President’s Message A Challenge Met.... During the week of September 10th, we had 77 National Alliance Programs scheduled, thousands of people registered from across our country, and some 200 faculty members ready to teach. On the morning of September 11th, I, along with most of you, watched in utter disbelief as the World Trade Center became a smoldering mountain of twisted steel and debris. As I sat in front of the TV in silence, I repeatedly asked myself what was the “right” thing to do? Should we cancel all the scheduled programs to await the fate of our friends and mourn the passing of some? Should we gather ourselves together, keep The National Alliance open, and work to HONOR those whose lives were in peril or who had passed away? I believed in my heart then, as I do today, that our friends, coworkers, and colleagues would much rather be HONORED by having those 77 programs conducted. Throughout the day and night of the 11th we worked with faculty and state association partners across the country, giving you and all the others involved in our programs a choice of what you and they wanted to do on Wednesday the 12th. We can never forget that “choice” is something our friends at the World Trade Center never got that Tuesday. They never had a choice or a chance! Your overwhelmingly positive response to our collective efforts emphasizes the fact that we cannot succumb to attempts to terrorize our minds and spirit or limit our freedom of choice. The result of our work and your support is that we were able to conduct 66 of those 77 programs originally scheduled. I believe we “met the challenge” by remaining calm, focused, and relentless in our commitment to never allow ourselves to be without choice or to allow our minds to be frightened into inaction. Because we can only go where our minds and spirit are strong enough to take us.
President, the Society of CIC
in this issue… Features 4
Changing Gears Revisions to the Commercial Auto Policy 2001
8 Publisher William T. Hold, Ph.D., CIC, CPCU, CLU Managing Editor James R. Cuprisin, CIC, ARP
Test Your BAP I.Q.
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wdauterive@scic.com
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Publications Art Director Becky Veach Contributing Designer Rhea Groepper Marketing Ken Wirtanen
Departments 12
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 appearing in Resources.
CISR OnLine Virtually Complete
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Paving a CSR Career Path Many Roads, Many Choices
kwirtanen@scic.com Resources is published quarterly by The National Alliance for Insurance Education & Research, P.O. Box 27027,Austin,Texas 78755-2027, 512/345-7932, Fax: 512/343-2167, Internet: www.scic.com, E-mail: alliance@scic.com. At present, Resources is available to Certified Insurance Counselors (CICs), Certified Insurance Service Representatives (CISRs), Certified Risk Managers (CRMs), and affiliates of The Academy of Producer Insurance Studies. Entire contents Copyright © 2001, 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.”
2001 National Outstanding CSR of the Year The Finalists, Winner, and Award-Winning Essay
Academy & Jack Frick, CIC, AIS NCIM Editor jfrick@scic.com Contributing Lonni Swanson Writers Carol Crysup
The Origins of Diminished Agency Value Evaluating the Ailing Agency
mrolland@scic.com
CRM Editor Wayne P. Dauterive, ARM
Enterprise Risk Management A Primer
rrezac@scic.com
CISR Editor Mark J. Rolland, CIC, CISR
Two Negatives Don’t Make a Positive Pitching on a Positive Note
jcuprisin@scic.com
CIC Editor Rodney R. Rezac, CIC, CPCU, ARM
Puzzled About Commercial Auto?
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2002 Outstanding CSR of the Year Nomination Form
Alliance News 7
California, Here We Come! The Producer School in 2002
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Got Scholarships? Just Ask!
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Go Ahead…Make a Difference! Society Membership — A Collective Power
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Hard Market Solutions MarketScout.com Makes Connections
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The Denver MEGA Take a MEGA Break this March
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In the News Newsmakers Within Our Ranks
Web site: www.scic.com ◆ E-mail: alliance@scic.com ◆ Fax-on-Demand: 800/828-8454 2007-1101
Resources Fall/Winter 2001
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Resources Fall/Winter 2001
he approach of the holiday season means a change in the weather, shopping lists, more football, and best of all, revision of the ISO Commercial Auto program in most states. The following article summarizes the major changes in the Commercial Auto Coverage forms and endorsements. In addition to changes in all the Declaration Pages of the various Commercial Auto Coverage forms, there are changes that affect most of the coverage forms. Major Changes for the Commercial Auto Coverages Rental Vehicle Loss of Use. The Physical Damage Coverage Extensions now include coverage for an insured’s legal obligation for expenses resulting from the loss of use of a rental vehicle hired or rented, without a driver, by an “insured.” This coverage only provides $20 per day up to a maximum of $600.* Limited Worldwide Coverage for Rented Autos. Limited worldwide coverage applies for covered autos of the private passenger type that are leased, rented, or borrowed without a driver for a period of 30 days or less when the insured’s responsibility is determined in a suit in the U.S., its territories and possessions, Puerto Rico or Canada, or in a settlement to which the insurer agrees.* Insured Contract Definition. The definition of an “insured contract” has been amended to be consistent with the CGL.* Limits of Liability for Physical Damage Coverage. The revised BAP states that the company may make an adjustment for depreciation in determining actual cash value in the event of a total loss. Also, the policy includes language that permits the company to take betterment deductions from the amount necessary to repair or replace a damaged auto. Physical Damage Exclusion – Diminution in Value. For decades, disputes have arisen from claims related to reduction in value of an “auto” damaged in a covered accident. Frequently, the diminution of value has been considered in third-party claims; however, seldom has it been paid in firstparty claims. The calculation of diminution in value is very subjective and is almost impossible to calculate without selling the vehicle. Since the intent of the Business Auto Policy forms is not to provide for payment of a loss in market value that is not a direct and accidental loss or damage, this
exclusion has been added. Also, a definition of “diminution in value” was added to the Definitions section of the coverage: the actual or perceived loss in market value or resale value, which results from a direct and accidental “loss.”
New Endorsements The two new endorsements are listed and described below. Auto Loan/Lease Gap Coverage (CA 20 71 10 01) (not submitted in WA). Frequently, autos that are insured for physical damage under the Commercial Auto Coverage forms are financed. On the occasion when there is a total loss to the vehicle, the amount owed is greater than the amount of actual cash value settlement. This gap causes a great deal of consternation to the insured. Obviously, it would be nice to avoid this gap. This coverage has been available from some carriers for a number of years via company-specific endorsements. The coverage will pay in the case of a total loss to a “covered auto” shown in the Schedule or Declarations. It pays the unpaid amount due on the lease or loan minus the amount paid under the Physical Damage and overdue lease/loan payments, financial penalties imposed for excessive use, abnormal wear and tear or mileage, security deposits not returned, as well as similar type expenses. It is hard to estimate whether insurers will be willing to issue this endorsement on a wide-scale basis. Optional Limits – Loss of Use Exposures (CA 99 90 10 01). This provides an opportunity for an insured to select higher limits for the Loss of Use Coverage Extension that is presently limited to $20 per day, subject to a maximum of $600.
Endorsement Modifications This section contains minor changes and clarifications.
Additional Insured – Lessor (CA 20 01). The title change to “Lessor – Additional Insured and Loss Payee” was made to reflect the intent of the endorsement more closely. Drive Other Car Coverage – Broadened Coverage For Named Insured Individuals (CA 99 10). The language has been revised to clarify the intent of the coverage. The insuring agreement now begins: “Any ‘auto’ you hire, borrow, or don’t own, is a covered ‘auto’ for Liability Coverage while being used by any individual named in the schedule or by his or her spouse while a resident of the same household except:…” Employee Hired Autos (CA 20 54). Additional text was added to the lead-in for consistency with other forms in the Commercial Auto form portfolio. Fellow Employee Coverage (CA 20 55). This has been revised to delete the words, “This endorsement changes the policy effective on the inception date of the policy unless another date is indicated below.” These words are generally used when the endorsement contains a schedule. Individual Named Insured Endorsement (CA 99 17). Language was modified in two sections: A. Changes in Liability Coverage 2. Personal Auto Coverage, and B. Changes in Physical Damage Personal Auto Coverage. The first word “While” is changed to “If.” This is in response to the N.C. Court of Appeals decision Drye v. Nationwide Mutual Insurance Co. 126 N.C. App. 811, 487 S.E. 2d 148 (1997) that found the word “while” as used in this endorsement to be ambiguous when used in the sentence, “While any ‘auto’ you own of the private passenger type is a covered ‘auto’ under Liability Coverage.” Pollution Liability – Broadened Coverage For Covered Autos (CA 99 48). This endorsement intends to provide coverage for the auto cargo exposure. Revised wording makes it clear that the care, custody, or control exclusion does not apply.
Major Changes for the Garage Policy The Garage Coverage form contains the previous changes just discussed, along with significant changes of its own. Continued on next page.
* The first three coverages described above were formerly included in the mandatory Changes In Commercial Auto Coverage Forms Endorsement (CA 00 22).
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Changing Gears…continued from
previous page.
Insuring Agreement. As the result of the Montrose Ruling (Montrose Chemical Corporation v. Admiral Insurance Company, 10 Cal. 4th 645, 42 Cal. Rptr. 2d 324,913 P.2d. 878), the insuring agreement for the Garage Policy is now amended to conform with changes made to the CGL as provided by endorsement in 1999. The insuring agreement now states that the Garage Policy will not respond to injury or damage that is known by the insured prior to the policy period. Pollution Exclusion. This change involves a reformatting of the Exclusion 8 – Pollution applicable to “Garage Operations – Other Than Covered” Autos essentially to track the pollution exclusion in the CGL. Besides dividing exclusionary language into two parts (one to exclude bodily injury and property damage and the other to exclude specified clean-up costs or expenses), there is an inclusion of coverage for pollution arising out of building heating equipment and gases and fumes from materials brought into a building in connection with operations being performed by or on behalf of the insured. Garagekeepers Coverage. In Section III wording has been changed by replacing the words “covered auto” with “customer’s auto.” The policy now includes a definition of “customer’s auto” in the Definitions section of the policy: “…a customer’s land motor vehicle, ‘trailer’ or semitrailer. It also includes any ‘customer’s auto’ while left with you for service, repair, storage, or safekeeping. Customers include your ‘employees,’ and members of their households who pay for services performed.”
Garage Endorsements Broadened Coverage – Garages (CA 25 14) and Personal Injury Liability Coverage (CA 25 08). ISO has made changes in these two garage endorsements to track with the changes under Personal and Advertising Injury Liability found in the 1998 CGL. There is now one definition for “personal and advertising injury.” The current “willful violation of a penal statute” exclusion has been replaced with a “criminal acts” exclusion. Exclusions were added to state that damages resulting from pollution are not covered. Garage Coverage Form – Other Than Covered Autos Exposure – Total Pollution
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With A Building Heating Equipment Exception and A Hostile Fire Exception (CA 25 36 10 01) (not submitted in ME and VT). This is a less restrictive endorsement than the Total Pollution Exclusion (CA 25 16). This coverage change corresponds with changes in the CGL in 1996 and 1998 related to building heating equipment. Pollution arising out of gases and fumes from materials brought into a building in connection with operations being performed by or on behalf of the insured are covered. ISO stated it wanted to offer more options in the area of pollution endorsements for commercial auto exposures. Broadened Coverage For Covered Autos – Garage Coverage (CA 99 55). This endorsement intends to provide coverage for the auto cargo exposure. Revised wording makes it clear that the care, custody, or control exclusion does not apply. Fire Legal Liability Coverages – Garages (CA 25 10). This endorsement has been corrected to provide that exclusions “3 through 17 of the liability section of the Garage Coverage do not apply to coverage provided under this endorsement.’’ There you have it — a summary of the most significant changes in the 2001 Commercial Auto Policy. These changes are adopted effective October 1, 2001, in 35 states with approximately six other states adopting the changes by January 1, 2002.
Raymond (Ray) D. Speas, CIC, CPCU, FLMI Ray is the associate director of FacultyCurricula Development for The National Alliance. He serves as an educational consultant and seminar manager for the Truckers and Oil & Gas Ruble Seminars, and he instructs at CIC institutes and CISR courses.
Learn More About this Topic from The National Alliance Keep up with the coverage changes in the Business Auto Policy by attending a CIC Commercial Casualty Institute or CISR Insuring Commercial Casualty Course near you. An additional chance: some Graduate Ruble Seminars delve into various aspects of the BAP (contact the Society of CIC or the sponsoring association for agenda and details).
The status of the new 2001 Business Auto and Garage Form, for each state, is detailed below. Most states have approved the form with a 10-1-01 (October) effective date. Nine states have not approved the new form and are continuing to use the older form, as indicated.
State Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware D.C. Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Puerto Rico Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming
BAP ‘01 Status 10-1-01 10-1-01 10-1-01 10-1-01 10-1-01 10-01 12-1-01 10-1-01 10-1-01 12-1-01 10-1-01 80 ed. 10-1-01 10-1-01 10-1-01 10-1-01 10-1-01 10-1-01 93 ed. 10-1-01 97 ed. Special 10-1-01 92 ed. 10-1-01 10-1-01 10-1-01 10-1-01 12-1-01 10-1-01 10-1-01 10-1-01 97 ed. 12-1-01 10-1-01 10-1-01 10-1-01 10-1-01 10-1-01 87 ed. 10-1-01 10-1-01 10-1-01 10-1-01 97 ed. 10-1-01 2-1-02 80 ed. 10-1-01 12-1-01
1-1-02 10-1-01
California
Here We Come The National Alliance School for Producer Development January 20-February 8, 2002 Anaheim, California What happens when you send a group of entry-level insurance personnel to a concentrated, three-week school to learn the basics of commercial lines sales and products under the guidance of experienced industry pros? You create…immediate producers. Fast-track, practical education is the hallmark of our Producer Schools. If your goal is to build a team of motivated, ambitious, commercial lines producers, we can return them to you ready to deliver immediate results and profits. And that means immediate savings for your agency.
THE NATIONAL ALLIANCE SCHOOL FOR PRODUCER DEVELOPMENT
COURSE OF STUDY
Students are immersed in problem-solution concepts and case histories, so they quickly learn the world of their commercial clients-to-be. The college-level training is three weeks, five days per week, eight hours per day. Yes, it’s intensive—and it’s a proven way to get results.
IMPORTANT INFORMATION Housing: Anaheim/Orange DoubleTree Hotel, 714/634-4500. Room rate is $109 for single or double.
WHAT THEY WILL LEARN
Meals: Lunch each class day and dinner each Wednesday night are included in the basic fee.
INSURANCE FUNDAMENTALS
Commercial Liability, Professional Liability, Business Auto, Workers Compensation, Excess Liability/Commercial Umbrella, Employment Related Practices, Commercial Property, BOP, Inland Marine, Time Element, Commercial Crime, Surety SALES SEQUENCES AND STRATEGIES
The 3-Step, Insurance-Specific Sales Process, Super-Qualifying, Buyer Profiles and Response Patterns, Diagnostic Appointment and Protection Review, Handling Objections, Goal Setting
Or Travelodge, Anaheim, 800/634-1920. Room rate is $54/single or $64/double.
Tuition and Fees: The basic fee of $3,400 covers tuition, materials and instruction, graduation materials, pre/post course work and follow-up, and meals as listed above. REGISTRATION & APPLICATION Coming Up… If our Anaheim Producer School doesn’t fit your schedule, you’ll have other chances in 2002: June 9-28, in Tallahassee, Florida
PLUS
Overview of Risk Management and Insurance, Agency Functions, Personal Lines, Industry Marketing, Insurer Relationships, Fundamentals of Marketing, Business/Personal Planning
September 22-October 11, in Fort Worth, Texas Visit our Web site or call for information: 800-633-2165 www.scic.com
800-633-2165 www.scic.com Resources Fall/Winter 2001
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o successfully assemble a jigsaw puzzle, you need to begin by forming the outline, and then filling in all the pieces, in order to get a clear view of the big picture. Proficiency with the Commercial Auto Policy is similar; you need a basic outline or understanding of the different parts of the policy, you need to know how they fit together, and you need to know all the small pieces or details, as well. Do you consider yourself an expert on the BAP, or at least very knowledgeable? If so, you should do well on the following quiz. Others, with less knowledge and experience, may not do as well. Most of you will probably find at least a couple of the questions to be challenging — or puzzling. So give the quiz a try, just to see how you do. Don’t be surprised if you don’t get a perfect score. In fact, you may miss several questions. This should serve as a reminder of the complexity of the BAP, especially when new forms are being introduced. CIC Commercial Casualty Institutes and CISR Insuring Commercial Casualty Exposures Courses can give you the knowledge you need to review the BAP and learn the newest changes. Make sure you’re not puzzled when you’re serving your clients. Consider attending a class to get the information you need — and watch all the pieces fall into place.
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The corporate insured telephones, advising that a covered auto they own was at fault in an accident. In anger, an employee intentionally drove through the front of an antique shop. The risk manager wants to know if their Business Auto Policy with Symbol 1, Any Auto, would protect them. You advise them: a. Intentional acts are not covered. b. The corporation has coverage, but the employee is excluded. c. The employee and the corporation have coverage. d. It is 4:55 on Friday afternoon, and you do not need a question like this.
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While attending a National Alliance program, a fellow student asks if the combination of Symbol 2, Owned Autos; Symbol 8, Hired and Borrowed Autos; and Symbol 9, Non-Owned Autos, is the equivalent of Symbol 1, Any Auto. The instructor responds: a. Of course, because there are only three types of autos. b. Remember that you can use Symbol 1, Any Auto for liability only. The combination can be used for any type of coverage and is the same as Symbol 1. c. We are getting ready to take a break, and a question like that is a death wish from the fellow students. d. No, because there is an exclusion in the definition of Symbol 8, Hired and Borrowed Autos, and this would provide less coverage than Symbol 1, Any Auto.
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The president of a small corporation you insure calls in to advise that they purchased a 26foot motorboat and trailer in the corporate name (of course). The owner will be pulling it behind the Ford Expedition that is already on the Business Auto Policy, with liability provided under Symbol 7, Scheduled Autos. Forty-five days after providing hull and liability coverage for the boat, you advise the president that the owned trailer is: a. Covered because coverage is extended back to the trailer from the vehicle that is pulling it, with the boat policy providing excess coverage. b. Automatically covered because you remember that small trailers have free coverage. c. Automatically covered for liability, but the physical damage must be added for an additional premium. d. Not covered for liability or physical damage.
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The president of a small corporation purchases a new BMW in her personal name. She calls to add the BMW to the corporation’s Business Auto Policy for “income tax reasons.” You add it to the corporate Business Auto Policy with no endorsements. After an accident, the adjuster advises the president that if a premium is shown: a. It is a covered auto regardless of ownership, and the owner and the corporation are both considered insureds. b. The corporation is an insured for liability and physical damage, but the president is not an insured for liability while driving it. c. The carrier will return the premium because the corporation does not own the BMW. d. The corporation is an insured for liability, the president is not an insured for liability, and because physical damage does not have a definition of insured, the named insured must have insurable interest in the BMW, and nothing will be paid for the collision.
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The insured is a manufacturer of forklifts. While driving the forklift onto a flatbed trailer for delivery to a customer, it falls off and damages the Jaguar parked beside the truck. You decide to notify: a. The Commercial General Liability Policy, because forklifts are mobile equipment and covered there. b. The Commercial General Liability Policy, because movement of property by a mechanical device is excluded under the Business Auto Policy. c. The Business Auto Policy, because this is not excluded. d. The Business Auto and the Commercial General Liability Policies, because this is one of those claims your hear about in class and the reason you placed both policies with the same company.
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You are making a customer visit in your personal automobile. While returning from the appointment, you hit a city transit bus. A total of 137 pedestrians get on the bus after the accident, and you and the company are named in the resulting lawsuit. Your personal auto limits will be exhausted. Your company’s Business Auto Policy with Symbol 1, any Auto, and no endorsements will: a. Provide a defense and pay damages for your company and you on a pro-rata basis because you were on company business. b. Provide a defense and pay damages for your company on an excess basis and let you pay for your own defense. c. Provide a defense and pay damages for your company and you on an excess basis because you were on company business. d. After payment of defense and damages for your company, subrogate against you because you did not have the Employees As Insureds, CA 99 33, endorsement attached to the policy.
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Acknowledging: R. Bryan Tilden, CIC, CPCU, CLU, ChFC, ARM, ALCM The National Alliance would like to thank Bryan Tilden for devising these challenging questions — and answers — for this BAP Quiz. Bryan is a national lecturer and expert witness in the field of insurance. He provides training and consulting services to the insurance industry and is a national faculty member for the Society of CIC.
1. B, 2. D, 3. D, 4. D, 5. C, 6. D, 7. D, 8. D.
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Your customer has decided to cancel his Personal Auto Policy and place all of his personal vehicles on the corporate Business Auto Policy. The household consists of dad, mom, the older good daughter, and the younger evil daughter. They want to have coverage for the family for their PERSONAL Non-Owned, Hired and Borrowed exposures that they lost when they cancelled their Personal Auto Policy. You recommend that they purchase Drive Other Car Coverage, Broadened Coverage For Named Individuals, CA 99 10, and: a. Purchase liability insurance, listing mom and dad as named individuals. b. Purchase liability insurance, listing mom, dad, the good older daughter and the younger evil daughter as named individuals. c. Purchase all coverages listed on the endorsement, listing mom, dad, the good older daughter and the younger evil daughter as named individuals. d. Purchase all coverages listed on the endorsement, listing mom, dad, the good older daughter and the younger evil daughter as named individuals, and attach Fellow Employee Coverage For Designated Employees/Positions, CA 20 56, because the Personal Auto Policy does not have a fellow employee exclusion.
Answers to the Quiz:
Your customer has leased an automobile on a long-term lease. It has excess mileage on it, which will be paid for when it is turned in at the end of the three years. The day before it is turned in, it is in a wreck. As respects for the claim for excess depreciation, the carrier will: a. Consider it a covered part of the loss, because valuation requires it. b. Consider it a covered part of the loss, because Auto Loan/Lease Gap Coverage, CA 20 71, was attached to the policy. c. Consider it a covered part of the loss, because Stated Amount Coverage, CA 99 28, was attached to the policy. d. Consider it unfortunate, because there is no way to address this exposure.
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n today’s fast-paced and highly competitive insurance industry, there are some who believe that nearly anything goes when it comes to making the sale. We can spin it, wedge it, paint it, or otherwise decimate the enemy. All is fair in love, war, and selling insurance. Although it is an inescapable fact that the incumbent agent is a huge hurdle, and to be the challenger is difficult at best, we know from years of selling insurance that there are other methods to win customers and keep them for life. Many people believe that selling is a zero-sum game. In order for one to win, the other must lose. To ensure that outcome, we cast a negative shadow on the current agent. Herein lies a fallacy. This assumes that all prospects desire to deal with only one agent — that they are incapable of having a relationship with more than one person at the same time. Granted, we all aspire to become the client’s only counselor in matters of insurance, but the fact is, it often takes time to move from agent to advice-giver to sole counselor. Experienced salespeople realize that a client may have a relationship with more than one agent for a variety of reasons. There are several other things to consider before using negative sales tactics. First, it may be completely unnecessary. Sadly, our industry is full of agents who
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provide lackluster service and fail to recognize the ongoing importance of maintaining a close relationship with the customer. When this happens, the customer goes shopping...mentally at first, and then physically. The reality is that keeping customers happy is hard work and some agents are simply not up to the task. If you happen to be in the right place and ask the prospect the right questions, you may find they’ve already made a decision to leave their current agent. They just haven’t gotten a better offer — yet. If you can demonstrate the level of service provided by your agency, they’ll reach the desired conclusion on their own. Your focus should be on what you do extraordinarily well, what makes your agency truly unique, and the value in dealing with you. Of course, you will want to explore any protection, service, or relationship issues the prospect has, but can’t you do that without mounting a direct attack on the incumbent? Professional salespeople can! If the customer’s needs were being met, odds are you wouldn’t be there in the first place. The prospect will see the difference very clearly, so build your own relationships and stop worrying about destroying the incumbent. Second, if you go too far trying to make the current agent look bad, you risk offending your prospects. After all, they chose to do business with that agent and agency. The last thing you want to do is to question their judgment and make
them feel they made a bad choice. You’re trying to build rapport and begin a relationship with the prospect, and this is not a good way to start. Haven’t we spent enough time making our industry look bad? Another consideration is that the very thing that caused the prospect to become dissatisfied with the current insurance situation may be your Achilles heel, as well. We all brag about the perfect service we can provide, but talking about world-class service and delivering it are two entirely different things. Before you set out to discredit a competitor, be certain your own house is in order. If it isn’t, you risk the eventual loss of the client on the same basis you gained him — live by the sword, die by the sword. If these aren’t sufficient reasons to keep your sales pitch on a positive note, consider one last thing. Does it really elevate your image in the eyes of the prospect or the insurance-buying public to take swipes at your competitors? We are all in this industry together, and our image, to say the least, could use some rebuilding, not further erosion. Selling insurance is an honorable profession — why not do it honorably? When are agents going to understand that you don’t build a strong relationship with a prospect by making competitors look bad? It is amazing how people who have never sold insurance can try to tell us the right way to sell insurance.
Yes, there are ways to build agentclient relationships without attacking other agents. Learn to talk about insurance in the prospect’s language, not “insuranceese.” Some insurance concepts are difficult enough for us to understand. Imagine how they sound to the buyer.
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Learn to listen for the buyers’ real concerns and emotions — they’ll tell you, if you stop talking long enough.
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Spend the time learning about prospective clients and their industry before you go out to see them. Do your homework and be prepared.
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Understand that insurance is not a technical product. It is an emotional product and needs to be sold emotionally. It deals with peoples’ base-level concern for survival and security.
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Be dedicated to finding a better value for your prospects based on their value system, not yours. Having the perfect policy may appeal to you, but it may be of no value at all to the buyer.
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Realize that our job is to negotiate with the buyer and the insurance company to create a better deal for both parties. You will strengthen your relationships with your company partners in the process.
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Truly believe and convey to the prospect that insurance is not a commodity and not an intangible. You are very real and no two programs will ever be identical if they are focused on the buyer’s needs.
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Yes, we are finally in a changing marketplace. Many insurance buyers are once again out looking for a new home and a new relationship. There will be a lot of dislocation and with that, winners and losers. We should use this time to elevate ourselves and our profession, not cast doubt or drive stakes in the hearts of our fellow agents. There are opportunities out there for everyone if we focus on what we do best and how the prospect can derive value by dealing with us. The choice is up to you!
Jeff Gelona, CIC Jeff is vice president of The Bramlett Agency in Ardmore, OK, where he divides his time between sales, sales management, and instructing. He is a member of the national faculty for Ruble seminars and part of the Dynamics of Selling faculty team.
Cheryl Koch, CIC, CPCU, ARM, AAI, ACSR, AIM Cheryl Koch is an agency management consultant, educator, and frequent speaker at industry meetings. She serves on the national advisory committee for the Insurance Institute of America’s Accredited Adviser in Insurance program and is the author of a textbook used in that program. She also is a member of the Dynamics of Selling and Ruble seminars faculties.
To Hear the Authors… Jeff will be teaching at the following Dynamics of Selling programs: Dec. 3-5 Minneapolis, MN Feb. 27-Mar. 1 Dallas, TX Mar. 6-8 New Orleans, LA May 8-10 Charleston, SC May 13-15 Palm Springs, CA June 12-14 Atlanta, GA Jeff is also part of the Producer School faculty and will teach at these 2002 events: Jan. 20-Feb. 8 Anaheim, CA June 9-28 Tallahassee, FL Sept. 22-Oct. 11 Ft. Worth, TX
Cheryl will teach at the Agency Management Institute in Tempe, Arizona, December 5–8. She will also teach at the following Dynamics of Selling programs: Jan. 20-22 Irvine, CA Apr. 10-12 Seattle, WA Apr. 24-26 Saratoga Springs, NY May 8-10 Charleston, SC June 12-14 Minneapolis, MN In addition, Cheryl is a Producer School faculty member and will be an instructor at the school held in Anaheim, California, January 20 – February 8, as well as the school in Ft. Worth, Texas, September 22 – October 11.
Learn More About this Topic from The National Alliance Go directly to a Dynamics of Selling program for an energizing tune-up on sales skills and techniques. This popular program is perfectly suited to producers of all experience levels. Industry newcomers can enroll in a Producer School, an intensive, three-week program that graduates trained producers with the sales tools and product knowledge to launch their careers.
Resources Fall/Winter 2001
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CISR OnLine — Virtually Complete
T
ime management issues, cost savings for insurers, and a solid education. These are the three main reasons many insurance professionals are turning to the CISR OnLine Web-based training program in increasing numbers for their continuing education.
Initial response to CISR OnLine has proven that the industry has an appetite for this Web-based learning format. Adding to the appeal is the option of transferring credit for ACSR and CPSR coursework to the CISR Program, so switching programs with minimal hassle is possible.
A Designation, a Mentor, and More While online insurance study has been a reality for some time, the scope and end-results have been severely limited. The opportunity to earn a nationally recognized designation has never before been possible or available. Now, breakthrough program CISR OnLine has changed all that. Participants may choose to take a course or two for CE credit, as with other Internet study programs. However, they have the option of progressing through all five courses at their own pace, taking each examination online, then ultimately becoming designated CISRs.
“Now you can take all five courses and examinations online... and earn a designation too!” —Mark J. Rolland, CIC, CISR, president and COO of the Society of CISR
Mark J. Rolland, CIC, CISR, president and chief operating officer for the Society of CISR, has worked closely with Norma J. Freeman, CIC, CPCU, ARM, AMIM, director of curricula-faculty development and senior vice president for the Society of CIC, to ensure that each CISR OnLine course provides the same information and training as the classroom experience. The course names remain the same: Insuring Commercial Casualty Exposures, Insuring Commercial Property, Insuring Personal Auto Exposures, Insuring Personal Residential Property, and Agency Operations. Rolland acknowledged that the face-to-face interaction of a classroom is hard to duplicate online. “However, the availability of an ‘e-mail mentor’ gives the participant confidence and help as needed,” he explained. “The last thing we wanted to do was to leave a student stranded and frustrated in mid-course. Through the e-mail mentor and telephone help, that is not a problem.” The Society of CISR has partnered with California-based e-learning provider eMind, to facilitate the testing, so the entire course, including the examination, can be taken online.
Benefits All Around
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With proctored online testing, e-mail mentor access, and the option of earning a universally respected and recognized designation, CISR OnLine is now uniquely able to present a complete Web-based training package to the insurance industry.
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CISR OnLine’s “portability” ranks along with cost efficiency as a key benefit for employers and students. Students can log on during their lunch hour or whenever it suits their schedules. Parents can do their course work at home. Travel time and expense is virtually eliminated.
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A student enrolls for CISR OnLine through The National Alliance Web site (www.scic.com) to take the course. Just click on “Web-Based Training.” Read the FAQs on the site before enrolling in a course. Check the Continuing Education (CE) chart to determine how many credits are granted in your state. Register (and arrange payment of $149 per course) online and receive your user ID and password. You have 30 days unlimited access to the course from the time you first log on for your first session. When you finish the course and are ready to take the exam, print out the exam instructions for reference. The student locates a state-qualified proctor and arranges for this person to be present during the exam. The proctor signs an affidavit, verifies the student identity with a photo ID, and times the exam. In some states, the proctor must register with the Department of Insurance. eMind offers online and telephone help for questions about the testing process. Student reports are sent electronically to The National Alliance, where CE certificates are issued and students are included and tracked in the system. Then it’s on to the next course — whenever you’re ready!
To take the CISR OnLine tour, go directly to www.scic.com or call the Society of CISR at 800/633-2165 for more information.
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o describe the educational opportunities available to customer service representatives (CSRs) through The National Alliance on a single career path would not do justice to the wide range of potential possibilities. Due to the diverse backgrounds of CSRs and variety of educational programs, there is not just one path or direction to follow. Rather, there are a number of ways CSRs can increase their knowledge and grow professionally. As the career path diagram indicates, National Alliance programs are the basis for a CSR’s education and professional development. Many CSRs start in the CISR Program to obtain a fundamental body of knowledge, leading to the CISR designation. CISRs can then attend the Advanced Lecture Series for advanced knowledge and to satisfy their annual CISR update requirement. Keep in mind that CISR OnLine, complete with online exams, is now available and any combination of successful classroom and online CISR courses will lead to earning the CISR designation. For many CSRs, their professional growth and knowledge evolves further with the CIC Program. Currently, over 1,300 individuals are double designees, with both the CISR and CIC designations. Those who earn the CIC designation are eligible to attend James K. Ruble Seminars for advanced knowledge and understanding of current insurance issues, while satisfying their CIC (and CISR) update requirements. CSRs who work with larger commercial accounts may want to explore another ad-
vanced opportunity — the Certified Risk Managers (CRM) Program and designation. At any time in this education process, CSRs can attend Dynamics of Service, to help them brush up on customer service skills. With retention being one of the most important factors in establishing agency value, consistent and superior service is paramount. Nowadays, many CSRs are also active in sales, and Dynamics of Selling can be a great help for improving sales skills and techniques. CSRs should not overlook the professional support available through Academy publications. The Insurance Essentials Handbook is ideal for a person new to the industry or someone moving from personal lines to commercial lines. The CSR Profile provides insight into compensation, servicing volume, responsibilities, and specific skills for furthering career plans and goals. The CSR Career Path offers a glimpse of the educational opportunities available for increased knowledge and professional development. By combining a number of National Alliance program choices at various times and in various ways, CSRs can pave a career path that is uniquely suited to their individual circumstances and personal goals.
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nless you’re new to the insurance/risk management business, you’ve probably heard of or read about Enterprise Risk Management (ERM). Not a month passes without at least one or two articles on ERM appearing in the national trade press. Unfortunately, a comprehensive consensus of what ERM is (and can do) has not yet emerged, at least not for non-financial institutions. (Note: Banks have practiced Enterprise Risk Management for many years.) Tillinghast–Towers Perrin, a leading consulting/actuarial firm, defines ERM as: “a rigorous approach to assessing and addressing the risks from all sources that threaten the achievement of an organization’s strategic objectives. In addition, ERM identifies those risks that represent corresponding opportunities to exploit for competitive advantage” (italics added). Enterprise Risk Management was originally initiated by the financial services industry. Banks needed a system within which their considerable financial and operational risks could be effectively managed, not only from a risk of loss standpoint, but from an arbitrage perspective, i.e., profiting from variations in market pricing. ERM provided the focus necessary to recognize the important role of risk relative to earnings and shareholder value. A Different Approach ERM is an approach—a system within which a range of tools and techniques can be used to evaluate and manage risk. It is also a mindset—a new way of thinking about risk, free of the structural constraints of the conventional insurance/risk management environment. Traditional risk management treats risks in a vacuum, as though they were static and self-contained with no relationship to one another. This is known as a “silo” mentality or approach. ERM promotes an opposite tack—an integrated approach that reveals interdependencies, natural hedging, and heretofore unrecognized opportunities. Enterprise-wide risks can be categorized into four main areas: (1) Hazard, (2) Financial, (3) Operational, and (4) Strategic. Hazard risks are generally insurable—fire, public liability, etc. Financial risks include interest rates, foreign exchange, commodity prices, and market risk. Operational risks are associated with the routine transactions and internal processes (such as quality control) necessary to conduct business. Strategic risk is inherent in all of the “big picture” decisions, e.g., mergers and acquisitions and new product development. It is not difficult to see how these risks can impact one another. For example, a breakdown in quality control (operations) may lead to a products liability claim (hazard).
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Insurable v. Uninsurable Another limitation of conventional risk management is that its focus is almost solely on insurable risk. Regardless of whether it’s a property insurance policy or a FX (foreign exchange) derivative hedge, conventional risk management is preoccupied with marketbased solutions. If the risk cannot be financed or transferred through a known source (therefore uninsurable), the risk is usually borne by the organization and absorbed as a cost of doing business. In an ERM program, the line between insurable and uninsurable risk is blurred—exotic forms of risk transfer that access both the alternative insurance and capital markets can be designed to manage a variety of risks once considered untreatable. In addition, ERM discards the notion of insurability as an outdated and inefficient construct.
Correlation/Non-correlation The volatility of risk, similar to investments, can fluctuate either individually or together, depending upon the circumstances. When two investments have positive correlation, it means that they respond to the same stimuli, e.g., two stocks on the Dow Jones index. Non-correlation means that each investment is subject to entirely different stimuli—when one is down, the other might be up, creating a diversified portfolio. Risks react the same way. By managing risks on an enterprise-wide basis, these relationships become evident. Portfolio Theory Portfolio theory is a simple concept, yet difficult to explain. Essentially, portfolio theory
Three Fundamentals of ERM Managing risk for its own sake was once considered a worthy pursuit, and still is in many companies. Conventional, silo-based risk managers are generally only concerned with the efficacy of their particular risk mitigation regimen. With this in mind, consider the three basic concepts that underlie Enterprise Risk Management—interdependency, correlation/ non-correlation, and portfolio theory. Risk Interdependency ERM forces the recognition of interdependencies between disparate risks and the resources expended to manage them. The cost of managing risks separately can be far higher than doing so in an enterprise-wide approach. Consider the cost impact of a catastrophic fire loss at a critical manufacturing facility and a concurrent drop in interest rates. If we assume that the fire loss is insured subject to a large deductible and the interest rate risk is hedged with a derivative, three expense factors remain—the insurance premium for the building, the amount of the deductible, and the cost of the derivative. Managed separately, the cost of each “fix” probably seemed fair and reasonable. However, managing these risks together reveals not only new ways to transfer and account for risk, but also efficiencies that can have direct, positive impact on the company’s earnings.
says that the whole is greater than the sum of its parts. The theory incorporates risk interdependency and correlation/non-correlation. Briefly, this is how it works: All of a company’s diverse risks are identified through a risk mapping exercise and quantified through statistical and structural modeling techniques. Loss probability distribution curves for each risk can be determined. This is a measurement of the risks’ volatility. Taken together, they represent a diverse portfolio. Mathematically combining each loss probability distribution curve creates one portfolio loss distribution curve. This curve’s volatility is less than the sum of the volatilities of each individual risk. Reducing volatility doesn’t reduce the risk; it enhances the company’s ability to predict outcomes.
The Ultimate Goal of ERM: Achievement of Strategic Objectives A company’s strategic objectives usually include sustained earnings growth, expansion
of products and services, and robust shareholder value. Unlike traditional risk management practices that compartmentalize risk, Enterprise Risk Management’s ultimate purpose is the accomplishment of the corporate objectives mentioned above. By recognizing, reducing, and managing risk volatility on an enterprise-wide basis, budgets become more realistic, earnings can be projected with a greater degree of confidence, and shareholder value can be protected against the vagaries of doing business in an increasingly uncertain global economy.
Don Riggin, CPCU, ARM Don Riggin is a vice president at Schiff, KreidlerShell, Inc., a Cincinnati insurance broker and consultant. He is also the editor of Financing Risk & Reinsurance, a monthly journal devoted to the convergence of the insurance and capital markets.
To Hear the Author… Don will speak about Enterprise Risk Management at both Ruble MEGA Seminars in 2002: in Denver on March 11, and in Orlando on June 25. He will teach Alternative Financing Options at the following two Risk Financing CRM programs: May 2 in San Antonio, and June 6 in Seattle. Don will also teach Loss Sensitive Transfer Options at the Seattle program.
Learn More About this Topic from The National Alliance The CRM Program is the place to learn and understand Enterprise Risk Management. The Risk Management Essentials course discusses some elements of the subject, within the overall context of the risk management process. The Risk Administration course incorporates Enterprise Risk Management information into practical discussions of policy and implementation.
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ver the past five years, we have been involved, many times, with the problem of diminished agency value. The purpose of this article is to identify and provide examples of those circumstances in the life of an agency that produce such a reduction in value.
In the Spring 2001 issue of Resources magazine, Bill Toll outlined the critical factors in the evaluation of an insurance agency. We concur with this list and have employed those factors in dispute cases that resulted in litigation action. We began to develop those “critical factors” in 1982, using our own agency as a model. The factors have changed as the profile of our distribution system has evolved, and in tandem with those changes, the most important issues have surfaced. It is our experience, after evaluating hundreds of agencies during the past decade, that there are common benchmarks of diminished fair market value in an agency. The fair market value rests on the assumption that nothing of major importance will change, and the agency will continue to operate in much the same financial and market profiles as before — as long as there is skilled management. Additionally, it can generally be said that a firm is of greater value in the hands of its existing owners, since the relationships developed between clients and owners have an intangible, but real, value in goodwill. Our evaluation of problematic issues for the example agency can be characterized as an “autopsy” of diminished fair market value. Just how does the consultant address and evaluate the ailing patient (or forensically examine the corpse) of the agency in a distressed fair market value scenario? Once again, we turn to an old friend (or adversary) from Section 2031 of the Estate and Gift Tax Code, which is found in Rule 59-60 (Evaluation of a Closely Held Corporation). To accomplish this agency inspection, we have listed a number of management missteps that would reduce fair market value, then
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dissected some individual case scenarios that are known to play out with negative consequences.
Management-Related Mistakes Which Diminish Agency Value ■ The agency suffers image damage with carriers due to their un-
derwriting losses, payment patterns, and sub-par insurance knowledge. ■ Skill levels of staff personnel, including CSRs and producers, are
below an acceptable standard, and the agency does not conduct proper recruiting and training. ■ The growth/attrition rates of the agency are below acceptable stan-
dards, with little emphasis on retention and account rounding. ■ The agency is dependent upon single-industry business and/or
large revenue accounts. ■ The agency is not automated (or is in an antiquated EDP condi-
tion), and has no online capability. ■ The agency is void of employment contracts with staff and pro-
ducer personnel. ■ Agency owners/management have few management credentials
in the areas of financial, sales, compensation, and market relationship management. ■ The agency has a poor history of E&O allegations arising from
a lack of training and establishment of procedures. ■ The agency’s book of business is poorly balanced between size,
type, and market placement. A number of other mitigating circumstances (and areas of dispute) can diminish overall value. These are: bankruptcy, tax consequences, divorce, piracy of expirations, and violation of contracts…along with general mayhem between owners/shareholders.
Case A: The departure of an owner, who, in absence of contract, is free to compete for the business and enjoys enough goodwill to take the clients with him/her
In calculating the value of this type of goodwill, the consultant must determine the extent to which the departing agent “controls” the major accounts of the agency, and how dependent the agency might have become in retaining their quality carriers and personnel. It has been our experience that this can be trickier than understanding many other problems we’ve listed.
Case B: The departure of non-owner producers who control accounts and operate in a non-contractual or contractual vacuum
Case B: The departing producer under contract
Case C: The termination of the agency by a major player/carrier who had previously provided competitive products to agency clients — and who has a majority volume
Situation: “They never did appreciate me; would not even give me any ownership in the fruits of my labor. I’ll just open my own shop, contact my clients, and see if their lousy employment contract is any good.”
Cases That Can Create Chaos — and Loss of Agency Value
Case D: The terminal financial mismanagement of the firm, arriving at a “fire sale” state Case E: The untimely death (or disability) of the owner, without the benefits of perpetuation planning, or the funding of such events Case F: A major, long-term carrier which has promised competitive products, competitive pricing, and underwriting latitude for the long haul if the agency will roll over existing business and/or give them “first shot” at new business Since we have been involved in each of the above events that resulted in reduced value, let’s take each one, apply it to a situation, and diagnose the ailment.
Case A: The departing/ divorcing owner Situation: “I’ll just take the business and move it across the hall, and then it won’t be worth a tinker’s damn.” Enter the divorce scenario, where one spouse has the goodwill of the client base, and the other has a vested interest in the value of the community property. Section 2 of the Ruling addresses whether or not the firm has goodwill, later assessing the evaluation challenge when a key manager departs. Stir into this brew the fact that the goodwill bearer serves in absence of contract and, therefore, has no compulsion to continue labor just to pay the ex-spouse. If the bearer of goodwill does leave... the agency sustains a diminished value. Some jurisdictions have impugned the value of personal professional goodwill as an ingredient which belongs solely to the owner. In addition, few owners in the past have limited themselves from competing with themselves by employment agreements. This might enable the disgruntled owner to “walk across the hall, open new doors, and use their own customer list/trade secrets without restrictions.” We have faced the challenge of placing a separate value on this personal, professional goodwill. This situation must be considered by the evaluation consultant, and a measure of the value matrix must address the reduced value. Think of it as: FMV/GBC v. FMV/LC. That formula reads: fair market value of a going business concern versus the fair market value of a loose cannon out to diminish the value by pirating their own business.
There is only one concrete fact about employment contracts, and you can etch this in stone: maybe they’re good, and maybe they’re not. Doesn’t that sound comforting to ownership? Still, this addresses the same issue raised in the Ruling as Case A, and can’t be overlooked by the consultant. Courts in various states have determined in case law the “reasonableness” of the covenants in these contracts. For example, a contractual stipulation that will not let producers practice their “common calling” has been ruled unenforceable. If the producer joins another agency, or opens his own, as long as he does not attempt to pirate the business subject to the contract, he is free to do so. Any further restrictions might be considered restraint of trade. And that leads to the subject of ownership. Employment contracts can give equity, but what if the departing nonowner producer does not have any equity granted by contract from the agency owner? In that case, who owns the business? It is our opinion that the agency owns the business in absence of any equity provision granted to the non-owner producer. The expirations are in fact the “trade secrets” of the agency, and any attempt to establish a competing agency by the producer which employs the “customer list/ trade secrets” is piracy, and may be estopped by injunction by the court. What are these things called “trade secrets”? At this point, it is important to establish a generic definition of “trade secrets.” A trade secret, according to one law journal article, is generally defined as the confidential information of a business that provides the business with a competitive advantage. Types of information that may constitute trade secrets include formulas, manufacturing techniques, customer lists, pricing information, cost information, and identity of suppliers. The point in favor of employment contracts is clear. Why elicit trench warfare over a departing producer who enjoys the goodwill relationship with his or her accounts? The clients of the warring parties could care less about the squabble. Their attitude is, “How can I trust an agency and their producer to take care of my business, when they can’t even get along?” The resolution we are seeing in employContinued on next page.
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ment contracts today entails a buy-sell parachute. The agency allows the non-owner producer to “buy” the accounts if he decides to leave, subject to fair market value pricing, terms, and conditions — and the prevailing of cooler heads. The same can apply to the producer with contractual equity. In this case, the agency allows the owner-producer to acquire the remainder of his equity, subject to a pricing formula, terms, and conditions — or the agency can become the buyer of the producer’s equity.
Case C: We gave them the majority of our business and now they say it’s over. Situation: “They pulled out and gave the excuse that it was not a ‘good fit’ with their agency marketing thrust.” When the perfume of the new premium volume is overcome by the odor of the earned loss ratio, the carrier must make a good business decision. That’s been difficult for us to understand in the time before carrier management had to become sensitive to shareholder demands. As a former branch manager and vice president of a company, it was never a pleasant thing to “pick up the supplies,” but the reality check is that sometimes it was just not “a good fit.” When this condition exists, the consultant must review the history of the production and loss runs at the time of the evaluation, paying close attention to the tenure of the carrier, the spread of business, the earned to incurred loss ratios over a period of the year to date and previous three years. When the evidence indicates bad times at Hard Rock, the predicted departure of this major player will have a diminished value on the book of business. It’s not only a problem related to the carrier pulling out; the consultant must realistically review the entire book of business in order to determine if it can be replaced in an existing market, or with a new carrier. Replacement might be a marketability problem with the existing clients due to increased pricing, underwriting restrictions, payment plans, and coverage availability.
Case D: There’s still time to pull this out. Situation: “We’ll make it up in the next quarter, so there’s no reason to panic and tighten the old belt.” In a previous life, this author sat down with George Nordhaus and cut an audiotape on the “Six Ways That Agencies Go Broke.” In retrospect, those reasons still prevail. Briefly, those are the costs of labor, occupancy, producer compensation, perks, incurred bad debt, and that mysterious visitor to the income statement dubbed “miscellaneous expenses.” Here’s one clue: the least cost-effective people resist change, feel overloaded, cause trouble with underwriters, can’t get along with fellow employees… and will stay with you forever as long as you house and feed them! An experienced consultant can determine the financial condition of an agency just by examining the income and expense statement. Unfortunately, most agency owners do not have the expertise to
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accomplish the same review. The reason is simple. Most of us grew up in a production mentality which doesn’t guarantee any accounting expertise. Sales and service carried the day, and the only numbers that eked out interest were those of revenues, or even worse, premiums. That attitude has led many agents into the hazy world of premiums versus commissions rather than trust accounts versus broke.
Case E: We always planned to have a plan. Situation: “Dad was the original owner and never did want a partner in the business. Us kids worked there while we were in high school and some later in college. Dad complained that the business was not what it used to be, and we decided it was better to pursue some other business. When Dad died with no chance of a survivor taking over the agency, we had to liquidate the business before local competitors came in and cannibalized the accounts. As a matter of fact, Dad’s lawyer said we had no choice but to get it appraised for tax purposes. The lawyer said there wasn’t much value there because the book value didn’t indicate much net worth.” Book value! What a tragic analysis of the worth of their dad’s life in the business. But the attorney, like many professionals, is not aware of “intangible” value of expirations, just the bricks and sticks of the business. Granted, the lack of any perpetuation planning brought about the diminished value of the agency, but the consultant was challenged with the mission of determining that value, although it was less than it was while in the hands of the father before his death. If the son or daughter had been involved in the agency, we only have to turn to the dialogue discussed in Case A above. However, the IRS has a vested interest in the determination of fair market value, whether diminished by an incident or not. It is our opinion, from working with the service and our agency clients, that the IRS does not think in terms of diminished fair market value.
Case F: We gave them everything, but they left. Situation: “We had represented them for years, and we trusted the regional, branch, and senior management. We had been on their trips, received good profit-sharing commissions, and provided good loss ratios and increasing premiums on a well-spread basis for years. When they said they would be there for us over the long haul, we believed them. Although we were profitable over that long haul, when they left the state, they said they had to look at the entire territory, and not just our book of profitable business. The fact that they increased their demand for premiums didn’t seem to count when the bad news came. Afterwards, the companies we had reduced didn’t want to have much to do with us when we tried to remarket the business.” This is a worst-case scenario for the consultant. The agency without available markets for its client base has the greatest degree of mortality. The dependence upon single marketing sources was never, and is still not, a good management decision.
Conclusion In conclusion, we want to address the emergence of banks into the ownership of agencies. Wherever your battle lines are drawn, for or against, it’s a fact that tomorrow’s clients want one-stop financial services. Look at the growth of brokerage firms with the Boomer and X generations using checking account type services, which pay
Whether your agency needs a major overhaul or just a quick fix, these tools from The Academy can help you make the right adjustments. Critical Factors Impacting Agency Value zeros in on the critical factors, benchmarks, and goals that can increase agency value in the long run. Learn how these factors rank in order of importance and how neglecting them can eventually diminish agency value. ($27.50) The Growth and Performance Standards (GPS) study supplies benchmarks for comparing agency profitability and productivity. Many of these standards relate to the critical factors for agency value. Use the GPS standards, such as income and expense averages and productivity measures, to evaluate your agency’s performance. ($39.00) Maximizing Agency Value helps agency owners to evaluate the myriad of factors that must be considered for the purchase of an agency or perpetuation of their own agency. Learn the important considerations and acquire the technical know-how for buying and selling agencies. ($55.00)
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greater interest than the average bank checking account. And add to that the advantage of mutual funds and individual stock trading at the brokerage house or over the Internet. But in the rush for banks to acquire agencies, we see one important management error: the attempt by bank management to micro-manage an “independent” agency — an agency that is attractive for acquisition based on the entrepreneurial mentality of the agency and their staff. Any attempt to superimpose a hands-on management style will defeat the very reason the bank wanted in the business to begin with, and that will assure diminished value.
Dan King, CIC, CPIA Dan started his insurance career with a regional carrier as an underwriter, marketing representative, and branch manager. He entered the agency force in 1974 and developed a small agency into a large one in just 14 years. At the same time he also formed a professional consulting firm. Dan is now chairman and president of King-Phillips Insurance Agency and Dan R. King & Associates in Houston, Texas.
Roy Phillips, CIC, CISR, CPIA Roy began his career as an underwriter and also served as an adjuster, commercial auditor, branch manager, and vice president of a regional carrier. He is an active agent and vice president for King-Phillips Insurance Agency in Houston, selling group benefits and P&C insurance. He is a licensed risk manager, as well as an industry consultant and vice president with Dan R. King & Associates.
Learn More About this Topic from The National Alliance How an agency is managed directly affects its value. Agency Management Practices Ruble Seminars provide a wealth of information on this subject. The basic principles of managing an agency are also taught at CIC Agency Management Institutes, and the servicerelated aspects are part of the CISR Agency Operations Course.
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hat makes a CSR outstanding? Great communication and problem-solving skills, extensive product knowledge, and a positive attitude are attributes that certainly qualify. But look more closely and another quality
consistently emerges. Outstanding CSRs consider “helping others” their highest priority. Not their technological skills (though they’re a real plus). Not their proven organizational system (while admirable). Across the board, outstanding CSRs are really in the business of helping — they all are willing to go that extra mile for their clients. The 2001 Outstanding CSR of the Year is no exception. This year’s award winner, Ruth E. Goodwin, CISR, CPIW, API, is a commercial lines CSR and claims coordinator for the Davis Insurance Agency, Inc., in Ludlow, Vermont, who was selected from a slate of five finalists after the list of state winners was further narrowed. Her essay on the topic, “My Greatest Accomplishment as a CSR” spoke convincingly to the important balance a CSR must strike between meeting a client’s needs and representing her employer in the best way possible. Ms. Goodwin received a cash award of $1,000, a gold and diamond pin, and her name is inscribed on a sculpture on permanent display at the Society of CISR’s national headquarters in Austin, Texas. Additionally, a scholarship has been awarded to her employer, Davis Insurance Agency, for participation in any National Alliance program. Our congratulations go to Ruth Goodwin, the four award finalists, and the many CSRs who make helping others their professional priority.
The Outstanding CSR of the Year Award is sponsored jointly by the Societies of CISR and CIC.
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uth Goodwin, who has been in the insurance industry for 20 years, earned her CISR designation in 1991 and is working toward her CIC. She is an active member of the National Association of Insurance Women (NAIW) and has served on many NAIW committees at the local, state, regional,
and national levels. A blue-ribbon panel of judges narrowed a field of 36 state winners to five finalists, then selected Ruth Goodwin as the national award winner based on the following essay. “My Greatest Accomplishment as a CSR”
One of the biggest challenges for any customer service representative is finding the delicate balance between meeting our client’s needs and representing our employer in the best way possible. This balance can be achieved by utilizing the tools of education, communication, and service. Education means increased knowledge, which equates to greater confidence, which transfers to an improved presence or delivery to our clients. Knowledge of your product is vital and allows you to explain, in terms that are easily understood by your client, the benefits of purchasing the coverage you are recommending. That greater confidence will improve the effectiveness of the exchange between you and your client. Effective communication is an essential element of all successful business transactions. Whether it is discussing the viability of insuring a particular risk with your employer, providing accurate and detailed information to your underwriter, or asking your client the appropriate “leading” questions which help you obtain the valuable information you need to properly underwrite the account, communication skills are a must in today’s business society. It is also imperative to establish a network of contacts in a noncompetitive environment where a second opinion is always available
to you. When you have submitted a risk to your company that you feel is a sure candidate and anticipate no glitches, and the underwriter responds, “This is not something we wish to write,” you need to know what options are available to you. Do you challenge the underwriter? Do you submit the account to another company that perhaps doesn’t do as well with this type of risk? Having contacts in the industry outside of your immediate locale gives you the opportunity to discuss the issues and gain a nonbiased second opinion. Perhaps you missed the real risk in this case or maybe you have a fairly new underwriter who is being overly cautious. Either way, you can feel better about what you have to tell your client; you’re on more solid ground because you’ve backed up either opinion. It creates a win/win situation for everyone. The servicing of our clientele, without a doubt, is what ultimately separates one agency from another or makes one CSR stand out among all the rest. It’s going the “extra mile” to satisfy your clients’ perceived needs so you are able to discover and meet their real needs. It means going beyond their expectations and providing them with exceptional assistance. It’s remembering their name (a most important issue to many individuals) and recognizing them on the street.
Educating ourselves, communicating with our employers, company personnel, and clients, and providing exemplary service to them all, will help find that balance between meeting our client’s needs and representing our employer in the best way possible. My greatest accomplishment as a CSR occurred with a client who is a large excavation contractor. Like most contractors, he dislikes dealing with paperwork. His workday begins long before I arrive at the office and extends beyond my normal working hours. Coming in early or staying late to go over his many policies with him has become part of the routine. Filling out his claim reports and being the go-between when the claims adjuster’s schedules and my client’s work schedules do not mesh, helps speed the claims process along so all involved parties are completely satisfied. Watching over his policies to make sure the company gets the change done correctly, making sure he has the coverage he needs in both his business and personal life, including life, health, disability and financial planning, gives me a great feeling of satisfaction. And when, instead of printing off a certificate of insurance and giving it to my client to mail to his potential customer, I offered to fax his business proposal along with the certificate instead, he was awarded the job that evening. It made his day and mine. You know when your client sends you flowers just for doing your job that you’re doing something right! It makes your employer look good as well. Through the education I have received from the CISR Program and am continuing through the CIC Program, I am a betterequipped and more confident individual who can express herself with conviction and an improved presence to all interested parties. The knowledge that has been gained through these programs has made me more self-confident and given me the desire to be more than just an ordinary CSR. It makes me want to be extra-ordinary and to make my employer and my clients feel that way, too.
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Nominations are now being accepted
in all 50 states and Puerto Rico for the 2002 Outstanding CSR of the Year. This award is the highest honor for insurance customer service representatives who have distinguished themselves through contributions to their industry and profession.
Open to everyone regardless of affiliation or professional designation, candidates must: ■
■
■
be an insurance customer service representative, or have primary responsibility for customer service duties, and write an essay* of not more than two pages, double-spaced (approximately 1,000 words) on the topic, “The Role of a CSR During a Hard Market,” and submit letter(s) of recommendation from a professional reference.
*All essay entries become the property of the Society of CISR, inclusive of permission to reprint.
Awards are presented on state and national levels. Each state winner will receive: a framed Certificate of Achievement, ■ state recognition, and ■ advancement to the national competition.
2002 Nomination Form Nominee* Information: Name of Nominee ________________________________________ Agency/Company _________________________________________ Address ________________________________________________ City, State, Zip ____________________________________________ Telephone _______________________________________________ Fax ____________________________________________________ E-mail _________________________________________________
*You may nominate yourself.
Nominator Information: Your Name ______________________________________________ Agency/Company _________________________________________
■
Each of the four national finalists will receive: ■ national recognition and ■ a special gold and garnet pin. The national winner will receive: ■ a special gold and diamond pin, ■ a $1,000 cash award, and ■ a scholarship to a National Alliance program for his or her employer.
To make your nomination,
please complete this form and mail or fax today so that your nominee may be contacted. (Please note that you may nominate yourself.) Deadline for all materials (including essay) to be completed is May 1, 2002.
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Address ________________________________________________ City, State, Zip ____________________________________________ Telephone _______________________________________________ Fax ____________________________________________________ E-mail _________________________________________________
Please do do not mention my name when corresponding with the nominee.
Submit All Materials To: Society of Certified Insurance Service Representatives P.O. Box 27028 Austin, TX 78755-2028
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ithout drum rolls or noisy fanfare, The National Alliance, along with state insurance agent associations, agencies, companies, and even individuals, continually endeavors to help insurance professionals become the best that they can be. How? By regularly offering scholarships to deserving individuals in the industry. means nearly every CIC institute, James K. Ruble Seminar, CISR course, or Dynamics program may have one scholarship recipient in attendance.
Who To, Who From Scholarships are frequently awarded to firsttime participants, especially those interested in attending all classes in a program and earning the designation. Candidates should be strongly committed to continuing education and a career in insurance. Scholarship applicants must meet the minimum following criteria. For CIC scholarships, one must: ◆
be licensed as an agent, broker, solicitor, or
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have at least two years of full-time experience as a practitioner in insurance or risk management, or
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have served at least two years as a full-time insurance faculty member at an accredited college or university.
For CISR scholarships, one must:
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That during 2001, scholarships totaling roughly $90,000 were awarded for Alliance programs?
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That approximately 450 scholarships were requested and granted for all National Alliance programs in 2001?
This is a short list of some sponsoring organizations and individuals: 1) CNA Scholarship Fund 2) MarketScout 3) National Association for Insurance Women (NAIW) 4) Thomas G. Williams Fellowships 5) Clay Tucker Scholarship Fund
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be employed full-time in the insurance industry,
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not have ever held a CIC or CISR designation, and
7) Robert J. Rogers Scholarship Fund
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be able to use the scholarship by December 2002.
9) William Hold Education Foundation
Sponsors grant scholarships based on dedication, experience, and accomplishments of the applicant, among other factors. Scholarship recipients may be given special recognition during a conferment ceremony, the association annual convention, or the program they are attending. What do scholarships include? Most cover the course registration fee only, but in a limited number of circumstances, travel and lodging expenses may also be part of the package.
Did You Know... ◆
That one scholarship is available for most National Alliance programs conducted? That
6) New Mexico Scholarship Fund 8) Doug Weber Scholarship Fund
All scholarships have one thing in common — they help motivated individuals further their careers through additional education that is current and practical. And they provide a long-range benefit to the insurance community, by encouraging and training new agents and promoting career advancement within agencies and companies.
Know Someone Who’s Interested? We are always interested in helping new insurance professionals get a solid start and foundation for their careers. Do you know of a good candidate for a CIC or CISR scholarship? Call the appropriate number for your state, listed to the right, to nominate that special employee or work associate.
Your State
CIC Scholarships
CISR Scholarships
Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Missouri Mississippi Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Puerto Rico Rhode Island South Carolina South Dakota Tennessee (IIA) Tennessee (PIA) Texas Utah Vermont Virginia/DC Washington West Virginia Wisconsin Wyoming
205/326-4129 800/633-2165 602/956-1851 800/633-2165 800/633-2165 303/512-0707 800/424-4244 717/795-9100 850/893-8245 770/921-7585 800/633-2165 800/633-2165 217/793-6660 800/438-4424 800/633-2165 785/232-0561 502/875-3888 800/633-2165 508/628-5452 717/795-9100 508/628-5452 517/323-0041 952/835-4180 573/893-4301 800/633-2165 406/442-9555 800/633-2165 775/882-1366 508/628-5452 800/424-4244 800/633-2165 800/424-4244 800/849-6556 800/633-2165 800/555-1742 405/840-4426 503/287-7570 717/795-9100 787/758-1001 508/628-5452 803/731-9460 800/633-2165 615/385-1898 615/771-1177 800/633-2165 800/633-2165 508/628-5452 804/264-2582 360/571-7100 800/633-2165 608/274-8188 800/633-2165
205/326-4129 907/349-2500 602/956-1851 800/633-2165 800/633-2165 303/512-0707 800/424-4244 717/795-9100 850/893-8245 770/921-7585 800/633-2165 800/633-2165 800/628-6436 800/555-9742 800/633-2165 785/232-0561 502/875-3888 800/349-3434 508/628-5452 717/795-9100 508/628-5452 517/323-0041 952/835-4180 573/893-4301 800/633-2165 406/442-9555 402/476-2951 775/882-1366 508/628-5452 800/424-4244 800/633-2165 800/424-4244 800/849-6556 800/633-2165 800/555-1742 405/840-4426 503/287-7570 717/795-9100 787/758-1001 508/628-5452 803/731-9460 800/633-2165 615/385-1898 615/771-1177 800/633-2165 800/633-2165 508/628-5452 804/264-2582 360/571-7100 800/633-2165 608/274-8188 307/283-2052
CRM or NCIM Scholarships: To nominate an employee or work associate for a CRM or NCIM scholarship, contact The National Alliance at 800/633-2165. Resources Fall/Winter 2001
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Y
ou work long, work hard. You get up each morning and try to make a difference in the lives of your clients, while simultaneously trying to positively impact the future of your business and your career. Ultimately, you try hard each day so that someday, you can look back and say, “I did it. I made a difference. The world is a better place because I was here.” The essay contributions for the Outstanding CSR of the Year Award consistently show the difference that “the extra mile” makes for a client who has suffered a devastating loss. The stories that you tell at Ruble seminars and all the other courses where we have a chance to sit down and talk tell the same thing. You’re committed. You’re dedicated. You demand excellence from yourself. And you care. That is the reason that you remain in the insurance and risk management business.
Investing in yourself, and your organization. The National Alliance is in its fourth decade of providing educational programs that are recognized and respected throughout the industry. Our common goal of making a difference has been underscored whenever you have given your time and energy to serve on
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a CIC Education Committee, nominated someone for the Outstanding CSR of the Year Award, attended a program, recommended one of our programs to a colleague, or in the countless other ways in which you have supported efforts that are vital to the future of the insurance industry.
During the last year your evaluations have confirmed that: ■
The Producer School is an unqualified industry asset, as is CISR OnLine.
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The revisions to the Dynamics of Selling, Dynamics of Sales Management, and Dynamics of Service programs have resulted in sessions with even greater applicability to your daily needs.
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The revisions to the CRM Program and the James K. Ruble Graduate Seminars have resulted in courses that exceed your expectations and can be put to immediate use to increase your bottom line.
You continue to give top evaluations to both the content and speakers for the CIC institutes and the CISR Program, and many of you return to these programs as ISO revisions and other industry changes necessitate having state-of-the-art knowledge. You continue
to support The Academy through your purchase of publications and affiliations, and your participation in ongoing research. And the quantity of sales and quality of comments that we receive on these publications confirms their place as industry standards.
And there’s so much more underway... Through The National Alliance’s affiliation with MarketScout — an innovator in insurance e-commerce — CICs and CISRs have access to “Best of Class” insurance companies in over 500 industry segments. And insurance companies have access to “Best of Class” insurance professionals — CICs and CISRs. Moreover, CISRs have the opportunity to participate in the CISR Elite Service Program, a program that offers reward “points” to CISRs that may be redeemed with over 20 major vendors. We currently collaborate with the NAIW on national scholarships and other cooperative efforts, and the Risk and Insurance Management Society, Inc.® (RIMS), where the CRM designation has been recognized as fulfilling the foundation segment of the new RIMS Fellow designation. We have a relationship with the Insurance and Risk Management Institute (IRMI), where new CICs can receive their
A NEW Benefit of Membership:
The 2002 CIC Member Directory Beginning January 2002, an online directory listing all dues-paid CICs with their contact information will be available on our Web site. This is going to be THE place to find the best insurance agents in America. And you’ll be able to easily locate other CICs.
As a dues-paid CIC you will: ■
Have your own national listing — with your name, designations, and contact information.
■
Be able to update your information.
■
Have access to view and search all directory information.
Your directory listing is ready to preview and update now. Go to www.scic.com/ cicdues. You will need to use a personal user name and password (which you can find at the top of your dues notice) to access, view, and edit your personal information. Your name will automatically be added to the CIC Member Directory. If you elect to be excluded, check the appropriate box on your dues notice. IMPORTANT: The directory will be on the Web site for all to see in January, 2002, and only dues-paid CICs will be listed!
newsletters, and reciprocal links are established on both of our Web sites. As our efforts with these and other organizations continue to expand, so will your benefits. This has been a remarkable year for The National Alliance, due to the innovations made possible by your annual membership dues.
Benefiting one and all The tangible benefits of education have always been easy to measure; what is difficult to measure are the intangible benefits of education and the value of your affiliation with The National Alliance. The fact is, commitment and dedication lead to recognition and respect, and we must each continually renew our resolve to make a positive difference. What we do today impacts the respect and recognition that comes with your membership in the nation’s leading society of insurance and risk management professionals. What you do today makes a difference in how the CIC, CISR, and CRM designations are regarded in the wider industry. But each of us can do only so much on our own. It is together that we can make a monumental difference in the industry — and have. You can clearly see the positive results of our affiliation: ■
Courses that address real needs and issues, providing the best educational value in the
industry, and the continued development of the programs that will be future industry benchmarks. ■
A premier national faculty, giving our students access to some of the nation’s most respected insurance and risk management professionals.
■
Leading-edge research, combined with the publication of industry-related articles that are as informative as they are timely.
■
Scholarships, so that those who choose to become better insurance professionals have every opportunity to do so.
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Awards and recognition activities that recognize current and future industry leaders, while at the same time conferring a renewed professionalism and affiliation among all members.
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Industry recognition and national reputation, the value of which is immeasurable.
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Professional pride and personal achievement, the cornerstones of an industry in which the choice to make a positive difference is seldom easy.
Thank you ... We couldn’t have done it without you. Developing programs is expensive. Training faculty is expensive. So are public relations, producing Resources, conducting research, and countless other activities that have enhanced the value of your designations, but cannot be funded solely by registration fees. These accomplishments bear thousands of signatures of those who have each year chosen to make a small difference by paying their Society dues. When we talk about the “Power of the Pin” we are talking about the collective power of all designees to make a difference. Together, we can help communicate the power and value of what you do professionally. Our common goals could not be more ambitious...and your support, through payment of your annual dues, could not be more important. hat’s it all really worth? Ask MarketScout. Ask IRMI. Ask RIMS. Ask NAIW. Can you really put a price on it? Please think about how important each and every dues payment is to your Society’s future. Your dues will support many specific areas of education and research, but in combination they support every member.
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elcome to the first hard market in over 15 years. All agents are getting at least a little queasy worrying about maintaining good markets. As a result, over 5,000 CICs and CISRs have registered to access MarketScout’s 67 “A”-rated insurers. By executing a single producer agreement, a CIC or CISR is effectively granted access to 67 markets. As insurance companies raise rates and cancel programs, new market connections are critical to the success of independent agents. Very few agents have the political muscle and premium volume to secure contracts with 60+ insurers; and even if they did, it could take 12-18 months to do so. Providing quick access to new markets has enabled MarketScout to become the world’s largest eInsurance exchange. The National Alliance recognized the signs of a pending hard market and structured a strategic partnership with MarketScout in early 2000. The market was tightening considerably prior to spineless cowards attacking the World Trade Center. The estimated insured loss from the WTC attack currently stands at between $40-50 billion, easily the most expensive insured loss in history. Maurice R. Greenberg, chairman of AIG, told Industry
Business Insurance that insurance buyers can expect to see rates “going up by leaps and bounds.” Mr. Greenberg is undoubtedly one of the brightest insurance executives of our time. I believe him when he foretells a hard market. MarketScout is an e-commerce company populated with knowledgeable insurance professionals experienced in virtually all aspects of insurance underwriting and distribution, supported by a team of experienced marketing professionals, Internet specialists, and network technicians. MarketScout has assembled a select group of highly qualified insurers to serve CICs and CISRs. MarketScout has established a system of electronic portals through which CICs and CISRs can access hundreds of insurance products through eIndustry specialists and “Best of Class” companies prepared to meet the unique demands of the national and international marketplace. The depth and strength of our online technology makes MarketScout a resource through which you can identify, research, and find coverage for almost any business or industry. Through MarketScout, you can protect and expand your current business base
with traditional insurance coverage and compete for new business in non-traditional markets. When you use the MarketScout exchange, you will be accessing an elite group of insurance companies with a proven track record in their particular industries. CICs and CISRs get special access to everything MarketScout has to offer. Why? Because our insurers recognize the fact that CICs and CISRs are a “cut above” other agents. Our insurers have greater confidence in agents who have taken responsibility for their continuing education and professionalism. Insurers underwrite their agents as much as they underwrite a particular risk. CICs and CISRs are preferred agents. Currently, CICs and CISRs have free access to hundreds of industries and coverages which are represented by one of MarketScout’s “Best of Class” insurers. A brief recap of just a few of these facilities is set forth in the chart below. CICs and CISRs who bind business with MarketScout get preferred commissions. Also, CISRs accumulate points which can be cashed in for prizes ranging from gift certifi-
Insurer
Coverage
Territory
Access
Workers Compensation
AIG
Monoline Workers Compensation
32 states
www.marketscout.com www.smallworkcomp.com
Small Commercial
CNA
700 Classes, Auto, General Liability, Property and related coverages
48 states (Hawaii and Alaska excluded)
Professional
CNA
Employment Practices Liability, Crime
50 states
www.marketscout.com www.employmentliabilityinsurance.com www.crimeinsurance.net
Ambulance
Royal & Sun Alliance
All Lines
50 states
www.marketscout.com ww.ambulanceinsurance.net
Bars, Restaurants, Artisan Contractors
Century Surety
All Lines
48 states
www.marketscout.com www.apartmentspecialistinsurance.com
E-Commerce
Zurich
Specially designed for Internet and e-commerce exposures
50 states
www.marketscout.com www.ecommerceinsurancequote.com
Broad policy design
50 states
www.marketscout.com
Directors & Officers
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AIG
www.marketscout.com ww.smallcommercialnetwork.com
Calling all CICs… Attend American Agent & Broker’s Fall Conference, hear your favorite CICs, and SAVE!
“…our insurers recognize the fact that CICs and CISRs are a ‘cut above’ other agents.” cates at Target to a Las Vegas holiday. And all CICs and CISRs using MarketScout qualify to apply for scholarships to any National Alliance program. Soon, MarketScout will announce an exclusive venue through which CICs and CISRs can access specially reserved capacity at one of the largest insurers in the world. If you are a dues-paying CIC or CISR, you will enjoy a dedicated underwriting team specifically reserved for you. So, when you are in need of a habitational market, for instance, you can now tap the capacity set aside for CICs and CISRs. You will be getting further details on this program , entitled “CIC Select,” by year end. We hope you find MarketScout to be a great resource in this hard market. The National Alliance receives no compensation of any type from MarketScout. Access to the 67 insurers is free for CICs and CISRs.
Richard K. Kerr, CIC, ARM Richard Kerr is chairman and CEO of Insurance Data Systems (IDS) and MarketScout.com, companies that develop product distribution portals and other e-commerce business models. Richard has an extensive background developing insurance business strategies and was previously a retail insurance producer for Sedgwick, Inc., where he was their #1 producer worldwide. Under Richard’s leadership, MarketScout.com is now the world’s leading site for accessing “Best of Class” insurance markets and technical expertise.
PROGRAM BUSINESS SUMMIT • FRIDAY, DEC. 14, 2001 RADISSON HOTEL SCHAUMBURG • SCHAUMBURG, ILLINOIS Meet and greet CICs Jeff Gelona, Baron Garcia, and David Simmons, who will present case studies, industry trends, and practical strategies for increasing sales through this exciting and profitable market segment. Join the many producers, managing general agents, and home office marketing executives who will attend this one-day event for its exceptional educational value and networking opportunities. The National Alliance has arranged a $19 discount off the regular registration for members of the Society of CIC. To register or request more information, please contact Linda Brumitt of American Agent & Broker directly by phone at 800/867-9280, ext. 247 (or 314/421-1070), by fax at 314/421-1070, by e-mail at www.agentandbroker.com/conferences. Be sure to mention the Priority Code DEX000216 in order to qualify for the Society of CIC member-only discount!
Richard Edward Marks, CIC, CPIA, FMS April 3, 1929 - May 20, 2001 The Society of CIC lost a charter member, a founding father of our board, one of the first instructors on our national faculty, and a friend this past May, when Richard Marks passed away in Houston, Texas. Marks spent a lifetime in the insurance industry and was a founding partner of GEM Insurance, a Houston agency formed in 1954. A native of South Bend, Indiana, and graduate of Texas A& M University, his leadership in the insurance community and many professional affiliations reflected his devotion to the industry. He was past president of the Independent Insurance Agents of Texas as well as the IIA of Houston former director of the Insurance Publishing House in Austin, Texas, and served on agent’s advisory committees of several insurance companies. Additionally, he was a CIC board member, director of the National Association of Insurance Brokers, and a director of The Academy.
Marks played a significant role in the early success of CIC. He lectured at Agency Management Institutes from coast to coast and was sought after for advice by agents across the country. His lectures were some of the most highly evaluated by CICs and participants. Marks was the recipient of the Outstanding Agent Award from the IIA of Houston and the Drex Foreman Award from the Texas Insurance Agents, the highest awards given by these organizations. “When we speak of CICs who make a difference, surely Dick Marks comes to mind,” said longtime friend and colleague William T. Hold. “Richard was always a toughminded, dedicated professional. He left his indelible mark on the CIC Program and the industry, along with a legacy of humor and integrity. We will miss him, both personally and professionally.”
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Take a MEGA Break When it’s Spring-break-time in the Rockies, it’s time for a MEGA Seminar in the foothills of Denver. Once again, we’re bringing the popular James K. Ruble MEGA Seminar to the mile-high city during that time of the year when the skiing is at its best and you’re longing for a Rocky Mountain getaway.
Topics by the MEGAton Over 20 presentations to choose from on topics in almost every specialty area — the myriad of choices is what makes a MEGA Seminar unique. Hot highlights this year are E-Insurance Marketing, Sue Me!, Industry Update, and Enterprise Risk Management, just to name a few. Pour over the MEGAgenda for inspiration, then use the selector and registration form to pre-choose your classes. You’ll always have the freedom to change your
schedule later, but your pre-registration helps pre-seminar preparations. You can also register with one call (800/633-2165), or a visit to our Web site (www.scic.com).
MEGAflexible Your time at the MEGA is yours to schedule however you wish. Attend as many presentations as you can squeeze into five days, or just plan for the minimum 20 hours of instruction required for your update. Come and go or stay and play—the choice is yours and the seminar price tag is a bargain $345.
MEGAvacation You’re there already ... so take advantage of it! Take off to any of Colorado’s famous ski resorts (March is primetime ski season), The Denver Performing Arts Complex, or one of Denver’s famous professional sports venues... the list goes on and on.
We’ll be at the Westin You’ll like our new hotel! The Westin in Westminster is just 15 minutes from both downtown Denver and Boulder,
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and 30 minutes from Denver International Airport. The hotel is the centerpiece of the Westminster Promenade, consisting of 9 restaurants, 3 ice skating rinks, 24 cinemas, and the Butterfly Pavilion. Everything you need is right here — an indoor heated pool, fitness center, jogging and bike trails, and complimentary shuttle to FlatIron Crossing, Westminster Mall, and Interlocken Business Park. For room reservations, call the Westin. Phone: 303/410-5000 Room rate: $129 single/double Cut-off Date: February 7, 2002
The Denver MEGAgenda Monday, March 11
Wednesday, March 13
7:30 a.m. – 8:00 a.m. Registration with coffee and rolls
7:30 a.m. – 8:00 a.m. Registration with coffee and rolls
8:00 a.m. – 12:00 p.m.
8:00 a.m.␣ - 12:00 p.m.
CONCURRENT SESSIONS: 1 Industry Update 2002
CONCURRENT SESSIONS: 11 Construction Defect Litigation & Insurance Responses
Jerry M. Milton, CIC Insurance Risk Services Orange Beach, Alabama
2 Professional Liability Exposures W. Mark Landers, CIC, CPCU, ARM Landers & Creel Insurance, Inc. Birmingham, Alabama
12:00 p.m. – 1:15 p.m. Lunch — on your own 1:15 p.m. – 5:15 p.m.
CONCURRENT SESSIONS: 3 Business Auto Policy Gaps and Exposures Jerry M. Milton, CIC
4 Insuring the Medical Professional W. Mark Landers, CIC, CPCU, ARM
5:15 p.m. – 5:45 p.m. Hospitality — The Westin Westminster
Timothy Malloy, CIC, CPCU, ARM, AMIM, LUTCF
5:15 p.m. – 5:45 p.m. Hospitality — The Westin Westminster
Laurie A. Zangwill-Infantino, CIC, CISR, ACSR
Terry L. Tadlock, CIC, CPCU
Friday, March 15
8:00 a.m. – 12:00 p.m.
CONCURRENT SESSIONS: 17 The ERISA Triangle: Fidelity & Employee Benefits Liability
13 Directors and Officers Exposures Timothy Malloy, CIC, CPCU, ARM, AMIM, LUTCF Timothy J. Malloy Associates, Ltd. Dennisville, New Jersey
8:00 a.m. – 12:00 p.m.
CONCURRENT SESSIONS: 22 Becoming the Point of Comparison Jeffrey L. Gelona, CIC The Bramlett Agency Ardmore, Oklahoma
18 So Sue Me Ross Pringle Wright & Greenhill, P.C. Austin, Texas
1:15 p.m. – 5:15 p.m.
CONCURRENT SESSIONS 14 Mold — The Growing Concern
23 Commercial Property Riddles, Rhymes and Reasons
19 Personal Lines Questions and Answers
Marjorie L. Segale, CIC, RPLU, CISR, ACSR
15 The Magic of Interviewing and Retaining Employees
Terry L. Tadlock, CIC, CPCU
12:00 p.m. Adjournment
Terry L. Tadlock, CIC, CPCU The Florida Insurance School Tallahassee, Florida
Tuesday, March 12 7:30 a.m. – 8:00 a.m. Registration with coffee and rolls
Denver MEGA Registration Form
8:00 a.m. – 12:00 p.m.
Please Type or Print
Craig F. Stanovich, CIC, CPCU, AU Braley & Wellington Insurance Agency Worcester, Massachusetts
7:30 a.m. – 8:00 a.m. Coffee and rolls
Richard G. Rudolph, PhD,CPCU, ARM, APA, ARP, AIAF,AAM Seaver, Rudolph & Associates, Inc. St. Charles, Illinois
12:00 p.m. – 1:15 p.m. Lunch — on your own
CONCURRENT SESSIONS: 20 Risk Financing and Control through Contractual Transfer 21 Business Income…The Mystery Continues
7:30 a.m. – 8:00 a.m. Coffee and rolls
12 Intellectual Property
1:15 p.m. – 5:15 p.m.
Richard G. Rudolph, PhD,CPCU, ARM, APA, ARP, AIAF,AAM
Thursday, March 14
Marjorie L. Segale, CIC, RPLU, CISR, ACSR Insurance Skills Center, Inc. Huntington Beach, California
James T. Lawrence, CIC Texas Alliance Insurance Agency, Inc.
CONCURRENT SESSIONS: 5 Employment Related Practices Insurance & Risk Management
12:00 p.m. – 1:15 p.m. Lunch — on your own
Grand Prairie, Texas
16 Maritime Exposures
SS# __________________________________________________________________________________________ Name ■ Mr. ■ Ms. ___________________________________________ Designation(s) _______________
6 Enterprise Risk Management
Agency/Company ______________________________________________________________________________
Donald J. Riggin, CPCU, ARM Schiff, Kreidler-Shell, Inc. Cincinnati, Ohio
new address. Address ______________________________________________________________________________________
7 Your Estate Plan and the Living Trust Douglas J. Fleming, LUTCF Kingston, Massachusetts
Check box if
City/State/Zip _________________________________________________________________________________ Phone ( ________ ) ______________________________ FAX ( _________ ) ____________________________
12:00 p.m. – 1:15 p.m. Lunch — on your own
Payment Method: ■ Check ■ VISA ■ MasterCard ■ AMEX This card is: ■ Corporate ■ Personal
1:15 p.m. – 5:15 p.m.
Card Number _________________________________________________________ Exp. Date ____________
CONCURRENT SESSIONS: 8 Environmental Impairment and Pollution Craig F. Stanovich, CIC, CPCU, AU
9 Intellectual Property Laurie A. Zangwill-Infantino, CIC, CISR, ACSR Insurance Skills Center, Inc. Huntington Beach, California
10 eInsurance Marketing Strategies Richard K. Kerr, CIC, ARM MarketScout.com Dallas, Texas
5:15 p.m. – 5:45 p.m. Hospitality — The Westin Westminster
The National Alliance for Insurance Education & Research is registered with the National Association of State Boards of Accountancy as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses. Complaints regarding sponsors may be addressed to NASBA; 150 Fourth Avenue North, Suite 700; Nashville, TN 37219-2417; 615/880-4200.
Signature _____________________________________________________________________________________ Please study the seminar agenda on this page and indicate below the section numbers of the topics you plan to attend. Your choices will not be considered final, but this tentative information will greatly assist the Society in the coordination of materials and personnel for this unique seminar. Thank you. MONDAY, March 11
TUESDAY, March 12
(7:30 a.m. registration)
(7:30 a.m. registration)
(7:30 a.m. registration)
WEDNESDAY, March 13
THURSDAY, March 14
FRIDAY, March 15
A.M.
A.M.
A.M.
A.M.
A.M.
P.M.
P.M.
P.M.
P.M.
12:00 Ñoon Seminar Ends
General Information Registration Fee: $345* per person. The fee includes materials and reception for participant. All participants must present photo identification to the on-site registrar at the program. Cancellation Fee: Cancellations received within 10 days of the seminar will incur a $105 non-transferable fee. * You must be a dues-paid member of the Society of CIC or Certified Risk Managers International to attend a Ruble seminar and receive credit for the CIC or CRM continuing education requirement. The annual dues are $70. In accordance with Title III of the Americans with Disabilities Act, we invite all registrants to advise us of any disability. Please submit your request as far as possible in advance of the program you wish to attend. Please make payment to: Society of CIC
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P. O. Box 27027
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Austin, TX 78755-2027
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800/633-2165
Resources Fall/Winter 2001
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Have You Been “In the News” Lately? To submit items for editorial consideration, send article with picture to: The National Alliance/Resources P.O. Box 27027 Austin, TX 78755-2027
Rhonda Lobell Opens New Agency Rhonda B. Lobell, CIC, brings 21 years of insurance experience to the new agency she recently opened in Prairieville, Louisiana: the Lobell-Dixon Insurance Agency. Lobell is a faculty member for The National Alliance and a member of the board of directors of the PIA/Baton Rouge Chapter. She was instrumental in forming the Young Insurance Professionals/PIA of LA and served as charter president of the organization. Gonzales Weekly
Doron Claiborne is PIA TN 2001 Agent of the Year Doron L. Claiborne, CIC, CPIA, president of Farmer Brothers Insurance, Murfreesboro, Tennessee, was named the 2001 Agent of the Year by the PIA of TN during the association’s 66th annual convention. The award, recognizing the achievements and contributions made by Claiborne to the insurance industry, is the highest honor the association presents to a member. He was also named 2001 Committee Chairman of the Year and was elected president-elect of the statewide association. Claiborne is a national faculty member for the Society of CIC. The Daily News Journal, The Tennessee Agent
CICs and CISRs Receive NAIW Awards & Honors Kathleen A. (Kat) Davis, CIC, CPCU, ARM, ACSR, API, CPIW, of Tower Hill Insurance Group in Gainesville, Florida, followed her honor as NAIW Region III Insurance Professional of the Year by winning the top award at the national convention in Greensboro, NC, where the National Association of Insurance Women selected her as the 2001 National Insurance Professional of the Year. Bonnie L. Avila, CISR, CPIW, with Marsh USA Inc. in Grand Rapids, Michigan was chosen as Insurance Professional of the Year for Region IV. Thelma J. Cunningham, CISR, CPIW, of H. W. Sewing & Co., Inc., in Kansas City, Kansas, was named Region V Insurance Professional of the Year. Susan F. Jones, CIC, CISR, ARM, CPIW, with Assurance, Ltd., in Las Vegas, Nevada, represents Region VIII as their choice for Insurance Professional of the Year.
Magazine Profiles Richlands, VA, Agency Frances Foy-Vance, CIC, AAI, CPIW, owner of Huffman Insurance Agency in Richlands, Virginia, was profiled in Agent Exchange magazine, a publication of Erie Insurance Group distributed in 10 states and D.C. She was chosen as a cover agent for “leading a successful agency and for her commitment to customer service, quality marketing, and continuing education.” Her agency writes all lines of business —property/casualty, life, and commercial insurance. Richlands News-Press
Mary A. McPartling, CISR, CPIW, of Royal & Sun Alliance in Overland Park, Kansas, was named Claims Professional of the Year for Region VII. Today’s Insurance Woman
Parsons & Associates Acknowledged for 71-Year History Syracuse agency Parsons & Associates, Inc., was in the news recently, as an example of an agency with a strong history and the ability to successfully change and grow with the times. Consistently good service, generational clients, and an innovative outlook were all credited as important factors in the agency’s success. Four Parsons family members are currently in the business, yet they say “we don’t consider ourselves a family business; a business family is a better label.” Happy 71st Birthday, Parsons Agency! Professional Insurance Agents (NY Edition)
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Resources Fall/Winter 2001
Left to Right: Charles R. Parsons, CIC, president; Robert M. Parsons, CIC, vice president; Elfriede A. Parsons, executive vice president; and John C. Parsons II, AAI, vice president.
PIACT Elects CICs Vice Presidents Robert B. Gyle, IV, CIC, was elected vice president of PIA Connecticut at PIACT’s annual convention. Gyle is a personal lines account executive for Davidson Insurance Services in Danbury. Jeffrey Parmenter, CIC, CPCU, ARM (not pictured), a principal with S. H. Smith & Co., Inc. in West Hartford was also named a vice president of the association. The Standard
Chair of CISR Board Elected to Alabama IIA Post
CIC Chairs Legislative Program Series Lewis L. Wilson, CIC, CPIA, PIANY past president, national director, and PIANY Political Action Committee chairman, chaired a successful season of legislative programs held at 13 different locations around New York state. Over the past months, agents and legislators came together in forums to discuss and better understand the major issues affecting agencies and consumers. Programs were hosted by local captains who welcomed participants and encouraged lawmakers to provide their views on PIANY’s issues. In addition to Wilson, several CICs captained programs: Michael Skeele, CIC (Syracuse), Mark LaLonde, CIC, CPIA, AAI (New Hartford), and Henry Kaye, CIC/James Kearns, CIC (Buffalo). Professional Insurance Agents - NY Edition
Mickie McCarn Edwards, CIC, CISR, AAI, CPIW, vice president and office manager for Realty Insurance Agency in Homewood, Alabama, was installed this past June as AIIA secretary/treasurer at the association’s annual convention. She is the first woman ever to hold an AIIA executive office. The current chair of the CISR board has many other honors to her credit: she was selected the 2000 AIIA Insuror of the Year, NAIW National Rookie of the Year, Alabama Insurance Woman of the Year, and received the T.J. Mims Award of Excellence and the 1996 National Outstanding CSR of the Year award. The Alabama Independent
Michigan AIA Awards Announced Boise Agent Named Industry Leader of the Year Marcia L. Wing, CIC, CPCU, RPLU, CPIW, of Fred A. Moreton & Company in Boise, Idaho, was presented the Industry Leader of the Year Award at the All Industry Celebration joining members of Insurance Women of Boise (IWOB) and other insurance organizations. The award, sponsored by the IWOB, is based on contributions to the industry, their insurance organization, and community involvement. Today’s Insurance Woman
A lifetime recognition award, the Hildebrand Award, was given to Robert Elliott, CIC, of Tawas Bay Agency, for his contribution to the Association and the industry over many years. Elliott has served with many industry groups and in a wide variety of leadership roles within MAIA, and has been an outspoken advocate for independent agents. Roger L. Stoor, CIC, LIC, of Lud Stoor Agency in Crystal Falls was presented the Aschom Award, given to an agent who has shown service and a contribution to furthering the professionalism of MAIA members. Greg Rummel, CIC, of Emil Rummel Agency in Frankenmuth was awarded this year’s Young Agent of the Year Award by the MAIA. Rummel, chairman of the Young Agents Council, is active in his industry and community. Michigan Agent
Holt Insurance Agency Garners Multiple Honors Mike Doughty, CIC, ARM, CPIA, AAI, vice president of Holt Insurance Agency, Inc., in Perry, Oklahoma, was recently honored at the annual PIA convention in Oklahoma City as the association’s Agent of the Year. He will be president of the PIA of Oklahoma in the coming year. Additionally, Doughty was previously named Perry’s 2000 Citizen of the Year at the city’s annual Chamber of Commerce banquet. One of his Holt co-workers, Nancy Wells, CISR, was the recipient of the Chamber’s Employee of the Year award. Wells, a CSR, joined Holt Agency in 1986 and has been a CISR since1988. IIAO-Oklahoma Policy
Schoenemann Joins RISC Inc. Donna Schoenemann, CIC, has joined RISC Inc. in Dallas, Texas, as a property broker. Recently associated with a retail agency, Schoenemann developed extensive experience in the field through her work with several insurance wholesalers in Texas. Insurance Journal-Texas
AAMGA Elects Francis Johnson Francis G. Johnson, CIC, vice president of Johnson & Johnson Managers, Inc., Charleston, S.C., was elected director for the Eastern Region of the 20012002 American Association of Managing General Agents. He is current chair of the AAMGA Under Forty Organization. Florida’s Insurance News
Resources Fall/Winter 2001
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Essential Soup for the Insurance Soul All the basic ingredients for nourishing a working knowledge of property and casualty insurance can be found in the new Academy publication, The Insurance Essentials Handbook: Personal Lines, Commercial
Property & Casualty.
This handbook is a condensed, undiluted guide for the person who is new to property and casualty insurance, or the employee hungry for a detailed reference source covering specific terms, coverage forms, conditions, endorsements, exclusions, and limits. M’m, m’m good.
Ingredients ■
General Insurance
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Commercial Property Policy
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Property & Casualty Insurance Basics
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Businessowners Policy (BOP)
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Dwelling Policy
Umbrella/Excess Liability Policies
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Homeowners Policy
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Workers Compensation
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Personal Automobile
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Boiler & Machinery Insurance
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Liability Essentials
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Commercial Inland Marine
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Commercial General Liability
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Commercial Crime Coverage
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Commercial Auto Insurance
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Surety Bonds
Nurture your insurance appetite with a copy of The Insurance Essentials Handbook: $25.00 +$5.00 shipping and handling ($30.00 total). To order: call 800/526-2777; send a check to The Academy, P.O. Box 27027, Austin, TX 78755-2027; or visit The National Alliance Web site at www.scic.com. Not available in PA, MD, and DE.
PRSRT STD U.S. Postage
PAID Permit No. 93 Austin, TX Street Address: 3630 North Hills Drive, Austin, Texas 78731 Mailing Address: P.O. Box 27027, Austin, Texas 78755-2027