2010 January LaVoz

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January 2010

The MUTUAL BENEFITS PROGRAM "The Voice" of Independent Agents since 1934


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Five Reasons to Choose New Mexico Mutual

1 2 3 4 5

New Mexicos Experts in Workers’ Compensation Insurance CREATED FOR NEW MEXICO BUSINESSES

Created by New Mexicans for New Mexicans, we are a New Mexico business ourselves and understand the diverse operations of our state’s workforce. By placing your business with our company, your premium dollars stay in New Mexico.

PROTECTION FOR YOUR EMPLOYEES, SECURITY FOR YOUR BUSINESS,

We ensure that your business investment is protected from the costs of an accidental injury as well a provide services and programs to keep your employees safe at work and rehabilitate those who may suffer a workplace injury.

EXCELLENT CUSTOMER SERVICE

We are a local company that understands the state and your specific needs, not a faceless 800 number. Our local team of loss prevention and claims professionals know how to take care of injured workers and provide useful and practical information to keep your workplace safe.

LEADERSHIP AND ADVOCACY FOR NEW MEXICO BUSINESSES

We are an industry leader in providing workers’ compensation data to the state of New Mexico. We represent our clients in Santa Fe by advocating legislation that protects businesses and workers, while keeping the cost of workers’ compensation insurance to a minimum.

INTEGRITY

New Mexico Mutual is recognized as one of the most ethical companies in New Mexico and we’ve earned that designation by being forthright and respecting the relationships we’ve built with our agents, clients and injured workers, We are financially strong and will be here to back your business when you need us most.

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3900 Singer Blvd. NE • Albuquerque, NM 87109 505.345.7260 or 800.788.8851

www.NewMexicoMutual.com


IIANM Announces the

Mutual Benefits Program!

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tarting January 1, you can benefit by submitting applications for new business with New Mexico Mutual and receive even more by putting that business with them. IIANM is pleased to offer this Visa gift card program that can benefit you and New Mexico Mutual, the largest financial supporter of IIANM. New Mexico Mutual had rates approved for their three new companies October 1 and wants you to take a look at what they can do for your customers. The Mutual Benefits program is designed to benefit you when you submit an application for new business. Even better, you’ll receive an even larger benefit when you bind that new business with New Mexico Mutual in any of their companies. The benefits will be distributed as Visa gift cards that you can use yourself, give to your family or anyone else you choose!

Qualifications: • CSR receives $10.00 gift card for any new application submitted to and quoted by underwriting • For a bound policy with premium up to $4,999.00, CSR receives a $10.00 gift card • For a bound policy with premium from $5000. to $24,999., CSR receives a $25.00 gift card • For a bound policy with premium from $25,000 to $49,999, the CSR and agent each receive a $50.00 gift card • For a bound policy with premium over $50,000 the CSR and the agent each receive a $100.00 gift card. • Program will run from January 1, 2009 thru February 1, 2010. • Must be a member of IIANM to participate.


Colonial General Insurance Agency

Commercial Lines/Brokerage Department Founded in 1985, Colonial General Insurance Agency, Inc. is a wholesale General Agency providing quality insurance products to the Independent Insurance Agent. Colonial General specializes in both standard and non-standard business. Our Property and Casualty business includes:

Preferred BOP

Property

Inland Marine

Professional Liability

Commercial Liability

Workers Compensation

Avoid monthly or annual membership fees, use Colonial General for your Preferred Business Owners Policies. We have several markets available to give you the best quote possible. For additional information contact your underwriter.

Transportation Department

Commercial Auto

Truckers

Physical Damage

Commercial Contract

NB Mexican Truckers

Local Radius

Personal Lines

Garage

Intermediate Radius

Professional Liability

With 2,500 active producers under contract, Colonial General operates in eight states throughout the South-West. Our offices are located in Murray, Utah and Scottsdale, Arizona. Most of all, we pride ourselves in our friendly customer service and our ability to help our producing agents with their many insurance needs.

Please contact our Utah office for all your Transportation needs! P.O. Box 571770, Murray, Utah 84157 Phone: (801) 562-1188 Wats: (800) 594-8900 Fax: (801) 562-2218 Toll Free Fax: (800) 332-9285

Personal Lines Department ♦

Masterpiece Company

Standard Company

Umbrellas

Stand-alone Liability

Vacant

Seasonal

Dwelling Fire

Homeowners

Preferred Commercial Lines Division P.O. Box 14770 Scottsdale, AZ 85267 8475 E. Hartford Drive, Suite #100 Scottsdale, AZ 85255 Phone: (480) 991-7889 Wats: (800) 848-8860 Fax: (480) 948-1394 www.colonialgeneral.com

You will never pay a fee to access our companies. No volume or binding contracts.


“La Voz� is the official monthly publication of the

La Voz

Independent Insurance Agents of NM 1511 University Blvd. NE Albuquerque, NM 87102. (505) 843-7231. Fax (505) 243-3367. Web site www.iianm.org. This publication is intended to provide accurate and authoritative information on the subject matter covered, but is distributed with the understanding that neither IIANM, nor any contributing author, publisher, contributor or advertiser is rendering legal, accounting or any other professional service and assume no liability whatsoever in connection with its use. Further, the electronic links to our advertisers and/or contributors found in this publication are provided as a courtesy to our readers and do not necessarily indicate an endorsement by IIANM. News items from members of Independent Insurance Agents of New Mexico and the general insurance industry are encouraged. The advertising deadline is the fifteenth day of the month, preceding publication. Advertising rates are available upon request. Please contact Rachel Sheffield at rachel@iianm.org for details

IIANM Staff President/CEO Thom Turbett, CIC VP Of Membership Services Lorri Gaffney

"The Voice" of Independent Agents since 1934

Features Decoding Discontinued Operations

09

Tax Observations on Surplus Lines Taxes

11

Survey on New Years Resolutions: Finances

13

50th Annual Education Seminar!

15

Demand for Special Event Coverage on the Rise

17

P&C Insurers Urge Legislatures to Focus Health Care Reforms

18

Big "I" Supports Bipartisan Estate Tax Relief Legislation

19

Why is Insurance Considered a Commodity?

20

Eliminate Backlog From Your Agency

23

IIANM's 2010 Calendar of Events

24

In Every Issue Tech Talk

06

Education Edge

26

Director Of Insurance Programs Carmen Reese Porter, ACSR, CISR

January's Clickable Calendar

27

Odds n Ends

29

Director Of Education Jeff Straight, CIC, LUTCF, AAI

IIANM's Partners Program

30

Director Of Communications Rachel Sheffield

Receptionist / Member Services Associate Renee Trujillo

Advertiser Index Acuity

14

American Mining Insurance Company

19

Big "I" Professional Liability

28

Chair Alma Franzoy-Capron

Burns & Wilcox

22

CBIC

10

Vice-Chair Kathy Yeager

Colonial General Insurance Agency, Inc.

04

Cresta

07

Secretary/Treasurer Scott Jones

Litchfield Special Risks, Inc.

08

National Director Sam Conlee

Market Finders, Inc.

12

MetLife Home & Auto

16

New Mexico Mutual

02

Trustco

18

2009-2010 Officers

Immediate Past Chair Angela Vasquez


Source: The Anderson Agency Report

Prospecting ads The alternative to a sales ad is a prospecting ad. The purpose of a prospecting ad is to generate a lead, partly for immediate sales but primarily for building growing relationships for future and ongoing sales. Conventional wisdom is that you have to "touch" someone seven times before they start to notice you. It's my belief that a prospecting ad will generate roughly as many sales as a sales ad will, but leave you with a batch of leads. You can then put these prospects into a drip marketing system (see below) to start building a long-term relationship for future sales.

Sales Ads vs. Prospecting Ads Learn the value of prospecting ads and how to process leads when you receive them. One of the divisions of our company is an advertising agency. Specifically, we help our customers (not insurance agents, sorry) sell goods and services to their customers using Web and/or e-mail ads. Sometimes our customers already have a print media theme that they want to follow and augment, but often we (or they) create new ads. Given free rein, people invariably create sales ads. We, however, refer to them as "sink" ads, because the tendency is to put everything—including the (rhetorical) kitchen sink—into the ad. These ads include multiple sales points, all features and benefits—the works.

Sales ads The only result you can get from a sales ad is sales—which can be good and bad. Picture a Web page that advertises a product. The only call-to-action on the page is a "Buy Now" button. Some percentage of viewers will look at the ad, be motivated by the features and benefits, and will buy immediately. What about all of the other people who visited the page and didn't buy? They are gone forever and the company didn't get them as prospects because they had a sales-only Web page. Page 6

Let's put this information into an example for an insurance agency. Let's say your Web site attracts visitors who are not currently customers, as well as current clients. Next, let's say that you want to advertise personal umbrella policies on your site. The sales approach would be to have a hard-hitting page all about personal umbrellas, and why visitors to your site should have one. Content could include features, benefits, samples of claims covered by umbrellas, and samples of what happens to people without them. The Buy Now button could be an actual button that takes the visitor to an agency-branded page from a personal umbrella carrier. The occasional personal umbrella will magically appear, along with your commission check. The prospecting approach would be a shorter, lighter approach, almost a teaser page. Content would include a little bit about personal umbrellas—enough for the reader to grasp the idea—and an offer to e-mail a complimentary white paper or Top 10 list (or anything of value that can be e-mailed). In addition to the call-to-action of offering a complimentary document, you can also include another callto-action: a contact name and phone number. Be prepared in advance to fulfill the request by having the white paper (or whatever you've offered) ready to go. Here are a couple of ways to do that.

Forms If you have a sales and prospecting system, such as SalesForce.com, the form can be generated from that system, with an autoresponder that thanks the person for requesting the information and sends it to them. Alternately, you could use a service like ConstantContact.com—the same service you can use for sending newsletters and ads. A third alternative is to use a system such as FormMail.com, which provides the actual HTML code to put into your Web page, and processes the leads through their system (usually in seconds) and sends them to you, where you can either fulfill the requests manually or have a specific e-mail account with an autoresponder that fulfills the request.

Independent Insurance Agents of New Mexico - www.iianm.org - * January 2009


An important question is how much information you want to (or should) collect. The natural inclination is to get as much information as you can, and to make most of the fields mandatory. Wrong, wrong, wrong! This isn't about you or your agency; it's about the prospect. Make it as easy as possible for people to complete the form. If they want to give you their name and phone number but not their e-mail address, fine. Just remember that every time you add a field, fewer people will complete the form. Does it really matter that you have their first and last names as separate fields? Unless you're expecting thousands of responses feeding automatically into Salesforce, there's nothing wrong with a producer or CSR manually reading what the prospect is willing to give you. When we create forms, we usually have four fields, none of which are mandatory: Name, Phone, E-mail, and Comments box. And yes, we often get form submissions with incomplete data. Since these prospects are worth a lot to us, we take a few minutes to gather the missing information from the Web. Here's how: •If the e-mail address has an actual Web site, such as @ agencyname.com, you can usually get the full information there. •Try doing a Google and/or a Bing search for the e-mail address. •If the e-mail address is from a site like Hotmail, you can use a service such as emailfinder.com (premium membership with unlimited searches is $23.40 per year). •If you only have the phone number, enter it into Google or Bing, with hyphens, and you'll often come up with either a full telephone listing or a Web site. Once you have gathered this information, you should put it into either a CRM system, such as Salesforce.com (full-featured, but not cheap) Zoho.com (starts free and grows to inexpensive), or directly into a system such as ConstantContact.com, which enables you to send ongoing newsletters and promotional material and includes significant CRM components. If your agency is willing to take a longer-term view, try using prospecting pages and ads either in place of sales ads, or at least interspersed with them. You'll be glad you did. by G. Barry Klein G. Barry Klein is a former insurance agent who maintains UltimateInsuranceLinks.com as an industry service.

The Shortest Distance Between You And Quality Property/Casualty Insurance Products And Services

Cresta gives you access to: • Customized Packages for financial institutions, technology firms, health & life science companies and more • Commercial auto, including trucking, heavy equipment transportation and nonemergency medical transport • Contractors • Energy • Environmental Liability • Health Care • Professional Liability/ Specialty Lines • High Net Worth Individual Personal Lines • Umbrella & Excess Liability • Workers Compensation • And more... Competitive commissions. Responsive service. No monthly access fees. For more information on what we can do for you, call Bob Rich at 303.691.8540.

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Decoding Discontinued Operations

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Misunderstandings can lead to E&O claims.

homebuilder decides to hang up his hammer and retire to Florida. He contacts his agent to see what he needs to do about his insurance, which is coming up for renewal. The CSR advises him that he needs to do nothing because he has a CGL occurrence form, and the CSR tells him that, unlike under a claims-made form, he is protected "forever into the future" for claims. So, the contractor retires to Florida and enjoys the good life --- for two years. After two years, the deck on a home he built on a hillside collapses during a party, sending 35 people snowboarding down the hill without snowboards...or snow. Luckily, no one is killed, but several people are injured enough to require medical attention. A claim is filed against the contractor who contacts his agent. Eventually, the carrier advises that he has no coverage. At this point, the CSR, producer and agency owner finally take the time to read the contractor's CGL policy. They learn that, while the CGL does indeed cover claims "forever into the future," the claim must arise out of an occurrence that takes place during the policy period. A common misconception is that the occurrence happens at the time of the negligence --- in this case, when the deck was inadequately secured.

by Bill Wilson

Market Update: Based on the responses to Virtual University, we are told that the following have markets for discontinued operations/products coverage: • • • • • • • • • •

AIG (www.aig.com) General Star (www.generalstar.com) RLI/Mt. Hawley (www.rlicorp.com) Triangle Brokerage (Bermuda) Fenchurch Insurance Brokers, Ltd. (London) Admiral (www.admiralins.com) All Risks, Ltd (www.allrisks.com) Shand-Morahan - Evanston Ins. Co. (www.shand.com) USX/S (www.usxs.net) Cooney, Ricard & Curtin (www.crcins.com)

If you know of others, please email Bill.Wilson@iiaba.net.

However, a careful reading of the CGL policy's insuring agreement reveals that, "This insurance applies to ’bodily injury’ and ‘property damage’ only if...the ‘bodily injury’ or ‘property damage’ occurs during the policy period." So, no CGL coverage is extended. Fortunately for the contractor, the claim is covered... by the agency's E&O policy. Discontinued operations coverage and discontinued products coverage is a necessity for most contractors, manufacturers and others with similar exposures. Unfortunately, not every company writes this coverage, so it may be necessary to provide it on a surplus lines basis. Agents should be wary of this often misunderstood exposure, or they may find that their agency's operations suspended.

Independent Insurance Agents of New Mexico - www.iianm.org - * January 2009

Page 9


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Taxing Observations on Surplus Lines Taxes

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Certain states may have a heightened interest in surplus lines bill.

by Paul Buse

he House unanimously passed the Nonadmitted and Reinsurance Reform Act of 2009. After a similar bill failed in the Senate last year, many in the insurance industry, including the Big “I," are hoping the House bill brings some clarity to the surplus lines marketplace. Promoters of the bill cite the need to clarify rules for filing and paying state surplus lines taxes. The graph below provides some perspective on the importance of the surplus lines sector to P&C business in each of the 50 states and Washington, D.C. The graph shows an estimate of the surplus lines taxes collected, the premium tax percentage rate and the per capita surplus lines premiums in the state. The states are listed from left to right in descending order based on the estimate of total surplus lines taxes collected.

Source: A.M. Best data on each state’s surplus lines direct written premium for 2008, state surplus lines tax rates as reported in the Sept. 14 A.M. Best Surplus Lines Market Review, and the U.S. Census Bureau. Note: surplus lines taxes are an estimate based on tax rates and premiums reported by A.M. Best. Actual taxes and fees collected in states may vary from totals shown above as there are fees in addition to surplus lines taxes in some states and a state may tax premiums outside of what A.M. Best tracks as written in a state based on required filings.

The states most interested in any federal bill on surplus lines will presumably be those with the most tax receipts. Not surprisingly, the top five states in estimated surplus lines tax receipts are also generally the largest states. That is, of the top five states in premium tax receipts, four have the highest total population because the more people and the more activities requiring surplus lines coverage, the more tax revenues are generated. An interesting deviation from this trend is Louisiana. Louisiana, unlike its brethren in the top five, does not have a very large population – in fact, it ranks 25th in population, according to U.S. Census Bureau estimates for 2008. Reasons for Louisiana breaking into the top five no doubt include the heightened need for the specialized coverages and flexibility offered by surplus lines insurers in the state. This is reflected in the graph; Louisiana ranks first in the nation at $212 per capita in surplus lines premiums. Second, Louisiana’s surplus lines tax rate, while not the highest, is tied for second highest at 5%. Interestingly, the surplus lines tax states receive appears to be considerably higher than the tax on admitted P&C business. Most independent agents know the general premium tax in effect in their state and the rates shown in the chart generally exceed it. In fact, the surplus lines tax rate across all states is almost 4%. The average tax rate on standard P&C lines is less than 2%. As the Senate considers the bill further, the rationale for surplus lines taxes may see some discussion, particularly in light of the fact that some states charge as much as 6%.

Independent Insurance Agents of New Mexico - www.iianm.org - * January 2009

Page 11


www.marketfindersnm.com

Phone: (505) 822-8711 Fax: (505) 822-1165 Toll Free: (800) 530-8711

New Mexico’s Locally Owned Managing General Agency Since 1977 Representing some of the most financially strong and innovative insurance companies in the specialty marketplace!

Top-Tier Markets For:

Commercial / Public Auto General Liability Property / Vacants Garage / Dealers Liquor Liability Special Events Inland Marine Directors & Officers Liability Professional Liability / E&O Commercial Umbrella Watercraft / Motorcycles / ATVs Personal Umbrellas Homeowners Mobile Homes Dwelling Fire / Vacants At Market Finders, Inc., our mission is to professionally provide quality specialty markets and service to the Agents of New Mexico.

Market Finders, Inc.

4910 Alameda Blvd NE - P.O. Box 90280 Albuquerque, NM 87199 Page 20

www.marketfindersnm.com

Independent Insurance Agents of New Mexico - www.iianm.org - * January 2008


Survey on New Year’s Resolutions:

Finances Surprise Finding: Fiscal Fitness More Desired than Physical

A new survey about New Year’s resolutions shows Americans continue to have mixed feelings about their own financial future, as well as the country’s. Sponsored by Allianz Life Insurance Company, Synovate Research conducted the survey of 1,000 respondents across the United States in November 2009. When asked what the country’s New Year’s resolution should be for 2010, survey respondents cited that financial issues are top of mind: 52.6 percent said create jobs/ reduce unemployment, 32.4 percent wanted the country to fix its finances, 10.6 percent cited solving healthcare issues & 4.4 percent said mending strained relations around the world.

people (40.2 percent) said diet and exercise, versus managing their money better (38.7 percent). “Feelings about the future are mixed, but people fundamentally agree that the nation and its citizens must focus on rebuilding a strong financial future. The survey also shows a lack of confidence in exactly how to manage finances well,” said Chief Marketing Officer Nancy Jones of Allianz Life. “Whether focusing on managing money better or saving for the long term, a financial professional can help to identify specific clients’ needs and concerns.”

When asked whether financial planning was part of their own personal New Year’s resolutions: 33.6 percent said “I don’t have enough money to worry about it”, 33.2 percent said are including financial planning in their 2010 resolutions, 23.3 percent said they already have a solid financial plan.

Diet and Exercise vs. Fiscal Fitness When asked what type of expert professional service they would most like to use, 40.7 percent chose a financial expert compared to only 27.3 percent who said they wanted personal trainer. Financial guidance was of particular importance to the youngest and oldest generations surveyed, with 43.4 percent of the 18-24 group choosing financial expert, and 42.4 percent of those 65 and up. Conversely however, when asked what resolution for 2010 they are most likely to keep, more

Independent Insurance Agents of New Mexico - www.iianm.org - * January 2009

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trust. acuity.com


SPONSORS & EXHIBITORS CLICK HERE

a l E u n d n u cation Sem A 0 5 s ’ M inar IIAN 15 Hours of Continuing Education th

for the Insurance Professional

KNOWLEDGE IS GOLD

W

elcome to the Independent Insurance Agents of New Mexico’s 50th Annual Education Seminar! This seminar is designed to specifically meet the annual continuing education requirement for licensed NM insurance agents. We encourage you and your staff to join us on March 10th & 11th, 2010 at The Hilton Hotel in Albuquerque. This two-day program offers educational opportunities, a great Trade Show with over 30 exhibitors, and provides a venue for industry professionals, agents, CSRs and company representatives to network. For those of you who have not attended before, this is how it works: We will be featuring 20 classes, taught by various instructors. Choosing your classes is much like making selections from a menu. You may choose to take all your classes within one track (i.e. commercial lines only) or you may choose to mix and match tracks so you can take advantage of the wide variety offered. The entire program is approved for both the P&C and L&H licenses, so you may attend any class you like.

Please click here for class descriptions and registration form.

Seminar Tracks

8:00am - 12:00pm

1:00pm - 4:00pm

8:00am - 12:00pm

1:00pm - 4:00pm

4 Hours of CE

3 Hours of CE

4 Hours of CE

3 Hours of CE

Commercial Lines

Inland Marine Coverages

Implied Coverages

Big I’s Ask an Expert Commercial Lines

Employer Related Exposures

Jack Cleary

Paul Martin

Personal Lines

Agency Management

March 10

Dan Myers

Young Agents / Professional Development

Betsy Carlson

March 11

March 11

A Renewed Look at the Homeowners Policy

The Personal Auto Policy Dissected

The Insurance Game

Big I’s Ask an Expert Personal Lines

Manny Mansour

Dan Myers

Paul Martin

Jack Cleary

Avoiding E&O Exposures

Agency Management in the Age of Technology

The State of the Insurance Industry

Application Fraud Awareness

Manny Mansour

Chris Burand

Dick Densch

Ed Budanauro

DI Insurance

Employee Benefits

March 10

James Coope

LTC Insurance Tiffini Arringon Carolyn Rossi

Managing Stress for Insurance Agents Teri Cross

Health Care Legislation Update

COBRA & FMLA Update

Employee Benefit Plan Design

Sue Bisbee

Genevieve Kluckman

The Dynamics of Change

Motivate Your Team

Teri Cross

Keri Stewart

Time & Priority Management

Steve Byrd Carole Henry

Ethics DVD: Either March 10th or 11th

Keri Stewart

4:00pm- 5:00pm

Independent Insurance Agents of New Mexico - www.iianm.org - * January 2009

Page 15


KAY GUADAGNOLI CIC, LUTCF New Mexico Regional Sales Manager

GUADAGNOLI LUTCF * * *KAY BEST WISHES FOR 2010 - HAPPYCIC, NEW YEAR *** CALLNew ME FORMexico DIRECT AGENCY APPOINTMENT DETAILS Regional Sales Manager (505) 867-9520 or (888) 448-8422 kguadagnoli@metlife.com

FOR AGENCY APPOINTMENTS OR MORE INFORMATION, PLEASE CALL ME. (505) 867-9520 (888) 448-8422 kguadagnoli@metlife.com


Pulse on the P&C Market

by Veronica DeVore

Demand for Special Events Coverage on the Rise

S

Agents, carriers seek ways to simplify coverage process.

pecial events insurance encompasses a wide range of insured needs and often requires a good deal of expertise and detail work on the part of agents. Demand for special events coverage is on the rise, and carriers are offering a variety of packages and online forms to make writing business easier. “The trend seems to be that more and more facilities are requiring their events to have coverage, even small events,” says Lorena Hatfield, marketing resources manager at K&K insurance group. “Often, people will show up at a facility without insurance and didn’t know they needed it.” Hatfield says some carriers, including K&K, are offering new ways to bind special events coverage on short notice. Hatfield is also seeing an all-around demand for higher limits as events get more and more complex, and she says many carriers are bundling multiple coverages for a single event in order to make the policy more straightforward and easier to write. A prime example is weddings, where bundling coverages for the rehearsal dinner, ceremony and reception can simplify the process.

negotiate with large event sponsors to address their sometimes unreasonable insurance demands. “Sponsors’ requirement for high limits can negate the need for sponsorship due to the cost of the extra limits,” says Ham. “More and more, we find ourselves in a position of negotiating directly with the sponsor about what we can provide and at what cost.” Ham adds that carefully analyzing exposures, working with insureds to address every aspect of an event and being proactive about loss control are essential to providing effective events coverage. He says there are thousands of events in each state that require full liability coverage and a savvy insurance professional. “Often, someone will call seeking coverage and producers just give a price,” says Ham. “You have to find out the exposures and what they’re doing for loss control. If you are willing to spend the time, it brings in more business.”

Agencies that specialize in events insurance are also finding ways to simplify the coverage process while bringing in more business. Hank Ham, an agent at the Henry Ham Agency in Denver, says very large events, such as state fairs and festivals, often require insurance for every single vendor. Instead of making them all purchase separate policies, Ham encourages the event organizers to work off of a master policy form that he provides. This method easily covers all entities under one form – and brings in more business for the agency. However, while there are many ways to simplify special events coverages, Ham is finding that some aspects of the marketplace are becoming increasingly complicated. In particular, he must often

Independent Insurance Agents of New Mexico - www.iianm.org - * January 2009

Page 17


Homeowners Catastrophe Insurance Trust

Your preferred homeowners clients deserve the broadest possible coverage for their homes and personal property. As an active member of IIANM, you have the original -- the very best such program available to you right now. The HCIT Difference in Conditions (DIC) policy supplements basic homeowners coverage by providing protection for catastrophic losses, including FLOOD and EARTHQUAKE.

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Bobbi Phillips / bobbip@hcitins.com Eric Kingdon / erick@trustcoinc.com

On the Hill P&C Insurers Urge Legislators to Focus Health Care Reforms on Health Care Health care bill targets P&C insurers, threatening business model and competition.

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he Big “I” joined a united group of property-casualty trade associations representing every segment of the P&C insurance industry – primary insurers, agents, brokers and reinsurers – to express strong opposition to provisions included in H.R. 3692, the Affordable Health Care for America Act, as passed by the U.S. House of Representatives on Nov. 7. The P&C trades object to the inclusion of onerous provisions in the bill that go far beyond the issue of health care reform. The bill would repeal the long-standing ban that prevents the Federal Trade Commission (FTC) from conducting burdensome investigations into the insurance market and would permit the FTC to prepare studies and reports on the entire insurance industry. This would disrupt the industry’s business environment and create substantial legal uncertainty and unnecessary litigation.

Page 18

by Margarita Tapia

“The goal of any health care legislation should be to address issues of health care coverage and affordability,” says the letter. “This purpose is not served by allowing the FTC to encroach on the jurisdiction of the states and conduct duplicative investigations of any insurance company.” There is also language in the bill that would modify the McCarran-Ferguson Act for health and medical professional liability insurance by broadly applying federal antitrust laws to the “business of health insurance or the business of medical malpractice insurance.” This would fundamentally alter long-standing provisions of the McCarran-Ferguson Act and undo decades of settled case law, thus upsetting McCarran’s careful balance of regulatory and antitrust policy. It would also eliminate pro-competition information resources for insurers and easily compared forms for consumers, making insurance shopping more difficult and expensive. As the full Senate begins its consideration of health care reform legislation, the Big “I” will work with the P&C industry to keep these misguided provisions out of the Senate bill. Click here to read the full text of the letter.

Independent Insurance Agents of New Mexico - www.iianm.org - * January 2009


On the Hill

T

Big “I” Supports Bipartisan Estate Tax Relief Legislation

Estate tax faces uncertainty as year draws to a close. he Big “I” joined forces with more than 40 business trade associations as part of the Family Business Estate Tax Coalition on a joint letter expressing support of H.R. 3905, the Estate Tax Relief Act of 2009. The bipartisan bill would increase the estate tax exemption amount to $5 million and would reduce the top rate to 35% by gradually phasing in those new levels over the next 10 years. The estate tax disproportionately impacts small and familyowned businesses that serve local communities and fuel our economy. Without permanent relief, family-owned small businesses are unable to plan ahead and make important business decisions. Many of these businesses are assetrich yet lack the liquidity to pay estate taxes when an owner passes away.

by Joe Wall

million exemption for individual filers and a $7 million exemption for dual filers. The estate tax is scheduled to be repealed in 2010 and return in full force in 2011 with a 55% top rate and a $1 million exemption. Over the past year, the Big “I” has urged Congress to significantly reform the estate tax to encourage investment and growth in small business. Such reform could come in the form of a decrease in the estate tax rate and/or an increase in the exemption amount. There is evidence that the estate tax hinders the perpetuation of family-owned businesses because survivors are often forced to sell the business to pay the taxes. To view the full text of the letter, please click here.

The estate tax currently has a top rate of 45% with a $3.5

Independent Insurance Agents of New Mexico - www.iianm.org - * January 2009

Page 19


Why Is Insurance Considered a Commodity?

W

Answer: Because consumers (and some agents) focus on price.

hen people have to spend money on something intangible, something they do not really want to buy and do not fully understand in terms of value, they are not going to want to spend any more money than necessary. Unfortunately, insurance fits this mold all too well. When it comes to purchasing insurance, most consumers usually do not know the difference between one quote and another other than price. One quote could provide all risk coverages and another other could be a basic form, but the only difference many consumers would see is the price. Agencies have the power though to bring the value back to insurance by helping their clients break the commodity mentality. The two easiest ways to do this are to improve product knowledge and to use coverage checklists. Improve Product Knowledge A critical reason why insurance is viewed as a commodity is that many producers and CSRs do not have enough technical product knowledge. If a salesperson does not know a complex product, especially one with a public image like insurance, then he or she is not going to be able to explain to insureds the value of the product and its benefits. As a result, the focus shifts from value to price. Technical product knowledge is even more critical in a soft market because someone can always beat your price. This is especially true in our current soft market when some accounts can be rewritten midterm for 20+% less. Such dramatic price decreases even minimize the importance of great service because for 20% less, a client might be willing to accept a little less service when the savings are so great. Focus on coverages and your knowledge of those coverages. For example, if a client has an opportunity to save 20% by going elsewhere, the client might be interested in knowing he or she can get a lot more coverage from you and still save 15%. If you are skilled in understanding coverages Page 20

and are able to communicate the importance of those coverages, that client will likely take your offer. Sometimes the differences in coverage are easy for the insured to see. When one quote provides no liability and another quote does, it is not going to take much convincing to get the client to buy the better coverage. But first, the producer must read and understand the coverages involved in order to advise the client of these differences. Sometimes the coverage differences are easy for the insured to see but at first seem insignificant until a producer explains the importance. For instance, if an agent is working with a contractor, it may be very worth the agent’s while to point out differences in fence coverages. This is a black and white issue that may not seem that important, but they are to a contractor who has a lot of money invested in them. The producer who can point out these differences has the advantage. If the policy covering fences costs an extra $500 on a $30,000 premium, it may be enough to make the sale. Sometimes the differences in coverages are not easy to see or explain. For example, as many agents in New Orleans will now attest, business income and business interruption are not 100% synonymous. They are closely related, but they are not the same and this has caused many problems for people trying to recover from Katrina. Agents that did not understand the distinction were unable to explain it to their clients (and those agents are now most likely faced with E&O claims on the subject). If the agents had better educated their clients, the insureds may or may not have purchased something different—but having better educated clients would have probably prevented some E&O claims. Additionally, they would see the producer as a professional providing a valuable product, not just a commodity. This gives the producer an advantage. All it takes is knowledge about what you are selling.

Independent Insurance Agents of New Mexico - www.iianm.org - * January 2009


back to them tomorrow. Use Coverage Checklists A second way to add value and distinction to insurance products is to use coverage checklists. A coverage checklist is the best tool for helping clients see their options and for providing a roadmap for offering the proper coverages. Coverage checklists are more than a tool for providing professional service. As an E&O instructor and an E&O procedures auditor for the two major E&O insurance carriers, I have seen how the proper use of coverage checklists can significantly reduce agencies’ E&O exposures. In fact, one carrier estimates that 40% to 60% of all E&O claims in New Orleans could have been prevented had agents been using coverage checklists. As an additional benefit, coverage checklists also increase sales.

If a salesperson does not know a complex product, then he or she is not going to be able to explain to insureds the value of the product and its benefits

Whatever the reason, it boils down to the fact that if producers are not discussing coverages and they are not focusing their sale on the nuances and benefits of the product, they are focusing on price. If they are focusing on price, they have changed the perception of insurance from an investment to a commodity. Stop selling a commodity. Anyone can sell a commodity. Learn your product and use a coverage checklist to provide your clients with the value they would expect from an investment.

NOTE: None of the materials in this article should be construed as offering legal advice, and the specific advice of legal counsel is recommended before acting on any matter discussed in this article. Regulated individuals/entities should also ensure that they comply with all applicable laws, rules, and regulations.

by Chris Burand

Unfortunately, after speaking with hundreds of producers and CSRs throughout my years in this industry, I have found that less than 5% of all producers and CSRs use a coverage checklist. Why is such a great tool so rarely used? The two most common reasons are: 1) “The insured will not give me the time to complete a coverage checklist.” 2) “What do I say if they want to me to explain a coverage I don’t understand?” The first response simply shows that the producer has never asked because producers who do use coverage checklists have found that their clients will almost always give them the time to complete it. The second response circles back to the importance of product knowledge, but even if a producer does not know the answer, this is a simple sales situation of advising the client you will to research the coverage specific to their situation and get

Need a terrific souce for coverage checklists at a great price? Check out the Big I’s new Virtual Risk Consultant.

Independent Insurance Agents of New Mexico - www.iianm.org - * January 2009

Page 21


www.scottsdale.burnsandwilcox.com

Who has the ability to handle all your specialty insurance needs?

The

Answer is Your Specialty Insurance Professionals

Professional Liability Umbrella & Excess Employment Practices Commercial Property Products Liability General Liability Commercial Auto Personal Lines

Global Resources. Local Relationships. Albuquerque, New Mexico

(866) 643-8538 / (505) 822-0018 / fax (505) 822-0092 scottsdale.burnsandwilcox.com

www.scottsdale.burnsandwilcox.com


by Jack Fries

Eliminate Backlog From Your Agency

I

account rounding, timely renewal processing, and the

account reviews for personal lines and small commercial

The final, and maybe the most important step, is to provide

lines can’t be accomplished, because the CSR “doesn’t

the motivation for attaining zero backlog. In the past the

have time.” This situation has bothered me as an agency

reward for having zero backlog was to give the employee

owner, as well as a consultant, over the years. The

more work. Why would anyone want to be caught up, if his

question was, and is, how can I get people motivated to

or her reward was more work? There has to be a carrot.

nvariably when I conduct a Professional Agency Re-

view, I find that there is backlog in most of the profit cen-

securing of referrals, it must be written into the job description.

ters (Personal Lines, Commercial Lines, etc.). Regular

eliminate backlog and provide the service to the customer, that they deserve.

I have found that telecommuters (people who work from their home) accomplish their tasks in 60% of the time it

The first challenge is to insure that the correct systems

takes them to accomplish the same functions in the office.

and procedures are in place. In order to accomplish this,

There are several reasons for this. They are not inter-

I believe that you have to do two things. The first is to do

rupted by phone calls, the intercom or casual conversation

a full review of your current systems and procedures, to

with other employees. But there is another motivator that

determine if there are processes being done by the staff

is usually overlooked. The telecommuter knows that when

that is unnecessary. You can be accomplished by inter-

they’re done----they’re done. No one will give them extra

viewing the staff, regarding their current practices, and

work and they have free time to focus on other personal or

then creating a workflow chart. You must then reduce

business tasks.

these procedures to writing. The adherence to the written procedures is mandatory.

If you want zero backlog and complete adherence to agency job standards, you must establish a reward system for

Secondly, you must make sure that your staff is using

those that accomplish or exceed the goals that you have

the full capabilities of your agency management system

set in their job standards. A

and other available third party hardware and software.

Friday afternoon off, a free

This includes the entry of complete information in your

dinner at a fine restaurant,

system, the use of form letters, and regular training in

and cash incentives are

the correct use of the system. This also includes the

among the options available

implementation of imaging or electronic filing by he staff.

to you.

Electronic filing will ultimately lead to a 25-42% increase in productivity.

Remember, if you don’t reward excellence in your

The next objective for the agency owner or manager is to

organization, you’ll

establish job standards. A job description is insufficient.

encourage mediocrity

The work must be quantified. If you expect 0 backlog,

among the staff.

Independent Insurance Agents of New Mexico - www.iianm.org - * January 2009

Page 23


(remember dates are tentative!)

January 1st 12 & 13 th

th

14th

Office Closed -

Property & Casualty License Exam Review

Kitty Leslie

IIANM

Life & Health License Exam Review

Manny Mansour

IIANM

E&O Workshop (8 CE hours)

Jack Cleary

IIANM

Property & Casaulty License Exam Review

Jack Cleary

IIANM

Life & Health License Exam Review

Bob Ouellette

IIANM

Office Closed -

18

th

20

th

New Year’s Day

Martin Luther King Day

February 9th & 10th 11

th

Office Closed -

15th

March

Presidents Day

2rd

ACSR #1- Homeowners (8 CE hours)

Manny Mansour

IIANM

3rd

ACSR #6 - Commercial Property (8 CE hours)

Jack Cleary

IIANM

AAI 81A - Principles of Insurance (8 CE hours)

Bob Zettel

IIANM

4

th

10th & 11th

50th Annual Education Seminar (15 CE hours)

16 & 17

Property & Casualty License Exam Review

Kitty Leslie

IIANM

18

Life & Health License Exam Review

Manny Mansour

IIANM

th

th

th

April

Office Closed -

2nd

Abq. Hilton

Good Friday

6th

ACSR #2- Personal Auto (8 CE hours)

Manny Mansour

IIANM

7

ACSR #7 - Commercial Liability (8 CE hours)

Jack Cleary

IIANM

th

8

AAI 81B - Personal Lines (8 CE hours)

Jeff Straight

IIANM

13th & 14th

Property & Casualty License Exam Review

Jack Cleary

IIANM

15th

Life & Health License Exam Review

Bob Ouellette

IIANM

21st

E&O Workshop (8 CE hours)

Jeff Straight

IIANM

th

May 4th

ACSR #3 - Personal Lines Related Coverages (8 CE hours)

Jeff Straight

IIANM

5th

2010 ACSR Update (8 CE hours)

Jack Cleary

IIANM

AAI 81C - Commercial Property (8 CE hours)

Bob Zettel

IIANM

11 & 12

Property & Casualty License Exam Review

Kitty Leslie

IIANM

13th

Life & Health License Exam Review

Manny Mansour

IIANM

Manny Mansour

IIANM

6th th

th

31

st

June

Office Closed -

Memorial Day

8th

ACSR #4 - E&O/Loss Control (8 CE hours)

9

ACSR #8 - Commercial Auto (8 CE hours)

Jack Cleary

IIANM

10th

AAI 82A - Commercial GL & Auto (8 CE hours)

Jeff Straight

IIANM

15th & 16th

Property & Casualty License Exam Review

Jack Cleary

IIANM

th


17th

Life & Health License Exam Review

July

Office Closed -

5th 7th

Bob Ouellette

IIANM

Independence Day (Sunday)

ACSR #9 - Commercial Lines Related Coverages (8 CE hours) Manny Mansour

IIANM

AAI 82B - Commercial Lines (8 CE hours)

Bob Zettel

IIANM

13 & 14

Property & Casualty License Exam Review

Jack Cleary

IIANM

15th

Life & Health Licsense Exam Review

Manny Mansour

IIANM

8

th th

th

21 & 22

Tentative Date for 14 Annual Southern Seminar (15 CE hours)

21st & 22nd

Tentative Date for Property & Casualty License Exam Review

Kitty Leslie

Las Cruces

28th

E&O Workshop (8 CE hours)

Jack Cleary

IIANM

3rd

ACSR #5 - Professinal Development (8 CE hours)

Genevieve Kluckman

IIANM

th

4

2010 ACSR Update (8 CE hours)

Jack Cleary

IIANM

3

rd

ACSR #4 - E&O/Loss Control (8 CE hours)

Manny Mansour

Roswell

ACSR #9 - Commercial Lines Related Coverages (8 CE hours) Manny Mansour

Roswell

st

nd

Las Cruces

th

August

4th 5th

AAI 82C - Specialized Commercial Lines (8 CE hours)

Jeff Straight

IIANM

10th & 11th

Property & Casualty License Exam Review

Kitty Leslie

IIANM

12th

Life & Health License Exam Review

Bob Ouellette

IIANM

Tentative Date for 21 Annual Last Chance Seminar (15 CE hours)

25 & 26 th

th

st

September 6th

Office Closed -

Albuquerque

Labor Day

15th & 16th

Tentative Date for Convention

21st & 22nd

Property & Casualty License Exam Review

Jack Cleary

IIANM

23

Life & Health License Exam Review

Manny Mansour

IIANM

12th & 13th

Property & Casualty License Exam Review

Kitty Leslie

IIANM

14th

Life & Health License Exam Review

Bob Ouellette

IIANM

20

E&O Workshop (8 CE hours)

Jack Cleary

IIANM

Property & Casualty License Exam Review

Jack Cleary

IIANM

Life & Health License Exam Review

Manny Mansour

IIANM

rd

October

th

November 9th & 10th 11

th

25th & 26th

December

Office Closed -

Thanksgiving

2nd

IIANM’s Holiday Party

7th & 8th

Property & Casualty License Exam Review

Jack Cleary

IIANM

9

Life & Health License Exam Review

Bob Oellette

IIANM

th

24th 31st

Office Closed Office Closed -

Christmas Eve New Years Eve


IIANM’s

EducationEDGE Insurance Education Programs in New Mexico are critical to a successful and profitable career in the insurance industry. Every year, we offer exciting opportunities to expand your professional horizons. All of these education programs are designed to help insurance agents thrive in the most competitive of marketplaces. The pre-licensing classes are designed to be a review for the state licensing examination. We recommend that students be familiar with the study material prior to attending class.

Pre-Licensing Study Materials

Pre-Licensing Classes

To see a list of what is available and to purchase your study materials online, click here.

Study materials are NOT included in class prices.

Property & Casualty Review Class (2 days)

Life & Health Review Class (1 day)

Regular Price: $150 Member Price: $120

Regular Price: $115 Member Price: $90

Instructor: Instructor:

Jack Cleary Kitty Leslie

- January 12 - 13 8am - 5pm - February 9 - 10 8am - 5pm

Instructor: Instructor:

Click here for a full listing of our education program.

Bob Ouellette - January 14 8am - 5pm Manny Mansour - February 11 8am - 5pm

The FINE PRINT: IIANM reserves the right to cancel/reschedule classes. Please call ahead to verify when classes will run. Decisions will be made three days prior to class. Cancellations received after 5 business days, will be assessed a $50.00 cancellation fee. Cancellations received on or after deadline and ‘no shows’ will forfeit the registration fee altogether. A substitute is always welcome, with no extra fee, but prior notification would be appreciated.

Class Name/Date: Full Name:

Method of Payment:  Bill Agency (Members Only)

First Name for Badge:

 Check Enclosed (Payable to IIANM)

Agency / Company:

 M/C  Visa  Disc  Amex

Address:

Amount:

(all prices include tax)

Card No:

City, State, Zip:

Exp. Date:

Telephone: ( Fax: (

)

Signature:

E-Mail:

)

Send in your registration:

Page 26

Go on-line: www.iianm.org or E-mail: jeff@iianm.org

Give us a call: (505) 843-7231 (800) 621-3978

Mail in: 1511 University Blvd. NE Albuquerque, NM 87102

Fax in: (505) 243-3367

Independent Insurance Agents of New Mexico - www.iianm.org - * January 2009


January's Clickable Calendar - Click on a class to register online -

Sunday

3

Monday

4

Tuesday

5 P&C Pre-licensing Class

10

24

11

ce i f f O ed s Clo 17 18

Classifieds

31

25

12

CE = continuing education hours

Wednesday

Thursday

6 P&C Pre-licensing Class

Friday

Saturday

ce i f f O ed s Clo 1

2

8

9

15

16

7 L&H Pre-licensing Class

13

14

E&O Workshop 8CE Hours

19

26

20

21

22

23

27

28

29

30

Where Will You Find Your Next Great Hire? Looking to fill a position within your agency? Trying to find a job but don’t know where to look? Whether you are looking for somewhere new to share your special skills or an employer looking for quality, professional employees, we are there to lend a helping hand. The staff at IIANM knows that “Teamwork Makes Us Stronger” and we want to help all interested individuals find that perfect fit. Click here to take advantage of IIANM’s Job Bank. Do you have an agency you’re trying to sell, or in the market to buy one? Check out our Classifieds!

Independent Insurance Agents of New Mexico - www.iianm.org - * January 2009

Page 27


You’re an independent agent.

Who’s got your back?

The Big “I” Professional Liability Program Protect. Prevent. Prosper. Our risk management resources keep your agency from making common preventable mistakes.

Our superior coverage through Swiss Re and our expert claims teams are in your corner in the event of a claim.

When you know you have the best agency E&O protection, you can focus on growing your most important asset–your business.

The Big “I” and Swiss Re are jointly committed to providing IIABA members with leading edge agency E&O products and services. The IIABA and its federation of 51 state associations endorse Swiss Re’s comprehensive professional liability program.

www.independentagent.com/EO

Insurance products underwritten by Westport Insurance Corporation, Overland Park, Kansas. Westport is a member of the Swiss Re group of companies and is licensed in all 50 states and the District of Columbia. ©2008 Big “I” Advantage, Inc. and Swiss Re


Od

ds

A much lower standard mileage rate for business driving in 2010: Just 50¢ per mile, down 5¢ from the 2009 rate, due to lower fuel costs.

n

Emergency Kits

The New Mexico Department of Homeland Security and Emergency Management is urging New Mexico drivers to be prepared for winter conditions by putting together an emergency kit. Department Secretary John Wheeler says kits should include at least a shovel, windshield scraper, flashlight, battery powered radio, extra batteries, water, snacks, matches, gloves and a blanket. Other items to consider are a first aid kit, necessary medications, a pocket knife and emergency flares.

En

ds

Wheeler is urging drivers to also check antifreeze levels, battery and ignition systems, brakes and tire tread.

Space Junk

A Solution That Just Might Hold Water

The junk problem in outer space is getting worse. With more than 20,000 objects orbiting the earth, more than 90 percent of them categorized as debris—and those are just the objects large enough to track—the Defense Advanced Research Projects Agency (DARPA) is looking for ideas for clearing the skies. No, a giant vacuum cleaner won’t do the trick, but a proposal from GIT Satellite Communications might: water. James Hollopeter, director of technology development at GIT, suggests launching rockets into space to dump large quantities of H2O. The debris would fly into the liquid barrier, which would slow it down until the trash drops into the atmosphere and burns up. DARPA is considering that option along with proposals from 11 other firms.

A resolution for fiscal fitness in

2010

Most New Year’s resolutions revolve around getting fit. Although that frequently means losing weight, one area you want to fatten up is your money supply. Here are some simple resolutions for adding some healthy heft to your overall financial profile: • Pay down your mortgage. You can save more than $63,000 on a 30-year, $200,000 mortgage by paying just $100 more a month. • Save 10 percent. Put aside 10 percent of your income for long-term investments and retire¬ment savings before paying any bills. • Track your expenses. Record every dollar you spend, for at least one week. You’ll get a clearer idea of where the money goes and what you can cut back on. • Energize your house. Look for ways to make your house more energy efficient. You’ll save on heating and cooling costs and also help the environment. • Stay home. Resist the temptation to eat out. Cook more meals at home. Instead of going to the movies, rent a video, read a book, or a play a game with your whole family. • Don’t rely on credit cards. Credit card debt can eat up your savings and your future. Start reducing your debt, and don’t buy anything on credit if you don’t have the money to pay the bill off promptly.


a very special thank you to iianm’s partners The following companies have committed to support IIANM events throughout the year:

Diamond New Mexico Mutual is the state’s expert in workers’ compensation insurance and the preferred provider of the Independent Insurance Agents of New Mexico. New Mexico Mutual is recognized as an industry leader in customer service, advocacy, and integrity; providing protection for employees and security for New Mexico’s businesses. Adding three new companies in 2009 to the Group, New Mexico Mutual provides agents a comprehensive portfolio to meet your customers’ workers’ compensation insurance needs.

Gold ACUITY, headquartered in Sheboygan, Wisconsin, is a property and casualty insurer that operates in nineteen states, writes $750 million in premium through over 900 independent agencies, and manages $2 billion in assets. The only company in the nation to be named six consecutive years to the Great Place to Work Institute’s top five mid-sized companies, ACUITY employs 850 people. Builders Trust has been offering quality residential and light commercial workers’ compensation coverage since 1987 as a proud affiliate of New Mexico Home Builders Association. We offer many services designed specifically for New Mexico Contractors right here in your backyard. Participants in the Fund are owners and they can rest assured that their premium dollars are pooled for New Mexico injured workers. At Mountain States, we are dedicated to helping protect the assets of our policyholders by providing them with sound, affordable insurance products. We do this through an expanding network of professional independent agents. We believe in sustaining a strong chemistry with our agents and policyholders. It is our prime reason for narrowing our focus to the Mountain States/ Southwest region.

Silver Bronze

More information can be found about IIANM’s Partner Program by visiting our website at iianm.org or calling Lorri Gaffney at (505) 999-5805.


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