Resources Magazine Spring 2001 by resourcesmagazine

Insurance Facts and Figures Spoken Here Improve your agency’s efficiency and performance with a selection of targeted Academy publications.

Publisher William T. Hold, Ph.D., CIC, CPCU, CLU Managing Editor James R. Cuprisin, CIC, ARP jcuprisin@scic.com

CIC Editor Rodney R. Rezac, CIC, CPCU, ARM

productivity Growth and Performance Standards (GPS), $39.00 How is your agency doing? Now you can compare and measure against the best performing agencies, based on size and region.

Critical Factors Impacting Agency Value, $27.50 Establish an action plan for success after learning which factors rank as most critical for adding and preserving agency value.

Fee-Based Services: Using Fees to Increase Revenues and Retain Accounts, $30.00 There are benefits and obstacles when providing fee-based services. This book is the definitive guide for sorting out if it will work for your agency.

coverages Complete the Circuit: Insuring EDP Exposures, $27.50 High-tech exposures can mean high-tech headaches unless you learn how to confidently insure your customers. Help is here!

The Three Faces of Executive Liability: D&O, EPL, and Fiduciary Exposures and Coverages, $27.50 Win your clients’ trust and confidence by taking care of their liablity exposures. This information details the risks and coverage needs for clients and prospects.

marketing Maximizing Agency Value: A Guide for Buying, Selling, and Perpetuating Insurance Agencies, $55.00 Discover the key issues and decisions involved in buying and selling an agency to optimize its current value—and future net worth.

Producer Compensation: A Profile of Pay and Performance, $39.50 Commercial and personal lines producers can see how they fare compared to their counterparts in other agencies. Learn answers to the questions you’re too polite to ask.

rrezac@scic.com

CISR Editor Mark J. Rolland, CIC, CISR mrolland@scic.com

CRM Editor Wayne P. Dauterive, ARM wdauterive@scic.com

Academy & NCIM Editor Jack Frick, CIC, AIS jfrick@scic.com

Contributing Writer Lonni Swanson Publications Art Director Becky Veach Contributing Designer Rhea Groepper Marketing Ken Wirtanen 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.” 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.

2007-0901

Resources Summer 2001

in this issue… From the President Exploring New Realms With You… There is probably no phrase that better describes both the history and future of The National Alliance than “Exploring New Realms.” At its inception 33 years ago, the CIC Program represented an entirely new “realm” of professional insurance education with its emphasis on state-specific practical information and an annual update requirement. Today, with your interest, support, and guidance, we are continuing the tradition of exploring new ways of making The National Alliance a more valuable asset to you. These new “realms” of effort include the following: ◆

◆

Features 4

A Review of the New Flood Policy

CRM and RIMS – The Risk and Insurance Management Society, Inc.® now recognizes CRM as an academic foundation of the RIMS Fellow program and the two organizations are working together in the development of new risk management educational programs. Producer School – The growing commitment of leading insurance companies, including Chubb, to support the School is crucial to sustaining a strong agency system.

All of the above successful initiatives have led to your CIC, CRM, and CISR designations becoming even more valuable. It is our goal that these efforts will support your efforts in becoming increasingly competitive and profitable. President, the Society of CIC

Medicare Limitations and Misunderstandings Solving the Fuzzy Math

Toys You Own, Rent, or Borrow Toying with Additional Coverage

Planting the Seeds for Producer Development The Growing Season Never Ends

CISR OnLine – Now, anyone in the world can take the entire program and all the examinations online. In addition, nearly every state has approved CISR OnLine for CE credit. CISR is the only professional insurance designation program that is totally available online. MarketScout – Our strategic partnership with MarketScout continues to develop. As the nation’s leading e-insurance marketplace, MarketScout has worked to initiate Service Elite for CISRs, CNA’s position that CICs are the preferred agents for their e-insurance market, and scholarships for CICs and CISRs.

Flood Warning! Take Coverage

Safety Shouldn’t Take a Vacation When You Do A Risk Management Perspective

Departments 20

Independent Does Not Mean Equal! Prepare to be Successful

CISR Standpoint Knowledge Meets Opportunity

Steering You in the Right Direction Personal Auto Quiz

Alliance News 19

CISR OnLine Education—Anytime, Anywhere

Fort Worth Producer School To Take Off at American Airlines Conference Center

In the News Caught in the National Spotlight

Web site: www.scic.com ◆ E-mail: alliance@scic.com ◆ Fax-on-Demand: 800/828-8454

Resources Summer 2001

ffective December 31, 2000, a revised Standard Flood Insurance Policy appeared on the scene. All new and renewal policies effective from that date are subject to the new policy language. Although the National Flood Insurance Program (NFIP) advertised the policy to be a restructuring, without significant coverage changes, the final result is much more than that. The original goal of the policy rewrite was to simplify and restructure the policy to more closely resemble a standard Insurance Services Office (ISO) property insurance policy. To achieve this goal, the NFIP involved ISO in the policy rewrite in an effort to seek uniformity of structure and standardization of language. The flood policy, however, is not a standard ISO policy, and at times the ISO language results in subtle changes that limit coverage or cause confusion. For the most part, the changes are beneficial to the policyholder, but there are some definite concerns. Agents need to review the policy forms carefully in order to correctly advise their insureds. In some cases, a thorough risk review may be necessary due to limitations introduced by the new policy language.

Voidance and Reformation The policy begins with the Insuring Agreement which cites the Federal Code and reminds the insured that this is a single peril policy—direct physical loss by and from flood. It also contains the stipulation that “you have furnished accurate information and statements.” The Insuring Agreement gives the NFIP the right to review the information at any time and to revise the policy based on that review. It is this statement that sets up the conditions for policy voidance or reformation that are later contained in the general conditions section of the policy. The Standard Flood Insurance Policy (SFIP) is not a contract of adhesion as are most insurance policies. Once written and issued, it may still be declared null and void or provide less coverage than the policy states if certain conditions are met. In the case of intentional misrepresentation or an ineligible property, the policy may be declared null and void from its inception. In the situation where a rating error or classification error was made, the policy can be reformed to provide less coverage than stated. Once the mistakes are discovered, additional pre-

mium must be paid within 30 days to reinstate the level of coverage initially desired. The voidance and reformation clauses are unique to the flood insurance policy and agents need to be aware of the potential consequences of mistakes.

Definitions The definitions section of the policy has been restructured to include the definition of “you” as found in most ISO forms. In the dwelling form, “you” is the named insured and spouse, if a resident of the same household. In the general property (commercial) form and the condominium form (RCBAP), “you” is the insured shown on the declarations page. Unlike the ISO forms, however, no provision is made in the dwelling form for “death of the insured” and continuance of coverage for the insured’s legal representative. Likewise, in the general property form the concept of “First Named Insured” as found in ISO forms has not been included. Combined with a bailee condition that states that “no person or organization, other than you, having custody of covered property will benefit from this insurance,” there may be a question of coverage extending to legal representatives. The prior flood policy always included legal representatives within the description of “Persons Insured.” The definitions section of the policy has cleared up one of the biggest misunderstandings in the flood program by finally providing a complete definition of flood. Flood is a general and temporary condition of partial or complete inundation of two or more acres of normally dry land or two or more properties. Flood can be a very localized event affecting just two properties. The NFIP has always defined the scope of a flood as “two premises or two acres,” but never before has this language actually appeared in the flood policy.

Structure Coverage There are a number of changes with regard to structure coverage. Most significant is a complete reversal of the single building rule. The flood policy will now cover, as a single building, all additions and extensions that are attached to or in contact with the building by means of a rigid exterior wall, a solid load-bearing interior wall, a stairway, an elevated walkway, or a roof. However, the

Continued on next page.

Resources Summer 2001

Flood Warning…continued from previous page. policy extends an option to the property owner to separately insure these additions and extensions. Why would anyone do that? To obtain a greater amount of flood insurance!

erty cannot be insured under the same contents limit. The application requires the designation of contents as “household goods” or “other.”

If there is a single structure with an addition (think house and garage) attached by means of a covered walkway, it is possible to insure this as one building or two. If the total value is more than the flood program’s maximum $250,000, insure as two buildings. If not, insure as a single building. For a commercial structure (think strip shopping center) where the value far exceeds the $500,000 single building maximum, it is possible to use this rule to insure each unit that is separated by a solid, load-bearing division wall as a single building.

The flood policy specifies that ranges and refrigerators will be considered building items for the purpose of coverage. Likewise, structural improvements are considered building items. The policy language has been revised, however, to include coverage for tenant-owned ranges and refrigerators under the tenant’s personal property coverage amount, and to allow the tenant to apply 10% of the contents amount to structural improvements. Likewise, condominium owners may apply up to 10% of their contents amount to cover structural improvements and betterments.

Be aware of another limitation that is later found in the section entitled Property Not Covered. There is no coverage for underground structures and equipment, including wells and septic systems, nor for any portion of walks, walkways, decks, driveways, patios, and other surfaces outside the exterior perimeter walls of the building. Picture this: a house with a beautiful, covered wraparound deck overlooking the lake, or a restaurant with a large outdoor deck and tiki bar situated at a marina. None of this is included within the scope of building coverage; it is all located outside of the perimeter walls of the structure.

Personal Property Coverage

Unanswered Questions

Personal property coverage has been enhanced in the new policy form. The special limit applied to valuable items such as jewelry, fur, artwork, etc. has been increased to a $2,500 total for any one loss. Previously, the limit had been $500. Coverage for personal property used in any business has been included within this amount as well. In the prior coverage form, there was no coverage for business property. However, since the $2,500 is a TOTAL amount, not per category, it is wise to consider separately insuring valuable items on an inland marine policy form that includes the peril of flood. If there is a serious home business exposure, a second flood policy written for business contents should be considered. An NFIP rule is that two categories of prop-

Two questions remain unanswered at the present time with regard to building and personal property coverage. The first concerns machinery and equipment. In the general property form, a specific list of fixtures, machinery, and equipment is covered under building. No mention is made of other attached machinery and equipment that traditionally has been considered building in insurance policies. Instead, the personal property coverage section lists as covered property furniture and fixtures, machinery and equipment, stock, and personal property. It would seem that all machinery and equipment not specifically listed in the policy must now be included as personal property, not building. The underwriters at the NFIP assure me that this was not

Resources Summer 2001

The second unanswered question is with regard to a lessee’s responsibility to insure the structure as a result of the lease provision. Since the flood program does not allow the tenant to purchase structure coverage, nor allow the owner of a commercial condominium to purchase structure coverage, it may not be possible for either of these to fully insure their financial exposure. The only answer that I have received to date is for the tenant to pay for a policy written in the name of the building owner. The flood program has no endorsements that can be used to add other entities as additional insureds.

Property Not Covered and Exclusions

Under the building coverage section of the dwelling policy, up to 10% of the amount of insurance on a dwelling may be used to cover a detached garage. The coverage for carports, however, has been completely eliminated. In the general property and condominium forms, there is no extension for any type of other structure. The rule for flood coverage is that each building requires a separate policy.

the intent of the language change. The intent was to allow tenants to include coverage for machinery and equipment installed at their expense as personal property. The result may have been that all machinery and equipment must be insured as personal property if a literal interpretation of the policy is enforced.

Two of the most significant sections of the new flood policy, and the places where many of the subtle changes have taken place, are Property Not Covered and Exclusions. Every agent needs to carefully review these policy sections. Eliminated from coverage are self-propelled vehicles, unless used mainly to service the described location or assist the handicapped and located in a building at the described location. These include all types of motorized equipment, including dealer’s stock. Picture the contents of your local John Deere dealership! Coverage has been excluded for scrip and stored value cards, swimming pools, hot tubs and spas (unless bathroom fixtures), plants, shrubs, and growing stock. These are in addition to property that has long been ineligible for coverage such as accounts, coins, valuable papers, underground structures, containers, bailees customer goods, personal property in the open, structures over water, and personal property in a basement. Although not found in the dwelling or condominium forms, there is a pollution limitation added to the general property form. Coverage for damage caused by pollutants to covered property is limited to $10,000. This does not cover the cost of testing or monitoring of pollutants unless required by law. The big problem here is determining when direct physical loss by and from flood stops and damage by pollutants starts. Flood, by its very nature, is a pollutant. Flood water contains all sorts of noxious material. Water which backs up through sewers or drains as a direct result of a flood in the area is now covered. The 72-hour damage period and the 80% insurance to value requirement

previously needed for that coverage have been eliminated. That’s the good news! Now, the bad news. Land subsidence, destabilization, and erosion are no longer covered unless the subsidence is along a shoreline and results from the erosion caused by cyclical wave action.

Conditions Finally, the conditions section of the policy contains several changes that are noteworthy. A revision to the Other Insurance clause now allows the NFIP policy to be primary and another flood policy to be excess as long as the other policy has a provision stating that it is excess over a primary layer provided by the National Flood Insurance Program. The policy provides for three loss settlement options, replacement cost, special loss settlement, or actual cash value. A replacement cost settlement will apply to the structure coverage under the Residential Condominium Building Association Policy (RCBAP) or to a single-family dwelling that meets two conditions. First of all, the dwelling must be the insured’s principal residence, which means that the insured or spouse has lived there for 80% of the 365 days immediately preceding the loss, and at the time of the loss, the amount of insurance must equal 80% of the replacement value of the dwelling. A special loss settlement will be applied to manufactured or mobile homes that are the insured’s principal residence. If totally destroyed, the payment will be for the lesser of replacement cost, 1.5 times actual cash value, or the amount of insurance.

Hot off the Standard Publishing Corp. presses, Avoiding Surprises, Second Edition, is a risk management publication authored by “one of our own”—former CRM instructor and longtime CIC, Frederic C. Church Jr. First published in 1982, this venerable risk management classic with the great title has been revised and updated to include the latest risk management approaches and techniques. The subheading, “Seven steps to an efficient, low-cost risk management & insurance program,” aptly summarizes the basic, practical information the book delivers.

Frederic C. Church Jr., CIC

Shortly after the new Avoiding Surprises hit the shelves, associate editor of Business Insurance, Michael Prince, gave the book a rousing endorsement, calling it “a key resource for risk managers. With an eye toward simplifying what others often complicate, Mr. Church

M. Rita Hollada, CIC, CPCU, CPIA, AAI, CPIW

With these few exceptions, all other structures and all personal property will be paid at Actual Cash Value. There is no optional replacement cost for commercial structures, other structures, multi-family homes, or personal property. One final stipulation is that antiques will be paid at “functional” value. When questioned, one adjustor defined that to me as, “We’ll pay for a reproduction or an old chair.” There will surely be some interesting claim discussions on this one!

Rita Hollada is an independent agent and broker from Selbyville, Delaware. She is a member of the national faculty for the CIC Program and an instructor for CISR and DOSR programs. Rita is the chairperson of the Flood Insurance Producer’s National Committee, an industry advisory group to the NFIP policymakers.

Conclusion

To Hear the Author…

The flood insurance policy is a very distinct contract. Like any insurance policy, it must be studied and understood. Probably more important than what is covered is to understand what is not fully covered. Only in this way can an agent advise and assist an insured to appreciate their exposure to flood loss and the extent of protection possible through the purchase of a flood insurance policy.

Rita will teach the following 2001 institutes: Agency Management Sept. 12-15 Sioux Falls, SD Sept. 13-16 Fort Lauderdale, FL Oct. 24-27 Mystic, CT Nov. 2-4 East Windsor, NJ Dec. 5-8 Annapolis, MD Dec. 6-8 Lansing, MI Personal Lines Oct. 24-27 Fredericksburg, VA Dec. 5-8 Rockville Centre, NY

has set forth the basics of the risk management field.” He concluded his review on this note of unqualified praise: “[Church’s] informative, well-written book will help any risk management professional achieve his goal.” We can’t go without mentioning the book’s references to The National Alliance. In Chapter 10, under the heading “Sharpening the Saw,” Church presents a brief synopsis of the CISR, CIC, and CRM programs, and adds, “A feature of the CISR-CIC-CRM program is the laudable requirement of annual continuing education...” In addition, he gives us a particularly nice plug on the Acknowledgments page, extolling the teachings of the CIC and CRM programs. Congratulations, Fred, and thanks for the good words.

CLARIFICATION: Spring 2001 issue of Resources, page 17— Estate Planning and the Charitable Remainder Trust The Federal Estate Tax should be calculated in the following manner, and not by using the formula on page 17. The Federal Estate Tax (FET) is calculated by determining the tax due on the taxable estate (gross estate less allowable deductions), then applying the unified tax credit, as well as any other qualified tax credits. Value of the taxable estate

$5,420,000

Estimated FET on taxable estate (calculated from Federal Estate Tax Table)

$2,621,800

Less tax credit for Bill in 2001 (for a $675,000 applicable exclusion amount)

<$220,550>

Less tax credit for Barbara in 2001 (for a $675,000 applicable exclusion amount) <$220,550> Estimated FET due if no other credits

$2,180,700

Remaining value to go to the children

$3,239,300

Resources Summer 2001

he presidential debates between George W. Bush and Al Gore often focused on Social Security and Medicare protection. Both candidates addressed the importance of preserving the long-term coverage for Americans of every age. However, coverage specifically for older Americans is poorly defined and creates many misunderstandings and misconceptions. Our clients often believe that they do not need Long Term Care Coverage because Medicare will take care of them. This is simply not true. They look forward to retirement as a time of contentment and peace, a new time for old friendships, a period of calm sufficiency. They imagine they will be able to do things they always wanted to do but could not because they were caught up in working and tending to the needs of others. While this may prove to be a true picture for some people, many others find a far different reality. It is difficult to enjoy retirement without financial security along with adequate health insurance protection. Today, nearly 40 million Americans rely on Medicare for their health care. Much has been written and discussed lately about the Medicare program, including possible changes and program reductions. Medicare can be confusing for the general public to understand because there are so many rules governing its services. There is uncertainty about what Medicare covers and does not cover and how much it pays toward medical expenses. Our clients, like other Medicare beneficiaries, want to know what, if any, additional health insurance

Resources Summer 2001

or Long Term Care Insurance they should buy. This article is written to help better understand Medicare benefits, coverage, and limitations. Considering these shortcomings can be beneficial as you counsel your clients on their retirement needs. Medicare is a federal government program of health insurance. This program is designed to assist people age 65 or older and some disabled individuals under the age of 65. To be eligible for Medicare you must be eligible for Social Security or Railroad Retirement benefits. There is neither a financial requirement nor cut-off. You receive Medicare benefits no matter what your income or financial situation. There are two parts to Medicare Coverage: Part A—which is often referred to as Hospital Insurance (however, it covers more than hospital stays), and Part B—which is often referred to as Medical Insurance (this covers physician charges and other medical services). Part A helps pay for inpatient hospital care, skilled nursing facilities, home health care, and hospice care. Part B helps pay for doctors’ services, outpatient hospital care, and some other medical services that Part A does not cover. Medicare Part A coverage comes with your eligibility for Social Security or Railroad Retirement benefits. There is no premium charge for Part A. To receive Part B benefits, an individual must pay a monthly premium. The 2001 monthly premium is $50. Part B premiums may change each January 1. Medicare does not cover all potential health care costs. For example, there is a deduct-

ible, which is an initial amount the individual is responsible for paying before Medicare coverage begins. In addition, there are co-pays, which are dollar amounts or percentages of covered expenses, that the individual is required to pay.

Benefit Periods Medicare–Part A hospital and skilled nursing facility benefits are paid on the basis of “benefit periods.” A “benefit period” begins the first day you receive a Medicarecovered service in a qualified hospital. It ends when you have been out of a hospital or skilled nursing or rehabilitation facility for 60 days in a row. It also ends if you remain in a skilled nursing facility but do not receive any skilled care for 60 days in a row. If you enter a hospital again after 60 days, a new benefit period begins. With each new benefit period, all Part A hospital and skilled nursing facility benefits are renewed except for any lifetime reserve days (60) or psychiatric hospital benefits that were used. There is no limit to the number of benefit periods you can have for hospital or skilled nursing facility care.

Inpatient Hospital Care If you are hospitalized, Medicare–Part A will pay all charges for covered hospital services during the first 60 days of a benefit period, except for the deductible. The Plan A deductible in 2001 is $792 per benefit

period. You are responsible for the deductible. In addition to the deductible, you are responsible for a share of the daily costs if your hospital stay lasts more than 60 days. For the 61st through the 90th day, Part A pays for all covered services except for coinsurance of $198 a day in 2001. You are responsible for the coinsurance. After a hospital stay has lasted 90 days, a patient may draw upon 60 reserve days, which may be used only once in a lifetime. For these 60 reserve days, you are responsible for the coinsurance amount of $396 a day in 2001. Once used, reserve days are not renewed. Gaps in Medicare Inpatient Hospital Coverage: ◆ You pay $792 deductible on first admission to hospital in each benefit period. ◆ You pay $198 daily coinsurance for days

61 through 90. ◆ No coverage beyond 90 days in any ben-

efit period unless you have lifetime reserve days and use them. ◆ You pay $396 daily coinsurance for each

lifetime reserve day used. ◆ No coverage for the first three pints of

whole blood or units of packed cells used in each year in connection with covered services.

are primarily personal care or custodial services, such as assistance in walking, getting in and out of bed, eating, dressing, bathing, and taking medicine. To qualify for Medicare coverage for skilled nursing facility care, you must have been in a hospital at least three consecutive days before entering a skilled nursing facility. You must be admitted to the facility for the same condition for which you were treated in the hospital and the admission generally must be within 30 days of your discharge from the hospital. Your physician must certify that you need, and receive, skilled nursing services on a daily basis. Medicare will help pay for up to 100 days of skilled care in a skilled nursing facility during a benefit period. All covered services for the first 20 days of care are fully paid by Medicare. Medicare pays all covered services for the next 80 days except for a daily coinsurance amount. The daily coinsurance

While most casualtyproperty agencies do not specialize in Medicare benefits or retirement planning,

◆ No coverage for care that is not medi-

cally necessary or for non-emergency care in a hospital not certified by Medicare. ◆ No coverage for care received outside

the U.S. and its territories, except under limited circumstances in Canada and Mexico.

Skilled Nursing Facility Care A skilled nursing facility (SNF) is a special kind of facility that primarily furnishes skilled nursing and rehabilitation services. Medicare benefits are payable only if you require daily skilled care which, as a practical matter, can only be provided in a skilled nursing facility on an inpatient basis, and the care is provided in a facility certified by Medicare. Medicare will not pay for your stay if the services you receive

Home Health Care Medicare fully covers medically necessary home health visits if you are homebound, including part-time or intermittent skilled nursing services. A Medicare-certified home health agency can also furnish the services of physical and speech therapists as well as continuing occupational therapy. Medicare will also pay for medical supplies and a portion of the cost of wheelchairs, hospital beds, and other durable medical equipment provided under a plan-of-service care set up and periodically reviewed by a physician. Gaps in Medicare Home Health Coverage: ◆ No coverage for full-time nursing care. livered to your home.

unless medically necessary, or for a private duty nurse. items, such as telephone or television in a hospital room.

or in a SNF not certified by Medicare, or for just custodial care in a Medicarecertified SNF.

◆ No coverage for drugs or for meals de-

◆ No coverage for a private hospital room

◆ No coverage for personal convenience

◆ No coverage for care in a nursing home,

they do have opportunities and even a responsibility to discuss these issues

◆ You pay 20% of the Medicare-approved

amount for durable medical equipment. ◆ No coverage for homemaker services

that are primarily to assist in meeting personal care or housekeeping needs.

Hospice Care Medicare beneficiaries certified as terminally ill may choose to receive hospice care rather than regular Medicare benefits. Part A will pay all the cost for up to a total of 210 days if the physician certifies terminal condition of the patient. You do not have to pay Medicare’s deductibles and coinsurance for services and supplies furnished under the hospice benefit. You must pay only limited charges for drugs and care.

with their clients.

Gaps in Medicare Hospice Coverage: ◆ You pay limited charges for inpatient respite care and outpatient drugs.

in 2001 is $99. You are responsible for the coinsurance. If you require more than 100 days of care in a benefit period, you are responsible for all charges beginning with the 101st day.

◆ You pay deductibles and coinsurance

Gaps in Medicare Skilled Nursing Facility Coverage: ◆ You pay $99 daily coinsurance for days 21 through 100 in each benefit period. ◆ No coverage beyond 100 days in ben-

efit period.

amounts when regular Medicare benefits are used for treatment of a condition other than the terminal illness. While most casualty-property agencies do not specialize in Medicare benefits or retirement planning, they do have opportunities and even a responsibility to discuss these issues with their clients. It is obvious a person should not rely solely upon Medicare to provide sufficient health care Continued on page 13.

Resources Summer 2001

hether it is a new boat, trailer, golf cart, or other recreational-type vehicle, people seem to have more toys today than ever before. This poses a challenge to insurance professionals to provide the necessary insurance protection for their clients. Some clients may believe their personal auto or homeowner policy will provide the necessary coverage for an owned, rented, or borrowed recreational vehicle. It may not be until a loss occurs that they discover they do not have adequate insurance coverage. We will be looking at both the ISO Personal Auto Policy (PP 00 03 06/98 Ed.) and the recently revised ISO HO-3 Special Form Homeowner Policy (HO 00 03 10/00 Ed.) to explain the property and liability coverage provided for owned, borrowed, or rented recreational-type vehicles.

Watercraft The Homeowner Policy provides limited property coverage for watercraft owned or used by an insured. Coverage C Special Limits of Liability provides up to $1,500 for watercraft of all types including their trailers, furnishings, equipment, and outboard engines or motors. In most cases, this limit is not sufficient to fully compensate either the insured or the owner of the property in the event of a loss. Any loss to a watercraft under an unendorsed homeowner policy is on a named peril, actual cash value basis. This does not provide coverage for the most common causes of loss to watercraft, such as sinking or collision with a submerged object. Even the Special Personal Property Endorsement (HO 00 15) continues to exclude collision (other than with a land vehicle), sinking, swamping, or stranding of watercraft. Two property exclusions also pertain specifically to watercraft. Unless the watercraft is in a fully enclosed building, there is no coverage for a loss caused by wind or hail. The policy also excludes theft while the watercraft is not located on the residence premises. The 2000 edition of the Homeowner Policy defines watercraft liability to include the ownership, maintenance, occupancy, operation, use, loading or unloading, entrustment of the watercraft to any person, failure to supervise or negligent supervision, and vicarious liability for the actions of a child or minor.

Resources Summer 2001

The policy excludes any coverage while the insured is racing the watercraft (other than sailing or a predicted log cruise), renting the watercraft to others, carrying people or cargo for a charge, or using the watercraft for any business purpose. If these exclusions do not apply, watercraft liability coverage may be provided by the Homeowner Policy depending on its type, length, and/or horsepower. The following chart illustrates the liability coverage provided: Owned

Rented

Borrowed

Yes, if 50 HP or less

Yes, not excluded

Yes, no HP restriction

Sailboat

Yes, if under 25 HP or if newly acquired, there is no HP restriction Yes, less than 26’

Yes, less than 26’

Yes, no length restriction

Any type while stored

Yes

Type of Watercraft Inboard or Inboard/Outdrive Outboard

An owned watercraft that is excluded for liability coverage only because of its type, length, or horsepower can be covered using the Watercraft Endorsement (HO 24 75). This endorsement provides liability and medical payments coverage only; therefore, it would not provide any coverage if an insured is injured. Property and liability coverage may be more appropriately written on a boat or yacht policy as these policies typically provide coverage on an “open perils” and replacement cost basis, as well as coverage for unattached equipment, medical payments, and liability or protection and indemnity. Borrowed and rented watercraft, like owned watercraft, have up to $1,500 coverage in Section I–Property. However, the liability coverage is different depending on whether it is borrowed or rented. For a borrowed watercraft, the type, length, or horsepower exclusions do not apply. The insured can borrow any type or size watercraft and the homeowner liability would apply. Liability coverage is more restrictive for rented watercraft. For example, an insured that rents an inboard or inboard/outboard engine (including those that power a water jet) with over 50horsepower is doing so without liability coverage from the Homeowner Policy. If an insured borrows that same watercraft, liability coverage would apply.

Golf Carts Changes in coverage for motorized golf carts were made in the current editions of both the Auto and Homeowner Policy. Non-owned Golf Cart The Personal Auto Policy excludes liability coverage for a motor vehicle that is designed mainly for use off public roads; however, coverage is specifically given back for a non-owned golf cart. Physical damage is not covered, since a golf cart does not meet the definition of a non-owned auto (private passenger auto, pickup, van, or trailer). Section I–Property in the Homeowner Policy excludes coverage for a non-owned motorized golf cart unless it is not required to be registered for use on public roads and is used solely to service an insured’s residence or designed to assist the handicapped. Damage to a non-owned golf cart used otherwise is not covered in Section I. If the non-owned golf cart is not required by any law or regulation to be registered, there is $1,000 available in Section II–Damage to Property of Others in the event the insured damages it. Section II–Liability excludes coverage for a motor vehicle that is either registered for use on public roads or property, or is not registered but such registration is required by a governmental agency for use at the place of the occurrence. If the golf cart does not require registration in your insured’s jurisdiction, liability coverage for a non-owned golf cart would be provided. Exclusions for racing, renting it to others, or carrying people or cargo for a charge still apply. Owned Golf Cart Coverage for an owned golf cart can be acquired with either the Auto or the Homeowner Policy. Attaching the Miscellaneous Type Vehicle Endorsement (PP 03 23) to the Personal Auto Policy can provide liability, medical payments, uninsured motorists, and physical damage coverage for an owned golf cart. Use caution with this endorsement, as it has the potential to actually restrict coverage. Without the endorsement, a “you” or a “family member” have liability coverage for the ownership, maintenance, or use of any auto. The Miscellaneous Type Vehicle Endorsement contains language that restricts their coverage to a “your covered auto”— taking away their “drive other car” coverage. Since the Homeowner Policy excludes motor vehicles in Section I– Property Coverages, there is not coverage for damage to a golf cart. The golf cart can be scheduled on the Owned Motorized Golf Cart Physical Loss Coverage endorsement (HO 05 28 10 00) to provide physical damage coverage, and can include or exclude collision coverage. This endorsement provides coverage on a risk of direct physical loss and actual cash value basis.

Liability coverage for an owned golf cart was broadened in the 2000 edition. The prior edition provided coverage only while the golf cart was on the golf course being used for golfing purposes. The policy now defines a golf cart as one owned by an insured, designed to carry up to four persons, not exceeding 25 miles per hour, and within the legal boundaries of a golfing facility, and provides coverage while the owned golf cart is: ◆

Parked or stored or being used by an insured to play golf or other leisure activity allowed by the facility;

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Traveling to and from an area where motor vehicles or golf carts are parked or stored;

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Crossing public roads at designated points to access other parts of the facility; or

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Within a private residential community, including public roads if the motorized golf cart can legally travel on them, which is subject to the authority of a property owners association and contains an insured’s residence.

The policy specifically provides coverage when a motorized golf cart is being used for business purpose while on a golfing facility. When looking to the Homeowner Policy for liability coverage, remember that Section II excludes medical payments and bodily injury to an insured.

Snowmobiles (Snowmachines) Whether for an owned or non-owned snowmobile, the Personal Auto Policy excludes liability coverage except while the snowmobile is being used in a medical emergency. The Snowmobile Endorsement (PP 03 20) can be used to provide liability, medical payments, uninsured motorist, and physical damage coverage for an owned snowmobile. This endorsement does contain exclusions for racing and renting it to others. Section I–Property of the Homeowner Policy excludes snowmobiles just as it did golf carts. If the non-owned snowmobile is not required by any law or regulation to be registered, there is $1,000 coverage available in Section II–Damage to Property of Others if the insured damages it. Section II–Liability provides coverage for an owned or non-owned snowmobile as long as registration is not required for it to be used at the place of the occurrence. For a non-owned snowmobile, coverage is provided anywhere. For an owned snowmobile, coverage is only provided while it is on the residence premises, other premises to which liability coverage has been extended, vacant land, or any part of a premises occasionally rented to an insured. The Owned Snowmobile Endorsement (HO 24 64 10 00) can be used Continued on next page.

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TOYS continued from previous page. to provide Section II–Liability coverage for an owned snowmobile while it is not on one of these insured locations.

Trailers The Personal Auto Policy defines any trailer owned by the named insured (and designed to be towed by a private passenger auto, pickup, or van) as a “your covered auto” and would therefore provide liability coverage. The policy also provides liability coverage on an excess basis for the use of a non-owned trailer since the definition of an “insured” means you or any “family member” for the ownership, maintenance, or use of any auto or trailer. The Trailer/Camper Body Coverage Endorsement (PP 03 07) is used to provide physical damage coverage for an owned trailer. For a non-owned trailer, physical damage coverage is provided if at least one vehicle shown on the Declarations has physical damage. However, loss to a non-owned trailer is limited to $500 and is on an excess basis. This could be a problem for the insured renting or borrowing a trailer. In many cases the insurance professional can arrange with the auto carrier to bind coverage for the non-owned trailer, or the insured can purchase the physical damage coverage from the entity from whom the trailer was rented. Section I–Property of the Homeowner Policy provides coverage up to $1,500 for loss to a trailer or semitrailer not used with watercraft. Trailers in this category include utility trailers, horse trailers, camping trailers, trailers to transport recreational vehicles, etc. Coverage is on a named peril and actual cash value basis. Theft away from the residence premises is excluded. Section II Liability would also provide coverage while the trailer is not being carried on, towed by, or hitched for towing by a motor vehicle. For the insured with the camping trailer, coverage for emergency expenses should be considered in the event a covered loss makes the trailer uninhabitable and the insured incurs expenses for temporary living arrangements while the trailer is being repaired.

Miscellaneous Recreational Vehicles Recreational vehicles can include mopeds, go-karts, all terrain vehicles, motorized scooters, and motorized “children-type” vehicles. The potential for an uncovered loss involving vehicles falling into this category is increased if the insurance professional fails to identify these exposures when talking with the client. It may not occur to the insureds that the motorized scooter or their young child’s motorized car/truck may be excluded from coverage.

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Whether for an owned or non-owned recreational vehicle, the Personal Auto Policy excludes liability coverage except while it is being used in a medical emergency. Attaching the Miscellaneous Type Vehicle Endorsement (PP 03 23) to the Personal Auto Policy can provide liability, medical payments, uninsured motorists, and physical damage coverage for some of these vehicles subject to underwriting approval. Use caution since, as stated previously, this endorsement has the potential to actually restrict coverage. Section I–Property of the Homeowner Policy continues to exclude motor vehicles except those that are not required to be registered for use on public roads or property and are used solely to service an insured’s residence. If a non-owned snowmobile is not required by any law or regulation to be registered, there is $1,000 available in Section II–Damage to Property of Others if the insured damages it. Section II–Liability continues to exclude a motor vehicle that is either registered for use on public roads or property, or is not registered but such registration is required by a governmental agency for use at the place of the occurrence. If registration is required for the recreational vehicle, the policy will not provide liability coverage whether it is owned, borrowed, or rented. For an owned recreational vehicle not requiring registration, coverage would only be provided while it is on the residence premises, other premises to which liability coverage has been extended, vacant land, or any part of a premises occasionally rented to an insured. For a borrowed or rented recreational vehicle not requiring registration, liability coverage is provided anywhere. The Incidental Low Power Recreational Motor Vehicle Endorsement (HO 24 13 10 00) can be used to provide liability coverage for the motorized “child-type” vehicles or motorized scooters as long as the vehicle isn’t built to exceed 15 mph on level ground.

Classic and Antique Cars While classic and antique autos may meet the eligibility requirements of ISO’s Personal Auto Program, they present unique exposures that may be better covered in a specialty market. The Stated Amount Endorsement (PP 03 08), when attached to the Personal Auto Policy, provides physical damage coverage for these vehicles. However, this endorsement must be used with caution since it places a maximum limit of liability on the amount the insurance company will pay in the event of a covered loss. Therefore, the current value must be accurately determined at the time the coverage is written. And, since vehicles of these types typically appreciate instead of depreciate, the value must be updated annually. When placing coverage for classic or antique autos in a specialty market, an Agreed Amount Endorsement should be included. The insurance professional will want to be familiar with the policy form being used by the insurance company, paying attention to the definitions. For example, the definition of driving in some policies will limit driving to

club activities, car shows, etc. Simply driving the vehicle to be serviced may not be included in the definition of driving. When underwriting these types of risks, an appraisal may be required as well as photographs of all four sides and the interior of the vehicle. Garaging of the vehicle is usually a requirement, and there is usually a limit on the number of miles it can be driven annually.

Conclusion We have seen how the Personal Auto and the Homeowner Policies may provide coverage either in the coverage form itself or by using an endorsement. The client’s exposures should be carefully analyzed to determine if using endorsements to existing policies is really the best way to provide coverage. It may be better to write a separate policy since specialty policies typically provide broader and additional coverages specific to that type of risk. An awareness of the “toys” owned, borrowed, or used by a client is the best preparation for placing the proper coverage. Coverage cannot be recommended if the insurance professional is unaware that the exposure exists. Make the discussion of recreational-type vehicles a part of the information-gathering process with new clients, and a part of an annual review with existing ones.

JoAnn Clarke, CIC, CRM, CPCU, AAI, CPIW Since entering the insurance industry in 1974, JoAnn has worked in the company, agency, regulatory, and academic sides of the business. In 1999 she formed JMC & Associates, a consulting and training firm. JoAnn is a member of our national faculty and serves as an educational consultant for both the CIC and CRM Programs.

To Hear the Author… JoAnn will be teaching at CIC Personal Lines Institutes in San Diego, CA, September 13-15, Missoula, MT, September 19-22, and Detroit, MI, October 25-27. She will also teach at the November 14-16 CIC Agency Management Institute in Seattle, WA.

Learn More About this Topic from The National Alliance Before your clients hit the road or the nearest watering hole with their recreational equipment, find out the best ways to cover them at a CIC Personal Lines Institute, CISR Insuring Personal Auto Exposures or Insuring Personal Residential Exposures course, or a James K. Ruble Personal Lines Seminar. Visit our Web site or call:

www.scic.com

800-633-2165

Medicare continued from page 9. protection. It is equally important to know that Medicare does not provide long term care. Without proper planning, long term care will be paid out of retirement savings or other assets such as cash value of life insurance policies. The best advice we can give our clients is to tell them to visit their local Social Security office to review Social Security and Medicare Part A and Part B Benefits. In addition, we should advise our clients of the need for Medicare Supplemental Insurance, to help to fill the gaps in Medicare.

David G. Mathias, CIC, LUTCF David began his insurance career in 1970 and recently retired from active agency production to serve as a consultant for Montgomery Insurance and Investments. As a multiple-lines producer, he specialized in group health and disability benefits, life insurance deferred compensation, and retirement planning. David is a popular instructor of CIC Life & Health Institutes.

To Hear from the Author… You can hear David teach at the following Life & Health Institutes: September 19-22 Wilmington, DE October 11-13 Lansing, MI October 17-20 Casper, WY December 5-7 Columbus, OH

Learn More About this Topic from The National Alliance As you counsel your clients on their retirement needs, a clear understanding of the benefits, coverage, and limitations of Medicare is essential. Medicare is offered as an optional topic at CIC Life & Health Institutes and James K. Ruble Life & Health and Graduate Seminars. For detailed agendas of programs scheduled in your area, contact The National Alliance (www.scic.com, or 800/633-2165) or your sponsoring state association.

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These statistics indicate that, in most cases, someone affiliated with the agency knew the job candidate. Thus, agency owners should consider their employees and other professionals as some of the better sources for finding a producer to hire. Once the agency finds a job candidate, they should use personality tests to gain a better profile of the applicant. These tests are receiving widespread use, as 40% of the commercial lines producers surveyed indicated that they had to take such a test before they were hired. These tests cannot predict with 100% accuracy who will become a quality producer—they are just one measurement tool. However, they can raise some red flags for specific applicants, and give stamps of approval to others. Considering the relatively low costs of these tests (perhaps $10 to $50) and the potential to save agencies thousands of dollars, agencies should think about using personality tests on a regular basis.

ultivating

As seasonal—and often unpredictable—as a farmer’s harvest, an agency’s midyear sales projections can promise high annual yields or below average results. Beyond hard work and sweat equity, the agency owner’s ability to hire and retain educated, motivated producers can determine whether an agency’s bottom line will be rooted in the positive or negative column. When recruiting and hiring producers, agency owners must search for individuals who not only possess the required motivation and communication skills, but will also thrive in their organization’s unique work environment and culture. Where can agencies find good producers for hire? The Academy’s publication, Producer Compensation: A Profile of Pay and Performance is based on a nationwide survey of producers and has some answers to this ongoing challenge. (See inside front cover of this issue for ordering information.) While agencies can occasionally find producers with experience, the Producer Compensation study shows that the average commercial lines producer has 15 years of insurance sales experience and has been with his/her agency for nine years. With this kind of stability, agency owners often have to recruit individuals who have no experience as insurance producers. Agency owners can consider new college graduates to train as producers—71% of the commercial lines producers surveyed had a college degree. Agencies can also recruit salespersons from other industries to switch to a career of insurance sales—29% of the com-

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mercial lines producers surveyed had prior sales experience in another industry before becoming producers. The industries cited most often (in descending order of frequency) include: • Real estate • Office equipment and supplies • Automobiles and parts • Advertising • Medical equipment and supplies • Financial services • Food and beverage • Computers • Clothing • Telecommunications Agencies should give serious consideration to successful salespersons and individuals they know and respect from some of the above industries. How should agencies advertise or promote the fact that they are in the market for a producer? Agencies used several methods to find suitable candidates, as shown by the following survey results: METHOD % AGENCIES Referral 32% Job applicant contacted the agency 13% Family influence 12% Employment agency 6% Newspaper ad 4% School employment office 1% Other 32%

Thus, good recruiting opportunities are presented by new college graduates, salespersons in other industries, and occasionally experienced producers interested in changing agencies. Finding qualified candidates may not always be easy, but referrals seem to be the most successful system used. With a referral, someone has personal knowledge of the candidate’s integrity and work ethic. With other sources, the candidate’s integrity and work ethic may be unknown.

Nurturing Farmers must nurture their crops in order to achieve the highest yield. Agency owners must also give their new producers special care and attention if they want them to grow professionally and contribute to agency profitability in a reasonable amount of time. Training is a critical factor for long-term producer success. The National Alliance School for Producer Development (Producer School) is designed specifically to meet the initial training needs of new producers. This threeweek program teaches the sales skills and techniques that are necessary to compete and be successful in today’s competitive business environment. The National Council for Insurance Marketing (NCIM) Dynamics of Selling program sets important groundwork for the program. Skills and techniques that are taught and learned during the first three days of the Producer School are reinforced throughout the three-week period, often with role-play interaction. The other major component of the Producer School is the teaching of commercial lines

exposures and coverages. Many of these topics are similar to the curriculum of CIC institutes, such as the Commercial Casualty and Commercial Property Institutes, and the CISR courses, including Insuring Commercial Casualty and Insuring Commercial Property. A natural outgrowth of the Producer School is participation in the CIC Program, eventually earning the CIC designation. The purpose of the Producer School is to develop producers at a faster rate—to achieve higher professional growth in a shorter period of time. The Producer School, in a nutshell, vastly improves producers’ chances for success by improving their sales skills and increasing their commercial lines knowledge. New producers obviously should have instruction and training, but experienced producers also need additional education throughout their careers if they are expected to reach their growth potential. In the Producer Compensation study, commercial lines producers were asked about the areas in which they need more training or knowledge. Most of their responses could be categorized into sales and marketing, coverages and products, and risk management. Under sales and marketing, commercial lines producers listed: • Closing the sale • Cold calling • Dealing with objections • Listening skills • Motivation • Networking • Niche marketing • Obtaining appointments • Pre-qualifying leads • Prospecting • Sales management • Sales skills and techniques For learning sales skills and techniques, both new and experienced producers can attend Dynamics of Selling. This 2 1⁄2-day program discusses most of the topics that the producers mentioned in the above survey results. According to survey results, 63% of commercial lines producers have attended a sales class within the past two years. Producers continually ask for training in this area, and most agencies are, in turn, providing their producers with the opportunity to attend sales classes. Agencies which do not use sales classes for their producer development may not be able to stay as competitive as agencies receiving the benefits of these classes.

The commercial lines producers surveyed listed items where they need more training or education with coverages and products: • Boiler and machinery • Business income • Commercial property • Contractors • Directors and officers • Employment practices liability • Estate and financial planning • Commercial general liability • International coverages • Large commercial • Life insurance • Oil and gas • Professional liability • Trucking • Workers compensation These topics, and others, are covered at many National Alliance programs, such as the CIC institutes and James K. Ruble Seminars. Some of these topics are also taught at CISR pro-

grams and covered in Academy studies and monographs. A third area where commercial lines producers identified a need for more training was with the following risk management topics: • Alternative financing • Captives • Claims analysis • Financial management • Loss control • Risk financing • Self-funding • Underwriting Risk management has emerged as a key industry trend within the past decade, and to address the need for risk management education for practicing risk managers and insurance producers, the Certified Risk Manager (CRM) Program was established. This program covers the above topics, among many others. It consists of five 2 1⁄ 2-day courses leading to the CRM designation. This program is best suited for the experienced commercial lines producer, rather than a new producer or personal lines producer. Agencies can assist producers by providing leads and clerical support. The Producer Compensation study addressed several issues in this area: 35% of the commercial lines producers surveyed said their employer regularly assists them in obtaining leads. This assistance is provided by agency-operated sales centers and telemarketing departments. 84% of the surveyed commercial lines producers still do (at least) some of their own prospecting and mailings. 71% of the commercial lines producers surveyed do their own marketing and placement of accounts for new business (58% do it for renewals). Obviously, producers who can focus more time on sales and less time on prospecting can achieve higher production numbers, and agency owners need CSRs and others to assist producers wherever practical and cost efficient. There are costs associated with providing more service assistance for producers, such as CSRs’ salaries. Agency owners must evaluate how the cost for additional service personnel balances with the increased revenues from increased production. Another way agency owners can help step up production is by improving workflow Continued on next page.

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Producer Development…continued from previous page. systems and automation. Efficiency can be increased for both sales and service personnel, but the costs must be factored in. Automation costs, in particular, can vary greatly, depending on the changes or upgrades that need to be performed on the system. The implication from all of this is that many producers may not be spending as much time on sales as they should be. Academy survey results support this theory. Commercial lines producers spend (on average) only 44% of their time on sales, with the remaining time spent either on service work, or with other job responsibilities. Regarding these additional job responsibilities, survey results show that 20% of commercial lines producers are sales managers, 19% are office managers, and 12% have responsibilities with their automation systems. Additional obligations will take away from time spent for sales production. Perhaps in smaller agencies, producers may have to assume some of these additional duties. But with larger agencies, producers should be able to specialize in production and other employees can perform the various responsibilities.

Harvesting Farmers can only expect good harvests with high yields when they planted the seeds at the right time and attended to their crops during the growing season. Constant care and attention is needed year after year to achieve consistently good results. In a similar manner, agencies must plant the seeds with proper recruiting and training of new producers. However, once trained, producers cannot be totally neglected and left on their own if the agency wants to consistently meet or surpass its growth and profit objectives. Only with continual training and education will agency owners see the fruits of their labors with consistently high yields. Many agencies could improve production if they employed better sales management techniques. Agency owners frequently serve as sales managers, and larger agencies sometimes have a full-time sales manager. A sales manager can obviously assume sales management responsibilities and free the owners to spend more time on production and other areas of agency management. According to Academy survey results, 28% of the commercial lines producers indicated that their agencies employed a full-time sales manager.

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To assist agency owners and sales managers, NCIM conducts a 21⁄2-day Dynamics of Sales Management program. This program is an outgrowth of the highly successful Dynamics of Selling program and helps managers to increase production and profits, reduce sales expenses, set production goals, improve leadership skills, create a winning and motivated team, learn how to hire and retain producers, and improve contract and compensation plans. Agencies need to lend producers their support and listen to their concerns. Agency owners and sales managers should help producers improve in areas that producers find to be the most difficult. According to Academy survey results, commercial lines producers most frequently listed the following items as the most difficult aspects of their jobs: • Balance between new business and retention • Cold calling • Prospecting • Retaining accounts • Service work • Time management Several of these items are interrelated. Time management can be difficult for producers who have to do a lot of their own clerical and service work. They must take a sufficient amount of time to service and retain existing accounts, yet find the time for new sales. Cold calling and prospecting are difficult (and time consuming), and a sales center or telemarketing department could help by allowing producers to concentrate more on appointments and sales presentations. Many of these issues are covered in Dynamics of Sales Management. In The Academy survey, producers were asked what agency owners could do to help them increase their sales production. The following items are a summary of their responses: Service work: provide more clerical support and delegate more renewal work to CSRs. (Increased production must be balanced against increased expenses of service staff.) Prospecting: establish a sales center, hire a telemarketer, or supply qualified appointments and leads. (Increased sales revenue should be greater than increases in prospecting costs.) Marketing: develop niche marketing, become more involved with the community, and conduct regular sales meetings.

Insurance companies: assist with price and other negotiations, and help to establish and improve relationships. Training and education: hire a sales manager/ coach and encourage attendance at sales classes. (Dynamics of Selling and Dynamics of Sales Management are two programs of great value.) Automation: improve capabilities of the present database and find better ways to communicate with insurance companies. (One caution here is that automation upgrades or improvements can become substantial expense items.) Incentives: offer bonuses or trips; provide ownership in our book of business. (Dynamics of Sales Management and the Producer Compensation study offer guidance for adequate incentive systems.)

Don’t Leave It All to Chance! To achieve the best results, agency owners need to concentrate on hiring the best candidates, providing comprehensive training, and instituting an effective compensation and incentive system. However, just as farmers have to worry about Mother Nature, agency owners have to worry about changes within their industry caused by recession, technology, legislation, political implications, and yes, catastrophic losses caused by Mother Nature. Agency owners can rely on National Alliance programs to help with recruiting and training new producers, teaching sales skills and techniques, acquiring technical coverage knowledge, and supplying information on compensation and managing a sales staff— all necessary for success in the long run. Don’t leave it all to chance. Give yourself and your agency the best opportunity for consistent growth and prosperity through the classes of The National Alliance. Use the career tree model on page 17 to help plant the seeds of producer development and nurture your producers to consistently achieve high yields.

Jim Cuprisin, CIC, ARP Jim earned his CIC designation in 1989 and his Associate in Research and Planning (ARP) designation in 1995. He is the project director of The Academy and managing editor of Resources magazine.

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RIMS Accreditation

CRM and RIMS Partners in Professionalism

The Risk and Insurance Management Society, Inc.® (RIMS) recognizes the Certified Risk Managers (CRM) designation as fulfilling the Risk Management Foundation requirement of the new RIMS Fellow (RF) Program. The five CRM courses are approved for the RIMS Fellow “professional activities and programs.”

“CRM and RIMS are a timely collaboration bringing together two leaders in risk management education. It’s a terrific bonus for the risk management community and those pursuing advanced education in the field.” Lance Ewing, CRM, ARM Senior Director, Risk Management GES Exposition Services Las Vegas, Nevada SM

Find out how the CRM education and designation program will benefit your career. See the schedule of classes in this magazine’s center insert.

800/633-2165 18

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CISR, the only professional insurance designation available online, now offers online examinations. Say goodbye to #2 pencils and schedules you can’t control. Now make yourself comfortable...test-taking has never been so convenient. You can earn CE credits and the nationally recognized CISR designation at your own pace, and now you can take the CISR exam online too!

Here’s how the testing system works:

The National Alliance has partnered with e-learning provider eMind to facilitate online testing for the CISR Program. The Californiabased company administers online learning solutions to the insurance and financial services industry, and is the only national online proctoring service specifically designed for this purpose. eMind’s testing procedures are already approved in 47 states.

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A student enrolls for CISR OnLine through The National Alliance Web site (www.scic.com) to take the course.

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When the student finishes the course and is ready to take the exam, the student prints out the exam instructions for reference.

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The student locates a state-qualified proctor and arranges for this person to be present during the exam.

An extension of the CISR Program, CISR OnLine courses are consistent with the curriculum presented in the classroom. All five CISR courses are complete and available online: Insuring Commercial Casualty Exposures (IC), Insuring Commercial Property (IP), Insuring Personal Auto Exposures (PA), Insuring Personal Residential Property (PR), and Agency Operations (AO).

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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.

At home or at the office, without the expense of travel and the time constraints of classroom courses, Web-based training through CISR OnLine is a great education alternative and the perfect choice for many students.

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eMind offers online and telephone help for questions about the testing process.

To take the CISR OnLine tour, or if you’re ready to register and get started on your designation, go directly to our Web site or call:

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Student reports are sent electronically to The National Alliance, where CE certificates are issued and students are included and tracked in the system.

The product is proven.

www.scic.com

800.633.2165 800.633.2165 Resources Summer 2001

With shrinking carrier choices and added competition, we are faced with making some serious decisions. While the retail agency is busy servicing local clients and taking care of the day-to-day activities, we should remember that we are (at our core) a retail sales organization. Are you building a common sales culture within your office? In developing a sales culture, we need to start by benchmarking our current talent and developing a plan to improve our activity, our marketing and sales process, and our close ratio. Not as simple as taking a magic pill, here are some common-sense steps to achieve that goal.

Benchmarking Step One: Do you have the right people? Have everyone in a sales and service position take a personality test. This will identify the traits necessary to achieve as a new business “producer” and can then be compared to your staff. Include those in the customer service role responsible for cross-selling accounts. What are the traits? We can begin with a strong ego (no surprise here). They must have the ability to deal with rejection. We add empathy, being able to “walk a mile in their prospect’s shoes.” Do they understand the needs of the prospect? Do they understand their business? Do they understand how to translate that into the insurance industry in a language understood by the prospect? Are they “money motivated?” Do they have a drive to succeed and accomplish? Once the personality profile has been completed (several are available to you), you have an idea of the key traits of the team you have assembled.

n recent articles by national faculty of Dynamics of Selling, we have written about the sales process, strategy, steps for success, and building a sales culture. In this article we want to explore the concept that “all insurance agents are not created equal.”

We see small agencies dedicated to a sales process outperforming the larger ones in some areas, while larger agencies are caught in their “comfort zone.” In other areas we see just the opposite. There are more financial institutions in our business, along with captive agents and direct writers; even real estate agencies and credit unions are beginning to show up in insurance classes. We encounter direct writers in our insurance classes who have a common goal and culture, while the “independent agents” all come with different levels of expertise and strategy for achieving different goals. The first question that comes to mind is, “Why is that?”

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You will find that some of your sales team would be better off in a service role, while others are overloaded with details of the dayto-day routine and you are suffocating them. Left alone long enough, they will eventually gravitate to agencies that provide them with opportunities better suited for their talents.

Profile their Skills! Each of us has a different level of talent. All sales people are not equal. You need to identify those to take the role as mentor or Sales Manager. Even in a shop of just two people, there is room for someone to take the lead. Identify where your team needs training. Some may need product knowledge while others need sales training. Determine their needs and develop a strategy for improving their skills.

Obviously, we think the Society of CIC is an excellent place for you to outsource for product knowledge for producers. You may want to develop customer service representative skills through programs such as CISR. Some will want to sign their production staff up for a Dynamics of Selling course in a town close by. Still others will call and ask us to bring Dynamics of Selling into their office for an “in-house” program designed around their sales focus and marketing strategy. Your sales manager may want to attend a Dynamics of Sales Management program to learn how to manage the sales process within the agency. Having an affordable outsource for staff development is crucial to agency development. It also leaves little excuse for the nonperformers. Why not make non-performers perform and make average producers “Super Producers?” In this scenario, don’t you have everything to gain and little to lose? Now that we have profiled the staff, it is time to set a basic self-improvement program in place for each, depending on their desired positions, talents, and skills. Your agency is now moving closer to performing as a retail sales organization. What next?

F-O-C-U-S!

orget conventional wisdom. We have more competition today than ever before. Did you know that recent projections indicate that 50% of insurance sales people will be retired or dead in 20 years? It has also been predicted that the majority of the underwriting talent will retire and leave the company ranks in the next 10 years. This means that we can no longer do things as we have in the past. We need to develop sales and marketing processes that are proven. We need to clearly relay the message to our carriers of what we can and will do for them. Conventional wisdom suggests that those who do what they’ve always done will have what they have always had. Get out of that box and explore your alternatives before your competitor figures it out first!

rganize a defined marketing program that identifies your areas of strength as an agency, and the appetites of the carriers you represent. Learn about those classes of business and their unique needs. Scan your current client lists for names that you can use to learn their business and obtain referrals. Remember, referrals are the best way to grow your agency with qualified leads. Develop a series of letters and a telemarketing script, and identify lists of prospects for the marketing process. Then add a list of questions to ask in an initial interview for each

targeted class of business. Once we have developed our “team” within the agency and clearly defined each member’s role and responsibility, determine your areas of expertise among different industries. We bet you’ll find that you’re already an “expert” in a specific area and haven’t identified it within your current customer base.

ustomize your marketing materials to fit the industry, and begin building a sales presentation that highlights the particular industry(ies) you have targeted. Have your producers meet with the carriers involved to see what they know about the industry and any special coverage and endorsements unique to their specific needs. Interview claims adjusters about their experiences so that you can build stories of triumph and disaster to share with your new prospects. At the same time, take the producers and tour the businesses (either those you have as current clients or references the carrier insures) and ask the business owner to teach you the intricate workings of the company. Then ask them to serve as a referral to new prospects. Insurance products are “custom-made” from the ground up for each prospect, based on specific needs or pains.

nderstand that it takes time to learn a business, and develop a marketing plan and a sales plan. These things don’t happen overnight, but having a specific plan can sure accelerate your success. Now you know what top-performing agents do differently.

tick to a plan. Independent agents are entrepreneurs and they often run after anything that they think will work. It is important to finish what we start for our clients and for our carriers, which are our partners in this venture. A famous coach once said, “Make the main thing the main thing.” In the retail agency business, selling has a primary role in our existence and we need to keep our focus on selling. It’s the main thing! Any agency of any size in any town in America has an equal opportunity to grow their agency to whatever success they can imagine. Understanding the need to acquire outsourced expertise and to have a plan for making your agency a top-performing agency requires some planning and some FOCUS. An independent insurance agency exists as one of the last true entrepreneurial ventures in America that will allow you to grow to your dreams. And in every case you are paid based on your ability to generate results.

We wish you good selling and remind you that the tools are readily available to assist you in making your dreams come true. After all, independent does not mean equal!

Thomas A. Barrett, CIC, AAI Tom Barrett is a nationally known speaker, seminar leader, and sales coach who brings a unique “super producer” perspective to Dynamics of Selling programs and Ruble seminars. He is president of SIAA/MidAmerica, Inc., a 15-state region of SIAA (Strategic Independent Agency Alliance).

To Hear from the Author… You can meet Tom at one of these upcoming Dynamics of Selling courses: August 15-17 Baltimore, MD August 29-31 Tampa, FL November 7-9 Fort Worth, TX

Learn More About this Topic from The National Alliance Producers, agency owners, and sales managers can always benefit from a tune-up on sales techniques and procedures. Dynamics of Selling, Dynamics of Sales Management, and the James K. Ruble Sales and Marketing Seminar are all good education choices for motivated sales professionals and agency leaders. Visit our Web site or call for more information.

www.scic.com

800-633-2165 Resources Summer 2001

acation time! Throughout the summer, during the fall, over the winter holidays, or a spring break getaway—re gardless of when you go, you look forward to escaping the normal workday grind. But remember—even though you may be on vacation, safety shouldn’t be. You don’t want to remember this trip as the “vacation from hell.” Taking a few precautions before you leave home and while you are on the road will make that vacation much more enjoyable.

There’s No Place Like Home An empty house is a tempting target for thieves. To make your house look like you’ve never left, use a light timer and have a trusted neighbor pick up your mail and newspapers. If you are going to be gone more than a week or two, have someone mow your lawn so it doesn’t have a neglected appearance. You might even consider having a house sitter, or if that’s not possible, see if one of your neighbors will park their car in your driveway. Some insurance companies will also provide home checks for vacationers. Leave curtains and blinds as you normally would, and remember to turn down the ringer on all your telephones so a burglar won’t be alerted to your absence by a ringing phone. You might also consider taking any jewelry or other small valuables to a bank safe deposit box. Engraving any valuables you are leaving at home with your driver’s license number (NOT your Social Security number) is a good idea. (Note: your identity can be stolen by someone who has your name, birth date, and Social Security number. That can be much more devastating and long lasting than having your car or jewelry stolen.) Also, be sure to leave contact information with a neighbor or relative. Before you leave home, make that one last trip through the house to be assured that all the

Resources Summer 2001

windows and doors are locked. Don’t forget the garage door and the doors and windows on any sheds or outbuildings. You should have already repaired any broken windows or locks. Check to make sure the stove, oven, and other electrical appliances have either been turned off or disconnected. Unplug televisions and radios while you are at it. Oh, by the way, did you remember to pack a copy of your eyeglass prescription and copies of any drug prescriptions you might need? If you are traveling by air, pack your prescription drugs in your carry-on luggage in case your checked bags get sent somewhere else for their own vacation. What about your health insurance or prescription card? Did you bring it? Did you check with your health insurance provider, HMO, or PPO to see how to handle out-of-town accidents or illnesses? If you are going overseas, did you find out what you should do there for accidents or illnesses? You should check into this a few weeks before you leave home. Did you remember to bring your doctor’s telephone number and address? Do you have chronic health problems? Have your doctor prepare a medical summary for you to take along.

On the Road Again You have done what you can to protect your home while you are away; now you need to think about what you should do to protect your family and yourself while you are traveling. If you are using your personal car (or a car rented in your hometown specifically for your trip), taking a young child’s car seat will not be a problem. You just put it in and use it. But what if you are flying or renting a car at your destination? What do you do about your child’s safety then? Most airlines don’t offer child safety seats, and the car seats you can rent from car rental agencies (if they haven’t rented them all) may not be as trustworthy. While it is more expensive, you can buy your child his or her own seat on the airplane and take your own car seat with you. You then

have it available to use in any rental cars. The advantages are that you have a car seat that you know how to operate and that you know is safe. The disadvantages are the extra expense of an airplane ticket for your child and more luggage to get from one place to another. Is your child’s safety worth the added expense and inconvenience? You decide. If you are planning to take your vacation by car, you should make sure your vehicle is in excellent operating condition before you leave. If you don’t have the expertise to perform an inspection yourself, take it to a reputable mechanic. At a minimum, you should check your tires (including the spare), brakes, battery, lights (brake lights and turn signals, too), windshield wipers, engine belts and hoses, the muffler and exhaust system, and all fluid levels. In case of emergency, you should take along some essential items: basic tools, jack, spare fuses, flashlight, flares, and a first aid kit. If you have a cell phone, you should also consider taking it with you in case of emergency. Check with your mobile service provider about roaming and long distance charges. Also, take along a copy of your proof of automobile liability insurance, vehicle registration, and your insurance agent’s name, telephone number, and address. Just as at home, you should never leave your keys in the ignition or leave the car running when you aren’t in it, even for a moment. Car thieves often hang around service stations and convenience stores waiting for someone to dash in to pay for gas or buy a loaf of bread. Also, don’t leave valuables in plain sight. Lock them away in the glove box or trunk. Make sure all occupants of the car are wearing seat belts at all times. For younger children, use the appropriate child or infant seat. Just as your driver education instructor told you all those long years ago—DRIVE DEFENSIVELY. You should add “drive courteously” to that. Stopping every few hours for a break will keep the children (and the adults) from getting too restless. It will also help keep the driver awake. If you or your children suffer from motion sickness, there are both prescription and nonprescription medications you can use. Most of these are antihistamines that work by blocking nerve signals between the inner ear and the brain’s nausea center. Oral anti-motion sickness medicines should be taken approximately 30 minutes before travel. Another remedy available is a patch that is placed behind the ear. This patch should be in place at least four hours before it will be

needed. You should consult your doctor for the appropriate medication for your situation. Have disposable bags on hand just in case the remedies don’t work as well as they should.

Up, Up, and Away If you are traveling by air, there are some safety concerns that you should consider. Before you even get into the air, the flight attendant will brief you on, among other things, how to use your seat belt, where the emergency exits are located, and how to use your seat as a flotation device. Listen carefully. Count the number of rows between your seat and the emergency exit in case the emergency lights fail to work. If an actual emergency should occur, you should follow the instructions of the flight attendants and cockpit personnel. It is the law! Have you thought about what you will wear on the plane? According to several air travel organizations, you should wear clothes made of natural fabrics that cover your arms and legs as much as possible. Synthetics may melt when heated. Not a pretty sight. Your clothes should allow for freedom of movement. This includes wearing low-heeled shoes (not sandals) or boots made of canvas or leather.

Hotel California You’ve finally made it to your destination. If you are staying in a hotel or motel, there are some things you can do to make your stay safer and more enjoyable. On the back of the door to your hotel room, there should be some fire safety information. Read it. Locate the two exits nearest to your room. Count the number of doors between your room and the exits. The lights may not be working if a fire occurs. While you are on this reconnaissance, locate the nearest fire alarm and read the instructions. If you see fire or smoke, call the hotel desk and the fire department immediately. Tell the person who answers the phone what room you are in. If you hear a fire alarm, don’t go back to sleep assuming it is a false alarm. Before opening the door, test it with the back of your hand. If it is cool, slowly open the door and exit. If there is no smoke in the hallway, proceed to the nearest exit. Be sure to take your room key with you. If there is smoke in the hallway, get as low to the ground as you can and crawl to the nearest exit. If the door is warm or hot, don’t open it. Stay in your room. Go into the bathroom and fill the bathtub with water. Place wet towels or sheets at the cracks around the door. Also put a wet towel over your mouth and nose. Call the fire department and tell them you

are trapped in your room, and give them your room number. Remember how you taught your children never to open the front door to strangers? That was good advice for them, and it is good advice for you. Hotel employees that come to your door should be in uniform, and they should be able to provide identification. If you still aren’t sure, call the front desk or ask to have the room service receipt slipped under the door. You should make every effort to stay in hotels and motels that have deadbolt locks and a peephole as well as a chain lock. Now you have to do your part by always using them. Always make sure windows and doors are securely locked. This includes the connecting door between rooms. As an added measure, never discuss your room number in public. If the desk clerk says your room number while others are around, demand another room. The desk clerk should write the room number on a card or paper and hand it to you. Not even the most secure hotel can protect careless guests. Never prop your door open, and always keep a close eye on your room key. If you see a suspicious person in the hallway or you feel you are being followed, don’t go directly to your room. Walk in another direction and look for a house phone to call the front desk. If you feel you are in immediate danger, activate the nearest fire alarm.

Hot Fun in the Summertime If you plan to spend your vacation enjoying the fun and sun, make sure the sun’s harmful rays won’t cause problems later. Prevent premature aging and skin cancer by limiting your exposure to the sun with loose-fitting, natural fiber clothes that cover arms and legs. A hat with a brim or bill is also a good idea. Using a good, broad-spectrum sunscreen that protects against both UVB and UVA radiation will protect the skin that isn’t covered by clothes. Experts recommend using a sunscreen product with an SPF (Sun Protection Factor) of 15 or higher. Some Continued on next page.

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Vacation Safety…continued from page 23. people with light or sensitive skin prefer the “industrial strength” sunblocks with an SPF of 45 or higher. Remember to reapply the sunscreen or sunblock after swimming. Don’t forget your children. They need protection, too. There are some sunscreens on the market especially made for children. And remember to protect your eyes. Wear sunglasses (experts say gray or green offer the best protection) that block 99% to 100% of both UVA and UVB rays. Overexposure to ultraviolet radiation can increase your risk for cataracts.

Ring of Fire If your vacation will involve camping in the great outdoors, keeping your campfire contained should be one of your primary concerns. Careless campers with untended campfires have caused numerous forest fires and many wasted dollars in property damage, not to mention loss of life. Campfires are dangerous; treat them that way. When you prepare the campfire, the site selected should be well away from trees, shrubs, and your tent. Clear a 10-foot radius around the campfire of all sticks, twigs, grass, and any organic material; clear the area down to bare soil. You should place rocks directly around the campfire pit. Never use gasoline to start a campfire; use kindling or a lighter stick instead. Before you turn in for the night or leave your campsite, extinguish your campfire. Douse the fire with water or sand, break up the coals, add more water or sand, and stir it with a stick. Finally, cover the dead embers with dirt. You will need to take extra precautions if you are camping with young children. Make sure they understand that they should stay away from the fire. A common mistake made by campers is not being prepared with the proper clothing or equipment for seasonal changes in temperature. Storms blow in during all seasons. Wind and rain can lead to rapid cooling, making hypothermia a danger at any time. At the other end of the temperature spectrum, heat exhaustion or heat stroke are concerns. The symptoms of heat exhaustion are profuse sweating with pale, moist, and cool skin, weakness, loss of appetite, and dizziness. Nausea, chills, rapid breathing, tingling of the hands or feet, and confusion may also be present. Excessive heat can be a problem for young children, since their sweat glands

Resources Summer 2001

Before you leave home: ◆ Use a timer for lights. ◆ Have mail and newspapers picked up. ◆ Leave curtains and blinds as you normally would. ◆ Take jewelry and small valuables to your safety deposit box. ◆ Make sure all your window and door locks work properly. ◆ Disconnect TVs and radios from electrical outlets. ◆ Turn off or disconnect stove, oven, and other electrical appliances. Be sure to take with you: ◆ Copies of any drug prescriptions. ◆ Extra copy of eyeglass prescription. ◆ Prescription drugs you are taking. ◆ Health insurance or prescription card. ◆ Information on getting medical care away from home. While traveling in your car: ◆ Check that your car is in excellent working order. ◆ Always wear your seat belt. ◆ Never leave your key in the ignition. ◆ Make frequent stops for a more enjoyable trip. ◆ Drive defensively (and courteously). If you are flying: ◆ Wear comfortable clothes in leather or natural fibers. ◆ Shoes or boots should be made of leather or canvas.

do not fully develop until adolescence. To reduce the chance of heat injury, be sure to drink plenty of water. Cooled water (50ºF to 60ºF) will taste better and increase voluntary water consumption. Be sure that the water you are consuming is not contaminated. Assume all wilderness streams and creeks are potentially contaminated water sources, due to domestic and wild animals. If you can’t bring enough bottled water for your entire trip, you can buy iodine tablets that will dissolve in water as an easy and inexpensive way to purify it. Boiling is also an acceptable method of water purification, as well as using water filters. On the subject of wild animals—never approach one, not even a baby animal. And teach your children to keep their distance, too. Animals in the wild can carry rabies and other

◆ ◆ ◆

Pay close attention to flight attendant’s preflight briefing. Locate airplane emergency exits. Always follow flight attendant’s instructions.

At your hotel/motel: ◆ Read fire safety information on back of your room door. ◆ ◆

◆ ◆ ◆

Locate two nearest exits (count how many doors away they are). Don’t open your room door unless you know who is there (request identification if necessary). Choose a hotel with adequate locks on the room door. Never discuss your room number in public (or allow the desk clerk to). Keep your room key secure at all times.

While in the sun: ◆ Wear a hat with a brim or bill to protect your face. ◆ Use a sunscreen of SPF 15 or higher. ◆ Wear sunglasses that block 99% to 100% of ultraviolet radiation. ◆ Protect your children from the sun. While camping: ◆ Keep campfire contained. ◆ Never leave a campfire unattended. ◆ Bring proper clothing and equipment for seasonal weather changes. ◆ Take precautions against heat injury. ◆ Never approach wild animals. ◆ Take precautions against insects.

diseases, and cornered animals can turn vicious and attack. To keep animals away from your campsite, make sure all food is packed securely away. Dispose of garbage properly. If garbage disposal is not possible, you should lock it in your car, but be aware that a locked car may not stop an aggressive bear searching for food. There are some other wild critters of which you should be aware: ticks, mosquitoes, and chiggers. Ticks can carry lyme disease. Check for them every night. To remove a tick, grab the head with tweezers as close to the skin as possible, and pull it off in one slow, smooth motion. Mosquitoes also carry disease and can be a real problem. While chiggers pose no real medical concern, they can make for an unpleasant time. Using an insect repellant containing “deet” (diethyltoluamide) can help keep these pesky insects away. Spray it on

shoes, socks, pant cuffs, ankles, arms, and legs. Always be careful about spraying insect repellant near your face. Over-the-counter antiitch creams will help control the itching. Some items that will make your camping experience more comfortable and safe are a map of the area, a compass (make sure you know how to use it), whistle for each member of your family (for if you get lost or separated from them), bottled water and food (and a place to keep it), waterproof tent, sleeping bag, extra clothes (including rain gear), flashlight with extra batteries, sunscreen and sunglasses, waterproof matches or matches in a waterproof container, pocketknife, candle or firestarter, and a first aid kit.

Homeward Bound After you’ve had all the fun and family bonding you can take for one vacation, you should start thinking about your trip home. Take all the safety precautions you took getting to your vacation destination. Don’t become careless now. No one can guarantee an absolutely safe trip because events can happen that are entirely out of our control. But taking these precautions will increase the likelihood of a successful, fun-filled vacation.

Marilyn B. Hollar, ARM Marilyn is curricula coordinator of Certified Risk Managers International and received her B.A. degree from Texas A&M University. She earned her ARM in 1990 and is currently working towards the CRM designation. She has been in the risk management field for over 10 years.

Learn More About this Topic from The National Alliance While this article discusses risk management basics on a personal level, the CRM Program has a decidedly commercial orientation. The five CRM courses include all essential components of the risk management process, reflecting the most current techniques and theories in the field. For CRM Program specifics, visit our Web site or call:

www.scic.com

800-633-2165

ustomer service representatives often start in the CISR Program to gain knowledge and understanding that serves as a foundation for their careers. Many designated CISRs move on to the CIC Program after attaining their CISR designation. CISRs now have the option of attending CRM courses as well. We hope that designated CISRs across the country will serve as mentors for customer service representatives who are just beginning their careers. As the comments in this edition of Standpoint demonstrate, CISRs know how attaining the CISR designation is key, not only for knowledge, but also for gaining the confidence to do their jobs well and grow professionally. The National Alliance encourages others to follow in their footsteps and enjoy similar success stories.

“The CISR Program offers education for those new to the business, with courses designed to thoroughly explain exposures and coverages.” “Starting out in the insurance business can be a bit overwhelming to a new Account Service Representative. Most have come to the industry from very different backgrounds. Agencies have varied plans for training new ASRs, but many begin in a “hands-on” situation. The CISR Program offers education for those new to the business, with courses designed to thoroughly explain exposures and coverages. The information I learned through these classes was immediately applicable to the practical daily tasks of my first ASR job. I remember the proud feeling I had after attending several classes and being able to understand and explain how a policy applied to a client’s needs. The CISR Program was the first step to my continuing education. I have since received the CIC designation and am now working towards CRM. I am fortunate to work for McGriff, Seibels & Williams, Inc., where access to excellent education is provided, encouraging all employees to reach their highest potential.” Pam Perry, CIC, CISR McGriff, Seibels & Williams, Inc. • Birmingham, AL

“With the ever-changing insurance industry, it is most important to keep educating yourself.” “The CISR program deals with day-to-day issues for CSRs from both an agency-insured relationship and an agency-insurer relationship. The program allows us to benefit from the diverse perspectives of our friends and fellow colleagues. The case studies allow us to examine and understand another’s point of view, even if it contradicts our own. You may see things in a new light. Our depth of understanding is often directly related to our ability to apply what we’ve learned. Application takes knowledge from the head to heart. That is how you become a lifelong learner and that is what a CISR is all about! With the ever-changing insurance industry, it is most important to keep educating yourself. I would encourage anyone who hasn’t taken the CISR courses to start, and those who are attending, to continue!” Kelli L. Rhoads, CIC, CISR Essick & Barr Insurance • Reading, PA

Resources Summer 2001

hen it comes to insurance coverages, many people think that the standard ISO Personal Auto Policy is simpler than other types of P&C policies. That’s not necessarily true, as we hope this quiz will point out. If you are a personal lines expert, you may be on automatic pilot when going over the questions. However, many of you will see that these questions aren’t all that easy—the standard ISO PAP is more difficult than you remembered. Try taking the quiz and see how many you get right. Answers are provided at the bottom right of page 27. After taking the quiz, you may feel you need more information on the PAP—not only do you want the correct answers, but you want explanations for the answers. The CISR Insuring Personal Auto Course and the CIC Personal Lines Institute can give you the detailed information you need to understand what the correct answers are and the reasoning behind them. So try maneuvering through this crash course and see if these questions serve as passing lanes or roadblocks for rating your personal auto IQ.

“You,” as defined in the Personal Auto Policy, has the broadest coverage of any insured. Which of the following is a “you” by definition? 1. The spouse of a person named in the Declarations, as long as they remain married 2. A nonresident child of the named insured who co-owns a vehicle added by endorsement to the named insured’s Personal Auto Policy 3. A person not related to the named insured but who resides with them and co-owns a vehicle added by endorsement to the named insured’s Personal Auto Policy a. b. c. d.

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None of the above 1 and 2 above 1 and 3 above 2 and 3 above

1. A vehicle owned by the named insured’s employer and provided for the insured’s unrestricted use 2. A Honda, 4-wheel, ATV that is shown on the Declarations page 3. A 10-ton dump truck the named insured borrows from a neighbor because his covered pickup truck will not start a. b. c. d.

None of the above 1 and 2 above 1 and 3 above 2 and 3 above

Which of the following have liability coverage under an individual’s Personal Auto Policy, when the named individual is driving a borrowed private passenger vehicle while performing an errand for his/her employer? 1. The owner of the vehicle 2. The named individual 3. The named individual’s employer, if they are liable for the conduct of the named individual a. b. c. d.

None of the above 1 and 2 above 1 and 3 above 2 and 3 above

Who has liability coverage under the parent’s Personal Auto Policy, when they are operating a vehicle solely owned by a resident child, but not insured under the parent’s or any other Personal Auto Policy? 1. “You” as defined in the parent’s PAP 2. Any “family member” as defined in the parent’s PAP 3. Any “family member” as defined in the parent’s PAP, except the “family member” owning the uninsured vehicle 4. None of the above a. b. c. d.

Only 1 above 1 and 2 above 1 and 3 above Only 4 above

Which of the following are excluded by a Personal Auto Policy, with no special endorsements or notification made to the insurance company? 1. A stolen car stereo valued at $500, which was bolted under the dash of a covered auto 2. Hail damage to a custom paint job on a covered Ford Mustang 3. Bus fare incurred for transportation expense in the amount of $5 per day for 50 days, due to the total theft of a covered Honda Civic a. b. c. d.

1 and 2 above 1 and 3 above 2 and 3 above None are excluded

Which of the following can collect medical payments coverage under a Personal Auto Policy? 1. The named insured while riding in a taxicab 2. A resident child of the named insured while getting off a school bus 3. A fellow employee of the named insured while occupying a “covered auto” a. b. c. d.

1 and 2 above 1 and 3 above 2 and 3 above All of the above

Subject to a deductible, which of the following is covered by “Other Than Collision” in the Personal Auto Policy? 1. Damage caused when the insured oversprays while painting his lawn furniture, getting green paint on a covered white pickup truck 2. Damage caused when the insured’s horse eats the vinyl top and leather seats of a covered auto 3. Damage caused when a thief crashes a covered auto into a tree a. b. c. d.

1 and 2 above 1 and 3 above 2 and 3 above All of the above

John and his wife, Mary, have a Personal Auto Policy with John being the named insured. John moved out of their house 120 days ago in contemplation of divorce. During this period of separation, Mary normally drives a Buick insured under his Personal Auto Policy. Which of the following claims could be covered by John’s Personal Auto Policy? 1. Mary borrows her sister’s pickup truck to move furniture, and has an at-fault accident. 2. John borrows his brother’s pickup to move furniture, and has an at-fault accident. 3. Mary lets her unlicensed brother borrow the covered Buick, and he has an at-fault accident. a. b. c. d.

1 and 2 1 and 3 2 and 3 None of the above

Which of the following has liability coverage under an individual’s Personal Auto Policy, when a covered vehicle owned by the named individual is being “road tested” by an auto mechanic? 1. The named individual 2. The auto mechanic 3. The auto repair shop, if they are responsible for the conduct of the mechanic a. b. c. d.

Only 1 above 1 and 2 above 1 and 3 above None of the above

Since the passage of the North American Free Trade Agreement, the coverage territory of the Personal Auto Policy now includes: 1. The United States of America 2. Canada 3. Mexico a. b. c. d.

Only 1 above 1 and 2 above 1 and 3 above All of the above

Answers:

1. d, 2. d, 3. d, 4. a, 5. d, 6. d, 7. d, 8. c, 9. a, 10. b

Which of the following are “covered autos” as defined in the Personal Auto Policy?

Resources Summer 2001

The

Immediate Producer The National Alliance School for Producer Development September 23–October 12, 2001 American Airlines Training & Conference Center Fort Worth, Texas

all it boot camp, total immersion, or just doing it. Concentrated training in an intensive, interactive environment is a tested way to get results. This three-week program will give newcomers an education in insurance sales and products that will equip them for a rewarding career, without spending countless years— and dollars—learning the ropes. Producer School graduates will be light years ahead of those who enter the field as on-the-job trainees. A First-Class Facility The American Airlines Training & Conference Center is a resort-like complex with all the extras: free shuttle service to and from DFW, a fully equipped gym, swimming pool, and game room, and even a theater inside an Aircraft Cabin Simulator. Lodging is available at the Center, or participants can choose from several nearby hotels/motels.

Course of Study Producer School training is 3 weeks, 5 days per week, 8 hours per day. Students learn real-life solutions to the real-world problems that impact the business of the commercial lines customer: 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

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Plus Overview of Risk Management and Insurance ■ Agency Functions ■ Personal Lines ■ Industry Marketing ■ Insurer Relationships ■ Fundamentals of Marketing ■ Business/Personal Planning.

Who Should Attend Industry newcomers and entry-level personnel of insurance agencies and companies are perfect Producer School candidates. The curriculum is college level; however, a college degree is not a prerequisite. Class size is limited and students are accepted on a first-come basis.

Coming Up… If our Fort Worth school doesn’t fit your schedule, you’ll have another chance: January 20–February 8, 2002, in Anaheim, California.

Want to Know More? Dates & Locations ■ Tuition & Fees ■ Registration & Application Visit our Web site or call for information.

The National Alliance SCHOOL for PRODUCER DEVELOPMENT

Some insurance organizations that have sent students to our Producer Schools: J. Smith Lanier & Co., Inc. Albany, GA Palmer & Cay, Inc. Columbus, GA Sylvia & Company North Dartmouth, MA The Leavitt Insurance Agency Las Vegas, NV Arthur J. Gallagher of LA Lake Charles, LA Saldana & Associates, Inc. San Juan, PR Insurance Services Hannibal, MO Aparicio, Walker & Seeling, Inc. Madisonville, LA Wells Fargo Insurance, Inc. Fargo, ND The Mahoney Group Mesa, AZ AON Risk Services New York, NY McQueary Henry Bowles Troy, LLP Dallas, TX

800-633-2165 www.scic.com

EXCELLENCE

REWARDED

The CIC pin is one of the most powerful emblems in the insurance industry. As a symbol, it stands out among other designations. As CICs, you are a collectively powerful force in the marketplace.

of lasting impact include James K. Ruble Seminars and the Certified Risk Managers (CRM) Program. [See the extensive schedules for these challenging programs in this magazineâ&#x20AC;&#x2122;s center insert.]

CICs gain a competitive edge at institutes with regular review of coverage changesâ&#x20AC;&#x201D;such as the recent ones with Homeowners, Business Auto, Commercial Property, and General Liability. The CIC Program helps you to continually increase your base of knowledge, a key to peak performance during the emerging hard market. Education update options

CIC POWER. Earn it with dedication and commitment. Wear it with pride. Need to know more?

800/633-2165 www.scic.com SM

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CIC-Span Neil Owens and Manny Tabackman represent two ends of the CIC spectrum. Neil, who is one of our youngest CICs (he just turned 24), earned his designation at warp speed, starting in March 2000 at age 22 and finishing up in December of the same year at age 23. Manny Tabackman, now 77, began working on his designation at age 70 and became a designated CIC at 74.

Wisconsin Agency Honored

Neil Owens, CIC

At any age, it’s about motivation—setting a goal and going for it. Manny Tabackman, Manny who has been in the in- Tabackman, CIC surance business 46 years, says “I should have done it sooner.” A commercial broker who recently moved to the San Diego area, he still provides service to some of his Ohio clients and has a nonresident license. “There was no single motivating force behind earning my CIC as a senior citizen. I am a good student and the formalized education the CIC Program represents appealed to me.” Manny, who has an M.S. from Washington University in St. Louis, has attended Ruble seminars for his last two updates. Neil Owens jumped right into the CIC Program after graduating from the College of William and Mary with majors in Finance and English. He works on commercial accounts for Elias B. Cohen & Associates in Roseland, New Jersey, and credits the CIC Program with giving him added confidence when meeting new clients. “The CIC Program has been a rewarding influence on my career, and I hope that it continues to be a force in my future development,” said Neil. “And it’s allowed me to meet many interesting people.” From California to New Jersey, from age 24 to 77, Manny Tabackman and Neil Owens are two such interesting people, and proof positive that in this diverse, dynamic industry, it’s never too early— or too late—to become a CIC!

Resources Summer 2001

The agency of husband and wife owners Brad Steinbach, CIC, and Cindy Steinbach, CISR, was recently honored by West Bend Mutual Insurance Company. The Mayville Insurance Agency Inc. was recognized for “outstanding performance” in the company’s agency incentive program, Partners in Excellence. Approximately 600 independent agencies throughout Wisconsin, Illinois, Iowa, Minnesota, and Indiana participated in the program. Mayville Insurance has been in business for over 55 years and represents more than 20 companies. Mayville News

NCEF Has New Board Chairman

Kliment Becomes Assistant Vice President Rogers & Gray Insurance Agency, Inc., a Massachusetts agency with offices throughout the state, announces the election of Janet Kliment, CISR, to assistant vice president. Kliment is the branch supervisor of the South Dennis office where she works with both personal and commercial lines accounts. The Enterprise

San Antonio Association Installs Dunlap as President The Independent Insurance Agents of San Antonio (IIASA) have installed Doug Dunlap, Jr., CPA, CIC, as IIASA’s 79th president. Dunlap is CFO for Catto & Catto Insurance, and previously served the IIASA in various capacities. The Insurance Record

Peter van Aartrijk Jr., CIC, a 20-year veteran of insurance industry communications, has been elected chairman of the board of directors of the National Consumer Education Foundation (NCEF). The NCEF supports communication efforts to improve consumer awareness and understanding of insurance and financial services issues. Van Aartrijk is CEO and managing director of The van Aartrijk Group LLC, a Springfield, Virginia-based insurance branding and marketing communications firm. Insurance Advocate

Cahill Promoted by Douple Corinne L. Cahill, CISR, has been promoted to personal insurance customer service agent by Douple Agency, Inc. of Ephrata, Pennsylvania. She is responsible for providing service to existing customers and will also sell new policies. The Ephrata Review

Lisa Jenkins Tapped as 15,000th CISR The Society of CISR celebrated the naming of its 15,000th CISR with the designation of Lisa M. Jenkins, a customer service agent with CNC Insurance Associates, Inc., in Dover, Delaware. At a special presentation at her agency, Jenkins received a professionally framed diploma, and CNC Insurance was given a scholarship to a future CISR course. Jenkins has been in the industry for almost 15 years, the last 61/2 with CNC. She handles all personal lines for the agency and also has many commercial clients. All of the CISR courses Jenkins attended were conducted by the PIA of Pennsylvania, Maryland, and Delaware. News Release

CIC Serves Peace Corps in Africa Pamela Aycock Presented RAIP Member of the Year Award The Raleigh Assoc. of Insurance Professionals recognized Pamela G. Aycock, CIC, CISR, CPIW, with their “Member of the Year” award, for outstanding service to RAIP, NCAIW, and NAIW. Aycock is employed with Aon Risk Services-Raleigh as a senior account coordinator/team director. IIANC Agent News Update

Robert Knight Joins Community Bank Board Citizens First National Bank recently established a Community Board for its Sandwich, Illinois, office and selected Robert L. Knight, CIC, as a new member. Knight is president of Anchor Insurance Marketing, Inc. and the Knight Insurance Agency in Sandwich, and officer and treasurer of Nantucket Development Corp. Sandwich Record

NAIW President is Florida CIC When Candice K. Robinson, CIC, AAI, CPIW, was introduced as the current president of the National Association of Insurance Women at the annual NAIW Florida State Meeting, the St. Petersburg professional was well known to most of the 250 in attendance. Robinson, who has worked in the Florida insurance industry since 1974, has been active in NAIW at the local chapter, state, and national level ever since. She is currently commercial lines manager for Iler Wall & Shonter Insurance Inc., a multi-lines independent agency formed in 1995. Florida Underwriter

Hylant Group Elects Marc Holland Vice President Marc Holland, CIC, of The Hylant Group Toledo, has been named a vice president of the Property & Casualty division of the company. His new duties will include training and supervising the account representatives and account executives in the P&C unit. Holland, who has been with the company since 1987, specializes in insurance for the construction industry, large and middle market manufacturing, and environmental firms. Toledo Business Journal

Florida Agent Honored as Insurance Agent of the Year Robert Reynolds, CIC, CPIA, AAM, AIS, AU, vice president of Morris & Reynolds Insurance in Miami, was recognized as the “Agent of the Year” by the Certified Professional Insurance Agents Society (CPIA). The annual award, based primarily on sales volume, also recognized his role as an officer, director, and leader in numerous industry trade and local and civic organizations. Miami Herald, Pinecrest Tribune

Bob Magner, CIC, an agent who has been working for McSweeney & Ricci Insurance Agency in Braintree, Massachusetts, left July 5th to fulfill a 27-month commitment in the Peace Corps in Bob Magner, CIC Africa. Motivated by his work as a long-standing volunteer at the Children’s Hospital in Boston, Magner will join a 22-member team dedicated to providing health services to the children of the Gambia region.

RIMS® Appoints CIC Lance Ewing, CRM, ARM, senior director of insurance and loss prevention for GES Exposition Services in Las Vegas, Nevada, was recently appointed vice president in Lance Ewing, charge of educa- CIC, ARM tion for the Risk and Insurance Management Society, Inc.® Ewing, who serves on the CRM Curricula Advisory Committee and the Academy Board of Directors, is the most recent CRM faculty member to earn the designation of Certified Risk Manager.

Annual Community Service Award Was CIC’s Vision Robert Kretzmer, CIC, a principal with Dygve-Kretzmer Insurance Services in Chantilly, Virginia, conceived the idea for a Community Service Award to recognize and encourage the tradition of independent agents’ acts of charity. 1999 was the first award year. The winning agent’s charity receives a check for $5,000 from the Rough Notes Company. “Our idea is to identify and promote extraordinary acts of service,” Kretzmer stated. Applications for the 2001 award will be in Rough Notes magazine later in the year. Rough Notes Resources Summer 2001

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