
RESOURCES | Winter 2020
T
By Bill Toll, CIC
o many agency owners and managers, producer compensation resembles a basket of snakes. It is not particularly pretty, it is constantly moving, and if you are not careful, it is likely to bite you, with disastrous results. As with all things, careful planning can assist with managing the basket of snakes. So let’s begin with the three basic goals of producer compensation. The first is to provide growth to the agency. There is no reason to hire a producer into the agency unless the producer is going to work to assist with overall agency growth. The second goal is to provide for agency profit. If a producer is hired, you would not expect that person to be a drain on the assets of the agency over the long run. Every producer should add to the profitability of the agency by producing business with generally low loss ratios and clients that will stay with the agency over a number of years. Generally, it takes about three years for an agency to realize some profit from a new producer with no existing book of business. This leads us to the third goal. The third goal of producer compensation is to attract and retain good producers. This goal is closely tied to the other two producer compensa-
tion goals because an agency wants to retain producers who provide growth and produce profitable business. Producers of this caliber can be candidates for managerial duties and future perpetuators of the agency. Agency owners can often construct tailored buyout structures with existing agency producers whose capabilities are known and valued, as opposed to selling the agency to a third party at some point in time. The buyout structures can be built with individual components not only beneficial to the agency owner(s), but also the producer(s). With these three goals in mind, it is possible to take a deeper look at the individual design elements. There are two major parts to producer compensation, with the “up-front” consideration being any salary and/or commission share the agency might pay to a producer. The second part is the “outback” part of the equation, and consists of equity, which is defined as some form of ownership in the business produced, and perhaps, ultimately, the agency itself. Every producer needs equity or some ownership in the business they produce.
Every person, including producers, thinks about what things will be like in the future, for not only themselves, but also any dependents the producer may have. The primary question is, “What am I going to retire on?� If an agency does not satisfy this need, then the producer might move to another agency where their equity need is more likely to be fulfilled. As a result, the agency the producer leaves will lose the investment it has made in developing and training the producer. If we consider the up-front portion of producer compensation first, then we can focus on the first two producer compensation goals. In the example table on this page, we can consider the profit goal first. Agency owners should pay themselves first; the rate of return an agency and its owner(s) want can range widely, for example, from 12 percent to 20, or even 25 percent. In the chart, 20 percent has been selected as a targeted, pre-tax profit. If we think of a dollar of commission coming into the agency, 20 cents of it would go into the pockets of the owner(s) first. Owners should think of paying themselves first as being compensated for the business risk they are taking. After the 20 percent (or whatever the rate of return the agency wants is established), the contingent commissions and interest income should be considered. Right now, interest rates are very low, but insurance companies are continuing to pay their agents bonus/contingent commissions for writing profitable business. Agencies that write profitable business and hire producers who do the same can qualify for bonus/ contingent commission. This agency income is particularly valuable because there is very little or no expense attached to it, and it drops to the bottom-line profit.
For this reason, bonus/contingent commissions can be deducted from the targeted agency profit. In the example, we have a targeted profit of 20 percent, and if we have contingent (and/or bonus income) and interest income equal to 10 percent of the commission dollars coming into the agency, then the agency has earned half of the targeted agency profit of 20 percent from writing profitable business. Therefore, the agency only has to realize a 10 percent profit after the adjustment for contingent/bonus commission on every dollar of commission coming into the agency. In the example, if we have an adjusted targeted agency profit of 10 percent, and we subtract it from the one dollar of agency commission, we
have 90 cents of the commission dollar to apply to agency expenses. If we assume that selling expenses outside of commissions to producers average about 5.4 percent (this can vary from one agency to another), and we assume fixed administrative expenses average 20.5 percent, that leaves us with 64.1 percent of our one dollar of commission to pay all agency staff personnel. In the example, the first item in paying personnel is management override. This is a payment to the owner(s) of the agency for time spent in strategic and operational management, planning, and decision making. The standard percentage assigned to this payment is five percent of the commission dollar coming to the agency. If there are multiple own-
A Typical, Well-Run Agency Targeted Agency Profit............................................................................... 20% (Before excess compensation to owners) Deduct: Contingents and Interest.......................................................... 10% (Consider using a five-year average) Budgeted Profit on Commissions Only................................................ 10% Amount of Commission Available for Expenses............................ 90% ($1.00 of commission minus 10¢ contingents and interest) Less: Specified Selling Expenses.................................................5.4% Specified Administrative Expenses.............................20.5% Balance Left to Pay All Personnel........................................................ 64.1% Less: Management Override......................................................... 5.0% Staff Compensation.............................................................20.6% Employee Benefits..................................................................8.5% Balance Left to Pay Producer................................................................... 30% Winter 2020 | RESOURCES
13
PRODUCER COMPENSATION
ers in the organization, this does not mean each owner gets five percent, but rather, five percent is split among the owners with the owner(s) spending the most time in management getting the largest share of that five percent. Staff compensation is paid to the account managers/customer service representatives who represent the backbone of the agency; typically, this is about 20.6 percent of the commission dollar. A related item is employee benefits, such as health insurance for all personnel, including owners and producers. These expenses average 8.5 percent, depending on the state where the agency is located. In the example, after deducting staff compensation and benefits, the balance left over to pay a producer is only 30 percent. It is very likely an agency would not be able to find a producer who would work for an agency for 30 percent of the agency’s commission across the board. A much more typical split for a commercial lines producer is 45 to 50 percent on new business, and 25 to 30 percent on renewal business. For personal lines, it is typical to see 50 to 70 percent on new business and up to 10 percent on renewal, especially for direct billed business. Paying more for new business than for renewal business emphasizes new business production
About the Author: William C. Toll, CIC
Bill Toll has worked with The National Alliance in several capacities since 1986. In addition to his work with The National Alliance Research Academy and as the new Editor of Resources magazine, he is a National Faculty member and Educational Consultant for both classroom and online courses.
14
RESOURCES | Winter 2020
and satisfies the producer compensation goal of providing growth for the agency. Then what does the 30 percent left to pay the producer actually mean? If, for example, an agency pays 50 percent of new commercial production to a commercial producer, it is easy to see there is no targeted agency profit in the first year. The 20 percent targeted agency profit is added to the 30 percent of the commission dollar, to achieve 50 percent; however, the 10 percent from contingents, bonuses, and interest would still be available, as long as business is profitable. The idea is to achieve the 30 percent of the commission dollar on the average, by paying more of the agency commission for new business and less on renewal business. As long as the 30 percent is achieved, the goal of providing a profit for the agency is realized. But that leaves the outback portion of producer compensation. How can the agency satisfy the equity needs of a producer while simultaneously satisfying the third goal of producer compensation—retaining good producers? There are several ways an agency can look at structuring the transfer of agency equity, but the important point is that equity (ownership) in an agency should be earned. Most likely the current owner(s) of the agency did not receive ownership
as a gift and is, therefore, reluctant to give it to others. An agency hiring a new commercial producer with little or no existing book of business could establish a honeymoon period that would last about three years. During this period, the agency owners would learn more about the producer’s work habits and interaction with other agency and company staff. After the three-year period concludes, a decision would be made regarding the producer’s eligibility to be granted ownership in the business the producer has produced. If the decision is to grant ownership, the granting could be done at 10 percent per year until a certain level is reached, such as 50 or 60 percent or more. Then the percent granted in the business the producer has produced could be used as a down payment toward stock purchase. A transaction such as this needs careful planning and should be done only using the professional counsel of accountants and tax experts. By keeping the three goals of producer compensation in mind: (1) provide for agency growth, (2) provide for agency profit, and (3) attract and retain good producers, the agency can make progress in charming the producer compensation basket of snakes.
Learn More Earn More The National Alliance Research Academy has conducted several studies on insurance producers. There is no quicker way for an agency to lose money and business relationships with clients and companies than to hire poorly performing producers. To assist insurance agencies in avoiding the many pitfalls in the hiring of producers, The National Alliance has developed a number of podcasts as a benefit for dues-paid designation holders. Some of these focus on insurance agency financial analysis, and specifically, producer compensation. The National Alliance Research Academy has periodically published Insurance Producer Profile: Compensation, Production and Responsibilities, a study which provides guidelines to help agency owners and managers with this very important topic. Visit The National Alliance website at www.scic.com to learn more and to purchase your copy of Producer Profile.
The Nat Alliance NOW Podcast Series provides risk and insurance professionals with rich, nuanced conversations that deepen learning and promote the successful completion of National Alliance programs. Monthly episodes feature active industry experts and guest hosts who explore trends and tackle challenging course content.
Listen. Learn. Succeed.
First CISR High School Student to Pass in the Nation
Listen at
CICs Win with MarketScout CIC Select Program
Managing Cyber Exposure: 2020 and Beyond – Part 1
Remote Work Roundtable: How We Became Virtual Insurance Agencies
High School Students Take on Insurance
Women Insurance Producers: An Interview with Joan Sansing, CIC, ARM, AAI
TheNationalAlliance.com
SALES MANAGEMENT
How to Get Results from Your
New Producer
T
By Diane Masterson, CIC, CPCU
wenty-five years ago, my business partner, Kenneth L. Fields, MSM, CIC, CPCU, CLU, ChFC, and I were tapped to create a new oneof-a-kind program designed to help agency owners who represent State Auto Insurance Companies bring on new producer talent, and then to work alongside those producers for a year. Our CEO at that time understood two things: agency owners were challenged by finding and training new producers, and new producers needed support beyond coverage and basic sales training—support that couldn’t be provided by agency owners who were way too busy running their agencies. This remains one of the ways that State Auto continues to support the growth of our industry. Over a six-month period of time, Ken and I used our backgrounds in recruiting and training new agents, along with the skills we developed as insurance trainers, to develop The PaceSetter Program®. During that time, we asked ourselves countless questions. Do we have the program mapped out in the right way? Will agency owners be okay with us essentially managing their new producer’s sales activities? What about us giving them guidance on effective prospecting habits, sales processes, and sales tactics? And will it be successful? With the help of our company field representatives, the first class of “handselected” independent agencies and agents started their journey with us in March 1997. Obviously, it’s worked. Here we are 25 years later, and in July 2021, we’ll be bringing on our 50th class! And the program continues to grow. You may be wondering how the program works and if there some ideas
you can take away to help you in your agency. Well, read on, and let’s find out. What Gets Measured Gets Done At the core of effective sales management is the development of: • a sales plan • a series of measurable must-do sales activities • accountability—the practice of holding producers accountable to the activities that produce results. After all, what gets measured gets done. Of course, the plan will look different in different agencies, and even the processes will differ. However, a plan and a series of measurable processes are a must. Without measuring what gets done and holding new producers accountable to the right actions, your desired result just won’t happen. Yes, I know that holding people accountable isn’t why you went into the insurance business, and you think people should just hold themselves accountable—but they don’t. Think about it, and you’ll realize that usually there is someone in your life that is asking about your results! It takes valuable time, and it’s not easy, but to me, it’s the most important element when it comes to driving sales in your agency. In the “good old days,” we’d just hire someone we liked and then tell them to go out and sell. Well, how’s that working for our industry? It’s not, when you consider that two-thirds of new producers don’t make it through their second year. Compare that to our results in PaceSetter: two-thirds do make it! Now you know that part of our secret sauce—accountability. So let’s back up and take a closer look at the plan that’s worked for us for 25 years.
The plan begins by vetting who we choose to be in our program. And that is dependent on who the agencies hire. After 25 years I can assure you of this: by taking your time and being very selective, you will save valuable time and money. Next up is training. What we learned in our initial pilot, before we launched The PaceSetter Program, was the importance of providing structured training in the new producer’s primary line of business. In the pilot, we only “touched” on product training. As a result, the producers didn’t have the confidence needed to make the number of cold calls that we required—let alone get the number of new business appointments or sales they needed. For that reason, we quickly pivoted to a robust technical and sales training program. Coverage Training It’s important for you to be aware that PaceSetter is a year-long program, and the year begins after our producers have received training through our Producer Development Program—two weeks of intensive coverage and sales training for commercially focused producers, and a one-week program for those in personal lines. Once the agent is licensed, the training platform we developed includes an intense self-study coverage designation program followed by a week-long in-person training program conducted by some of our top field people. Due to COVID-19, we have now moved to a virtual classroom for this training.
We do require each producer to focus primarily on one line of business during their year with us. Coverage training includes a review of the most widely used coverage forms, but we also discuss claims scenarios and the on-line rating platforms. In addition, we cover what makes a risk eligible (or not) to help the new producers identify key risk factors and other underwriting considerations.
Sales Training As important as coverage training is, sales training is king in our world. Prospecting and sales skills will make or break a new producer. We spend six days teaching, role-playing, and practicing core prospect-
SALES MANAGEMENT ing skills. We’ve also included The National Alliance’s Dynamics of Selling course as an important part of our program. Commercial Lines Prospecting Skills: Not only do we discuss client needs, different prospecting methods, and solid follow-up techniques, but each producer also practices each skill in our classroom. We also work on the use of social media. An upside to COVID is that our folks have had to further embrace the use of video for prospecting and follow-up activities, and learn how to use video conferencing for first-time appointments and presentations. Personal Lines Prospecting Skills: Just like the commercial side, the why’s and how’s of prospecting are a part of the one-week training experience. Although there is a lot cold calling involved, learning how to use their network (friends and family), and build new networks with realtors, bankers, direct writers, and others, is core to this side of the program. Prospecting Objectives One place I’ve seen new producers falter (before they begin PaceSetter) is in the area of know-how of what they need to do and how much they need to do to be successful in building their book of business. In PaceSetter, they learn exactly what and how much they need to do. Our planned approach is
based on x-dates, not appointments. In their first quarter, x-dating is the number one goal, dropping back by the x-dates leads (multiple times) is their second goal, and then we focus on appointments. Our philosophy is that building a bucket-full of x-dated leads and consistently following up on these leads will result in appointments—and writing business will follow. It’s sort of simple: if you don’t have enough leads to consistently call on, sales will be up and down, at best. Here are our weekly requirements for commercial producers during the first quarter: • 40 CL x-dates • 20 drop-ins (follow through with the x-dated leads) • 2 Centers of Influence appointments By the third or fourth week, a producer has enough leads to begin lining up their first appointments. For the remaining three quarters of the year, these are the weekly requirements: • 3–5 first-time appointments • 30 drop-ins • 20 CL x-dates • 3 Centers of Influence appointments • 2 referrals Accountability As a sales manager, here is the creed I’d suggest you follow: “Thou shalt
Learn More Earn More No question about it, managing and motivating insurance producers is a difficult task for agency owners and managers. However, doing exactly that is critical for agency success. The courses in The National Alliance’s Dynamics Series are the recognized leaders among agencies and carriers seeking career-boosting sales techniques, sales management strategies, and motivational power. Five powerful courses are available in the series: Dynamics of Selling, Dynamics of Insurance Service, Dynamics of Insurance Company/Agency Relationships, Dynamics Master Insurance Sales Class, and Dynamics of Insurances Sales Management. All five courses deliver real-world information and provide best-in-class knowledge and personal and commercial lines sales education. Visit the National Alliance website at www.scic.com for more information. 18
RESOURCES | Winter 2020
have a 30-minute sales coaching meeting EVERY WEEK with my new producer(s).” Notice the words, “EVERY WEEK.” At all times I have between 50 and 60 new producers I’m working with. That’s ten to twelve 30-minute coaching calls a day. How? I commit to it. And if I’m called into a mandatory meeting, I reschedule those coaching calls for later in the week. I can’t emphasize enough the importance of committing to this activity. New producers are just that—new! Everything they have to do to be successful is not natural to them, nor do they have the skills (yet). They are nervous, and some are scared. You are their rock, their motivator, and their coach. And yes, you are sometimes the person who has to put the hammer down. The number-one lesson I’ve learned is the importance of consistently meeting with these new folks. They need it. They need YOU. And you need for them to be successful. The good news is that if you do it right, they may be more successful than you ever dreamed was possible. So hire the right person, train them right, and hold them accountable! That new producer might turn out to be one of your most successful hires.
About the Author: Diane Masterson, CIC, CPCU
Diane has 40 years of experience in the insurance industry. She was elected to the Board of Directors of The National Alliance Research Academy in 2019. She is also a faculty member for the National Alliance where she teaches sales management, carrier/agency relations, and MEGA Seminars, and she is expanding into teaching CIC courses.
3
DYNAMICS SERIES
ONLINE DYNAMICS OF SELLING The Online Dynamics of Selling Virtual Classroom guides producers through a proven,
insurance-specific sales process that can help your confidence and closing ratios soar. Taught by sales masters, this highly interactive 3-day course will help you improve your communication and negotiation skills, develop solid prospects, and overcome client objections without leaving your home or office!
INNOVATION
Jonathan Thomas Jr., CISR—
A Student Success Story
W
anting to expand his knowledge regarding the insurance industry, Jonathan Thomas earned his CISR designation this year while attending the University of Georgia (UGA). Regarding his new designation, Jonathan said, “It just gave me a vast knowledge about the insurance industry, and a better understanding of topics that I previously did not understand.” His favorite course in working toward the designation was Agency Operations, because the course showed him how an insurance agency functioned. Jonathan believes his CISR designation will be beneficial to him as he enters the insurance industry and seeks leadership roles. Jonathan plans to pursue additional insurance education and designations, but he also wants to be defined by his work ethic and work history. After graduating from UGA this past summer, Jonathan virtually interned with CUNA Mutual Group Claims. There, he worked in claims with credit unions the company serves, including disability, voluntary unemployment, and life claims. During his internship, Jonathan said, “I am absolutely loving my internship experience. I am getting 20
RESOURCES | Winter 2020
exposure within the claims department. I’m a getting lending underwriting exposure.” He believes his internship provided him with a 360 degree view of the insurance industry. After his internship, Jonathan is looking for a career in the insurance industry. The top benefit he is looking for is a pathway for his passion for growth and development. He would like to work for an organization which pushes its employees to strive for greatness. Jonathan states that he believes such a passion is critical for driving growth, expansion, and remaining relevant in a competitive industry like the insurance
industry. He is particularly interested in insuretech and its application within the insurance industry. Jonathan says, “What excites me most about the industry is you have the opportunity to help individuals and businesses actually achieve their financial goals, and have a sort of sense of peace of mind that they won’t have a total loss; they can focus on their core business operations without the added worry of there being a loss that they can’t cover, or that would eventually put them out of business.” Before he went to the University of Georgia, he did not know what the insurance industry had to offer. Jonathan knew about auto insurance and health insurance. He did not know about educational institutions like The National Alliance. Now, he thinks the insurance industry has a great opportunity to try to tap into high schools and college students. He believes there are a great careers within the insurance industry, whether you’re working in claims, underwriting, or are a managing general agent, retail broker, or agent. Jonathan states, “There’s something in insurance for everyone. No matter what your skill set is, there’s something you can do and be successful at.”
For 30 YEARS, this publication has helped insurance agencies chart a course for improved GROWTH, PROFITABILITY, and PRODUCTIVITY. Compare your agency to industry norms and comparable agencies with respect to income and expense averages, productivity measures, and balance sheet ratios. Pinpoint where significant variances occur and focus your efforts where improvements can make the greatest difference. 192 pages + companion files for comparing your agency to peer agencies: income expense averages, productivity measures and balance sheet. Recommended reading for the CIC Agency Management Course
Print and Digital copies available. Winter 2020 | RESOURCES Order now at NationalAllianceBooks.com
21
Do you have a question to “Ask Bettie”? Bettie Duff, Senior VP & Corporate Secretary, has been with us over 40 years and is the person to contact for information on just about anything related to operations and procedures. Email your questions to bduff@scic.com.
Dear Bettie: I heard there is an online Ruble MEGA Seminar that is available on demand, where I can attend the sessions at my leisure. I am very interested in knowing how that will work. —Alvin Herring, CIC, CRM Hello Alvin, We are delighted to be able to provide this type of course format for those who DO NOT NEED STATE CE CREDIT and want to take their update program at the times they are available. You will have 60 days to complete your course from the date of purchase. Your expiration date will be displayed in your account under your course history, as well as inside the course itself. You can go in and out of the course
Dear Bettie: You will be proud of me because I paid my 2021 CRM dues yesterday; however, I did not see my benefits that come with dues payment. How do I access those? —Susan Bond, CRM Hello Susan, Thank you so much for paying your CRM dues and supporting the many activities that keep your designation relevant and valuable. You will access your 22
RESOURCES | Winter 2020
at your leisure, and when you log back in, you will return back to the place you left off. Each session has a video presentation, plus Knowledge Checks, throughout. Your attendance will be tracked through your responses to these Knowledge Check questions. You must answer the questions correctly in order to advance to the next section of the course. The four sessions must be attended in the order they are outlined in the course, and after you have completed all four sessions, you will need to submit the final survey. It is CRITICAL that you complete the survey because this step triggers your update completion in your records. There is no final exam! Of course, these instructions are stated in the course itself, but I wanted to give you some information prior to registration. We don’t want there to be any surprises! At this point, we have four topics available and will be adding more to choose from in the future.
• Insurance for EPL, Cyber, and Professional Liability Exposures: Hot Topics and Trends by John Immordino, CIC, CRM, RPLU • Cyber Liability: What Every Agent Should Know by John Immordino, CIC, CRM, RPLU • Insuring the Building Project: Builders Risk and Installation Floater by Cathy Trischan, CIC, CRM, CPCU, ARM, AAI, AU, CRIS, MLIS, TRIP • Protecting Wine Collections: An Insurance Perspective by Neil Kaplan, J.D., DipWSET, AAA To register for the online, ondemand Ruble MEGA Seminar, please visit our website. Choose “Menu” at the top of the home page and click on “Course Schedule.” Then, click on the blue bars to the left and choose: “Delivery Method—Self-Paced (On Demand)” and “Program—MEGA,” and the “On-Demand MEGA” tile will pop up. You are then ready to register and start your update course at your leisure! —Bettie
dues benefits through the website at www.TheNationalAlliance. com by logging in to your PROfile. Once you are in your PROfile, you will see “Dues-Paid Benefits” in the box to the left. Before you leave this page, we would like for you to review your data and update the information as needed for your permanent records— thank you! Then, you are ready to view your dues benefits. We hope you will peruse the many benefits, including digital editions of Academy publications, advanced topic webinars and podcasts,
such as “Managing Cyber Exposures: 2020 and Beyond”; “Remote Work Roundtable: How We Became Virtual Insurance Agencies,” etc. We also have a Risk & Reward Podcast Series which provides knowledge to students, leaders, and young professionals who are passionate about careers in the insurance industry, along with the unscripted conversations in the Awkward Insurance Podcast Series. Again, thank you for being a dues-paid National Alliance designee! —Bettie
EXPERT PERSPECTIVE
Characteristics of a Successful Producer —the Insurance Implications
A
gency principals and managers often ask the question, “Where can I find a good producer?” For many reasons, this is typically the wrong question to ask at the outset. Instead of wondering where to look, the better initial strategy is to first decide what you’re looking for. What the producer looks like, or other immutable characteristics, are not what matters. The best question to ask is, “What are the personality and behavioral characteristics that make a successful producer?”
Paul Z. Martin, CPCU Does is ever matter if the producer is a male or female? Perhaps, but in most cases, the answer to that question is no. If there is a particular niche the agency serves where the few natural characteristics that separate most women from most men are vitally important, then this could be a consideration. But in most cases, it’s not gender that matters most—even with niche markets. It is the aspects of their personalities, energy, drive, flexibility and intelligence that are most likely to lead to success.
To break down these characteristics into specifics, here are my top ten. Energy Insurance agency producers need energy at their core. Finding, meeting, persuading, and servicing insurance customers—whether personal or commercial—takes a lot of energy. It means always being on the look-out for the new prospect. It means a willingness to interrupt routines on-the-fly to meet a service need or explore a new opportunity. It means getting up early, Winter 2020 | RESOURCES
23
EXPERT PERSPECTIVE or staying up late, to get the information, take the meeting, or drive to the prospect’s location. It means constant learning, negotiating, and planning. Success never comes to those who simply wait for a sale to come to them. So, if an agency is considering a new producer, they should explore the energy that the applicant has displayed in their past life. The signs may show up in their educational track record, or
their personal activities, or even their approach to living. During interviews, look for energy. Attention to detail It’s a common misconception that insurance producers are just like any other “sales” person. They aren’t. There are many types of “sales” jobs. Some play the numbers game, calling as many people as possible to find a
The Wing-Man Approach
T
here are a lot of ways agencies can manage and develop new producers. One approach that caught my eye some years ago was deployed by a very successful large agency in a large urban center. The agency had several principals who were approaching retirement age and had a similar number of younger new producers to develop. They created a “wingman strategy” to guide their young producers’ development—and it worked. Each older principal was partnered with one of the young producers, the group of which included both men and women. Each principal committed to being the assistant—the wing-man—for the young producer on their accounts, while expecting each young producer to serve in the same
24
RESOURCES | Winter 2020
wing-man capacity for them on their accounts. The reports from this arrangement were fascinating. The new producers thrived with the experienced education they received from their older counterparts. And more than one of the principals said, “It’s been years since I’ve had this much fun.” The principals once again felt the excitement of the first years of a new career. When they served in the assistant role for the young producer, they got to go on new calls and watch the skill development of young people. Some said, “I felt young again.” These mature principals had discovered what they still had to offer and how much potential there was in their new staff. Perhaps agency owners need to step back into the past to help the next generation discover the future of their agency.
sale. Others use the art of conversation to persuade, or some might say, to manipulate people. Really successful insurance producers are not these types of salespersons—not even close. Producers must collect a lot of information consistently to succeed. Not paying attention to all of the underwriting information that is required to place the insurance at favorable terms, with the correct coverage, is a big agency headache. It leads to inefficiency, staff frustration, and errors and omissions risks. Successful producers collect data—a lot of it—over and over. They take the best the old adage, “Measure once, cut twice,” to heart. If they get the information on the application right the first time, they won’t have to go back and get it again in order to correct it with the carrier later. Their quote will be correct, their renewal will be easier, and there will be fewer issues at claims time. Considering the importance of attention to detail in insurance sales, a word of caution is appropriate when considering candidates. Some people have personalities that naturally gravitate to details, while others may not. It’s worth remembering that attention to detail is a skill that can be developed by those who are not analytical by nature, so be careful about rejecting a personality type that may offer other great attributes. Discipline in prospecting The hardest job of an insurance producer is prospecting for new business. It is the primary hurdle everyone faces when they take on the role. Ask any mature successful producer about their early days in the business and their stories will be similar. They fought and struggled to find new prospects for those first few years. And when they finally reached the point where regular prospecting gave way to network referrals, they breathed a sigh of relief. The hunt eventually gives way to a more comfortable and natural way of connecting with prospects. But for the new producer, the prospecting must be done with old-fashioned hard work and discipline. It may mean setting daily
goals for phone calls, emails, letters, or walk-ins. It can often mean going to conferences, luncheons, meet-andgreets, and network group meetings that may yield no results, but may just as well lead to a break-through contact to the right potential customers. So, when an agency is considering a new producer, look for a track-record of disciplined effort. Maybe you see it in their athletic past, or in pursuing an academic achievement, but look for someone—man or woman—who can make a plan and stick to it until they achieve the desired result. Commitment to achieving results A new producer’s life is filled with goals. Reaching those goals means success. Failure means moving on to a different career. Insurance agencies take on considerable risk when they bring on a new producer. They may have to carry them financially for many months until they can start paying for themselves. So, a producer needs a commitment to reaching goals. What does that look like? Some might say it’s a stubborn refusal to fail. Others might say it is using a thoughtful strategy to eliminate obstacles. Whatever you might call it, it shows up as a deepseated desire to get to a finish line. The best producers do this every year. The most accomplished will evaluate annually and consider, “What do I need to stop doing?” or “What’s holding me back from reaching my revenue goal?” They cull their book. They set new goals. They calculate what their time is worth. They evaluate their options for an ownership stake. So, when hiring a prospective producer, look for that fire that is essential for reaching their goals. If it’s hard to see, they may get there, but you might be smart to keep looking. Network builder It seems that every successful producer has, over time, created a network of contacts that consistently brings them customers. The strategies for building these networks are endless. Some network building efforts are purpose
ful, while others may be more subtle. A favorite story I heard years ago, told by an incredibly successful producer friend, went like this: “As Sunday school class at church was ending, one of the people in the class came up to me and said, ‘Don’t you sell insurance to businesses?’” When I said that I did, he then asked, “Well, how come over all these years you’ve never tried to sell me insurance for my business?” The producer responded, “I’m not here to prospect for insurance while I’m at church.” There are a couple of lessons in the story. Number one, this fellow has character. It shows in the story. He wasn’t at church to sell and promote himself. He took part to contribute, to be a part of things. And two, from my personal experience, wherever he went, he sought to serve others, however he could. He believed that opportunities will arise if you connect with people and they can see that you are interested in things beyond making money. Joining to meet people is a fine motivation, but when you build a network, it’s best if it goes beyond the superficial. People can tell whether you’re a “friend” or just another contact. When hiring a producer, look for those who make friends naturally. Those that do will build a network of contacts from all walks of life, and not just those who can help them make a sale. Empathy Empathy is one of those things that some people just seem to have acquired naturally. Those with a high level of empathy can sense how other people are feeling in a moment or situation. It’s easy to spot. Have you ever had a waiter or waitress that was really good, but they were only 19 years old? They weren’t taught how to anticipate a customer’s needs at waiter school. They could sense if customers were enjoying the meal or were displeased by something, and respond appropriately. This is a trait that great producers have. Whether it’s the first meeting, or a tense renewal on an old account, a good producer can read the situation and the people involved in it
to do what is necessary to ease their concerns, answer their questions, or act to their benefit. There are hiring assessment tools that an agency might want to consider which can test for empathy. Otherwise, ask lots of questions. Let people you trust meet them and share what they really think about the prospective producer’s empathy. Personal efficiency This characteristic goes back to discipline. Like some of the other characteristics, personal efficiency can be learned and developed. It is, in short, time management. Good producers don’t waste time. They arrange their day around what gives them the best return. They think of how to arrange appointments so time isn’t wasted sitting in traffic unnecessarily. They don’t come into the office when it’s not necessary. They use the least productive sales time to do the chores that don’t directly relate to sales success. One agency principal that I made a note to observe regularly encouraged his producers to never waste the lunch hour. He said, “Have lunch with somebody.” Meeting an old friend over a burger is better in most cases than eating alone. Use the time to be with people, to connect, to make new friends. It’s good advice that helps to build a network. When you’re considering your next producer, probe for good time management habits. For some, it comes naturally, but for others, it can be a terrific goal in building a habit of success. Strong advocacy skills Agents by definition are representatives. They represent the company, but they also represent the customer. This can be a delicate balance, but in most cases, it means standing in for the customer to get them the coverage or the pricing they need at placement, or at claims time. Great producers accept their advocate role in a measured fashion. They fight for the customer while recognizing there is a limit to what can be done. When customers see that spirit of advocacy on their behalf, it helps build a bond that can Winter 2020 | RESOURCES
25
EXPERT PERSPECTIVE keep them renewing year after year. A person considering a production role with an agency for the first time might not be able to understand every aspect of customer advocacy, but they may display a desire to stick up for those unfairly treated. Pay attention and look for this tendency. Marketplace awareness This is a characteristic that can be difficult to judge when considering a new producer. They probably don’t understand the insurance market, which can be strange and counter-intuitive,
but they may show an aptitude for the marketplace generally. Does the producer being considered understand economics? Some may think this is a peripheral skill. I disagree. Insurance is a complex economic market. An interest in it, or at minimum, an appreciation for it, will help. Look for the candidate that has a sense of economic twists and turns. In their career, they will need it to educate customers about what is happening in the insurance markets from year to year.
of these individuals is a much more important consideration than asking where you can find them. First, you have to know what kind of “good producer” you’re looking for. Add your own “must have’s” to this list, and you’ll be well on your way to answering that question in a way that will help you to find the right person for the job.
Ethics This is the most obvious, and perhaps the most foundational, of the characteristics of a successful producer. Any producer—male or female—must be a person of integrity. Ethical conduct is central to everything in any insurance transaction. If there is an indication that a candidate for producer lacks an ethical core, any agency would be wise to move on to the next applicant. It is never worth it for an agency to take short-cuts to sales success with producers who display questionable ethics. When it comes to the question of finding a good producer, the characteristics
Paul Martin is the Director of Academic Content and Team Lead for the National Alliance where he works with Alliance faculty, agents, and other industry professionals to deliver industry-best content and education. During his career, Paul has been an adjuster, underwriter, special agent, company manager, independent agent, and has over twenty years experience as an insurance educator in Texas.
About the Author: Paul Z. Martin, CPCU
Learn More Earn More What does a successful producer look like? This tough question has been asked by many agencies and insurance companies. Early on, The National Alliance recognized the need to provide a solid answer to this question, and does so through its Dynamics Series courses. Specifically, the Dynamics of Insurance Sales Management course provides a fresh perspective to managers in their ability to be a coach, friend, and leader in order to develop a sharp, productive, and highly skilled sales force. The course helps agencies in attracting, retaining, developing, and motivating sales talent. Topics include developing an agency sales culture which closes sales, selecting and hiring producers, goal setting and monitoring, to name only a few. The question “What does a successful producer look like?” is answered, and the agency is enhanced with proven strategies for managing the entire sales process. Visit The National Alliance website at www.scic.com for more information on the Dynamics of Insurance Sales Management course. 26
RESOURCES | Winter 2020
INNOVATION
Insurance CertiďŹ cation Program for Students
T
he current COVID-19 pandemic has created a great deal of indecision for high school juniors and seniors who are concerned about what career opportunities will exist after the pandemic passes into history. And long prior to the pandemic, insurance agencies and companies have had significant concerns about filling open positions with qualified front-line customer service representatives. The National Alliance is pleased to announce that Ms. Becca Burch, a senior at Mason High School, in Mason, Michigan has, through Wilson Center’s Business & Risk Management Program, become the first person in the nation to pass the Insuring Personal Auto Exposures examination for the CISR High School Program (CISRHS) designation! Since that time, 18 additional students in Michigan, as well as 12 in the state of Texas, have also passed this examination. The CISR HS Program offers students the opportunity to earn the CISRHS designation, which requires passing scores on five certification exams, prior to graduation. While these students have just taken the first step in that journey, it is a very big step, and we congratulate each of them, as well as their teachers, for the tremendous efforts that have gone into the successful launch of this program. As a member of The National Alli-
Winter 2020 | RESOURCES
27
INNOVATION ance, you may be interested in learning more about CISRHS, as well as how it can be offered in your community. If so, we would like to invite you to listen to a twenty-minute Nat Alliance NOW podcast, where Mitch Dunford, MBA, Chief Marketing and Content Officer for
75/$65
The National Alliance, interviews Becca, as well as her teacher, Monique Colizzi, instructor of Business & Risk Management at Wilson Talent Center. It’s not every day you hear that insurance is fun or a high school student talking about reading an insurance policy!
65/$55
$
75/$65
$
$
As insurance professionals, and those who actively support education and the additional knowledge afforded by National Alliance designations, we hope you are particularly proud of these students. Your support as dues-paid members of The National Alliance has been instrumental in providing the resources that were necessary to develop and launch CISRHS, and your active involvement in states across this country will ensure its future success. Thank you to all of you who have already reached out to us about ways to become involved, and those agencies, companies, and state associations that have sponsored CISRHS in their communities.
Learn More Earn More
149/$139
$
149/$139
$
75/$65
$
$
75/$65
$
75/$65
$
$
$
29/$19
$
$
29/$19
45/$35
55/$45
55/$45
25/$15
$
$
89
79
$
Paperback Price / Digital PDF Price
The National Alliance Research Academy Publication Library NationalAllianceBooks.com
28
RESOURCES | Winter 2020
Agency owners and managers are continually looking for good quality people to hire. Undeniably, this is a difficult task, however, innovation within The National Alliance is helping to provide assistance in the task of finding good, knowledgeable staff. The new Certified Insurance Service Representative High School (CISRHS) insurance certification program for high school students trains them in insurance coverages. Students participating in this program who are interested in beginning an insurance career come to agencies with understanding of the coverages and the industry overall, and thus become productive members of the agency staff more rapidly. Thus, the CISRHS certification program will save agencies money in training costs and make the agency more productive. Visit The National Alliance website for more information about this exciting new program. Help The National Alliance bring it to high schools in your area.
With Online Courses— Self-Paced or Instructor-Led Connect to our online courses from anywhere—all you need is a computer, a mobile device, or a smart phone. You never leave what matters most—your clients.
Self-Paced
Start Date
Anytime You Want
Duration
Instructor-Led
Offered Continuously
4 Weeks, 4 Hrs/Week
Format
Up to 60 Days
CE Credit Approved in Most States
View available online offerings at: https://www.scic.com/distance-learning/
IN THE SPOTLIGHT
E
Elite Honors
ach year, Insurance Business America magazine accepts hundreds of nominations for their prestigious annual Elite Women in Insurance list—representing insurance professionals who
are shaping a new future for insurance. Many of these individuals participate in National Alliance programs. The National Alliance is proud to present seven National Alliance designees who are included in Insurance Business
America’s list of “2020 Elite Women in Insurance.” These individuals are changing the face of the insurance and risk management industry. Congratulations to all of them.
Bettie D. Baggette, CIC, CRM – Higginbotham
Stephanie Cliff, CIC, CRM, CISR – Hub International
Maureen Gallagher, CIC, CRM, LIC, RPLU, CWCP, RM, CWCA, CWCC, CILMA, CRIS – AssuredPartners
Jennifer Hicks, CIC, CRM – Marsh Worthham
Kelly Nash, CIC CISR – BKS-Partners
Keri Purvis, CIC, CPCU, AU – All Risks
Learn More Earn More
Stephanie Waldron, CIC, CPCU – K&K Insurance 30
RESOURCES | Winter 2020
The National Alliance is proud of the designation holders who were named 2020 Elite Women in Insurance. In a recent Nat Alliance Now podcast, titled “Women Insurance Producers: An Interview with Joan Sansing, CIC, ARM, AAI, Joan reflects on what it takes to be a successful female insurance producer. Joan is a National Faculty member for The National Alliance, and has taught Dynamics Series courses and Ruble Seminars, and has held several sales management positions in the industry over the course of her career. Take advantage of the recommendations and insight in this podcast—available at The National Alliance’s website at www.scic.com.
Keep Your Designation Current. Complete Your Annual Update Online. Take the uncertainty out of completing your required annual update with our self-paced and instructor-led online courses. Browse an ever-growing catalog of the latest and most relevant risk and insurance topics available today.
WHAT ARE MY ONLINE UPDATE OPTIONS?