July 2015 by Independent Insurance Agents of NM

AGENTS

Our superior claims management and local Risk and Safety Management team can help your clients get better results. New Mexico Mutual is dedicated to

AGENTS

providing the highest quality workers’ compensation insurance and services in New Mexico. We work with nearly 400 agents throughout the state of New Mexico and hundreds of other agents from across the country.

Agent Information

New Mexico Mutual is the preferred workers’ compensation carrier of the Independent Insurance

Agents

Agents of New Mexico.

Events / Workshops Contact Us PROSPECTIVE AGENTS If you are a prospective agent, please contact Mike Baldwin at 505-343-2831 or email him at mikeb@newmexicomutual.com. PROSPECTIVE AGENTS QUESTIONNAIRE

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“La Voz” is the official monthly e-publication of the

Independent Insurance Agents of NM 1511 University Blvd. NE Albuquerque, NM 87102. (505) 843-7231. Fax (505) 243-3367. Web site www.iianm.org.

"The Voice" of Independent Agents since 1934

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.

IIANM Events

CE Seminar in Roswell 05 July’s “What’s Happening” Clickable Calendar

PRINCIPAL - Independents Are the Worst in the Industry for Critical Tech Adoption

Union Standard’s Heavy Hitter Spotlight, Kelly Mancha

PRINCIPAL - Motivate Your Team 10

Please contact Rachel Sheffield at rachel@iianm.org for details

IIANM Staff President/CEO Thom Turbett Chief Operations Officer Consuelo Trujillo Insurance Program Adminintrator Renee Trujillo Social Media Director Jacob Grant Communications Director Rachel Sheffield Reception Terra Shelton

Vice-Chair Connie Sevier

Features

Advertising rates are available upon request.

Chair Gabe Portillo

E&O Loss Control Credit Seminar

IIANM’s Convention Registration Form 11

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.

2014-2015 Officers

VoZ

CSR - Beating the Competition... Thrilling the Customer

PRODUCER - 42% of Americans Can’t Explain This Simple Health Insurance Term

Ask an Expert - Are Lawns Plants?

PRODUCER - Small but Mighty 22 CSR - This Mistake can Raise Worker’s Comp Claims by 51%

In Every Issue IIANM 2015 Company Partners! 04 Tech Talk 18 Snap Stats 21 Odds n Ends 27

Advertiser Index Acuity 19 Burns & Wilcox Back Cover Market Finders, Inc. 14 MHI General Agency 13

Secretary/Treasurer Mike Parisi

Mountain States Insurance Group

National Director Sam Conlee

Trustco / HCIT 15

Immediate Past Chair Diana Hobbs

New Mexico Mutual 02 Union Standard 08 Click here to reserve advertising space in an upcoming issue of La Voz magazine. 3

These carriers have partnered with our association to support the vitality of the independent agent system in New Mexico. Take a moment to visit their new page on our site and take advantage of their varied products and services. Independent agents have the freedom to choose!

ATTENTION Roswell Agents! Come and get your 15 hours of Continuing Education in a classroom setting

July 28th & 29th, 2015

Roswell Convention Center

Class List: July 28th

Full Seminar (15 CE hrs): Member: $200 / Nonmember: $240

Morning Class 8:00 - 12:00pm / Homeowners

One Full Day (8 CE hrs): Member: $105 / Nonmember: $140

Afternoon Class 1:00 - 4:00pm / Commercial Crime 4:00 - 5:00pm / Ethics Hour July 29th Morning Class 8:00 - 12:00pm / Liability for Contractors

One Half Day (AM 4 CE hrs / PM 3 CE hrs): Member: $70 / Nonmember: $75 Half Day with Ethics Member: $90 / Nonmember: $100 Ethics Only (1 CE hrs): Member: $35 / Nonmember: $45 NextGen Registration (15 CE hrs): Member: $150

Afternoon Class 1:00 - 4:00pm / Personal Lines Related Coverages We will be offering the above classes again at our ‘Last Chance Seminar’. This seminar is scheduled to take place at the IIANM office, August 25th & 26th. An ethics hour will be offered every hour, all day on August 27th. Registration will be open July 3rd.

E&O Loss Control Credit Seminar July 22, 2015

FREE!

8 CE Hours IIANM Building

Loss Control Credit Through completion of this course by appropriate agency staff members, IIANM members with E&O coverage through Swiss Re/Westport or Fireman’s Fund may qualify for a 10% premium credit upon renewal, good for three policy periods assuming the agency remains claim-free. Click here to register or for more information. For details, contact Renee Trujillo at (505) 999-5802 or renee@iianm.org.

July

2015

Click on a class to register: Monday

Tuesday

Wednesday

Thursday

Friday

sts a c web

8 P&C Exam Review

(No CE Credits) Reaching Diverse Customers Marketing Series - Introduction

Kitty Leslie

L&H Exam Review

An Errors and Omissions Mock Trial

Jeff Straight

Webcast: E&O Loss Procedures Control Seminar Manual 1, 2, 3 â&#x20AC;&#x201C; An E&O Overview 8CE 3CE

29 Roswell CE Seminar 15CE

Reagan Consulting Guides to Training and Perpetuation

Business Body Language CSR Essentials - Personal Time Management

CSR Essentials Relationship Management CSR Essentials - Verbal Communication Skills: Phone Etiquette & Client Interaction

Independents are worst in the industry for critical tech adoption Report by Jill Gregorie Any brokers who believe that they are not leveraging technology to its full potential should not feel alone in that assessment. According to a new study conducted by Velocify, a firm specializing in sales automation software, not only do “relatively few agencies” enjoy the full benefits that technology has to offer, but most tools remain underutilized by the industry as a whole. This comes in stark contrast to the benefits that technology can provide to brokers and agents. “One of our major findings when looking at insurance policies per producer was that agencies using at least one of six technologies were seeing 43% more sales than their counterparts,” said Jorge Jeffery, director of research at Velocify. The six technologies evaluated in the study include: marketing automation software, lead management software, automated dialers, competitive raters, agency management systems and customer relationship management (CRM).

While these numbers are startling, the researchers were more surprised by the trend that followed. “Another thing we found that we didn’t expect was the widening tech gap. Directs are not only the heaviest users of technology, but they also reported the most plans for investing in technology over the next year,” said Jeffery. “They’re already leaders in tech adoption and if they’re planning to invest the most as well, the gap will widen even further.” This discrepancy is worth noting since there is a strong correlation between technology use and revenue growth, with the most successful companies reporting the highest rates of tech use and most ambitious plans for investment.

“One way is in terms of the sales process,” he said. “Surveys continually show how closely correlated structured sales is to increased revenues and better sales.” Standardizing sales is a particularly advisable first step for brokerages since it ameliorates common issues plaguing the leads process. “A lot of agencies leave it up to the agent to follow up with leads, but in many cases, they fall through the cracks or get lost in the system,” Jeffery said. “Research has found, however, that there’s effective ways to follow-up with somebody in terms of number of calls, emails, and the timing of those, and having everyone follow the same process makes a significant difference in results.”

PRINCIPAL

Jeffery’s team also found that larger agencies were 93% more likely to adopt technology than organizations with 10 or fewer employees, and direct-to-consumer trumped independent agencies by 26%.

Still, Jeffery sees this as an opportunity for small brokerages and independent agencies to play “catch up.”

This can extend to household sales, as technology can be advantageous in acquiring customers, closing leads and upselling to existing clients.

Finally, since independent agencies already have a competitive advantage over larger, more established rivals, technology can enhance already existing differentiators. “These agencies offer a lot of different services and products that directs and captives can’t compete with, so if they were to adopt technology and take advantage of those benefits, it could make a big impact on the industry as a whole,” Jeffery said. 7

A Commitment to Young Independent Agents 2015

Together, Your Future is Our Future • 2015 Heavy Hitters Program Union Standard is committed to working with young independent agents because their future is our future. Investing in the education and development of the next generation of agency professionals provides the support necessary to achieve the real goal of mutual success. We recognize the need to foster new talent to perpetuate the independent agency system, as well as provide our best young agents an even greater competitive advantage. Interested in participating in our Heavy Hitters Program? Contact your local Union Standard branch office today. Union Standard’s Heavy Hitters Program – Preparing Agents for Tomorrow

A M

BEST

Commercial Insurance >> Done the Right Way >> By a Company of People >> Who Care

6501 Americas Parkway NE, Suite 600 | Albuquerque, NM 87110 P 505-830-0038 | TF 888-387-0038 | F 505-830-0033 | usic.com Union Standard Insurance Group is a member company of W. R. Berkley Corporation, an insurance holding company that is among the largest commercial lines writers in the United States.

UNION STANDARD’S

HEAVY HITTER Q Kelly Mancha,

Insurance One

Q A

Please tell us a little about yourself…

I was born and raised in Albuquerque, graduated from Cibola High School and earned my Bachelor of Science in Biology from the University of New Mexico. My mom was a Medical Technologist and my dad was a police officer, and I am the middle of five brothers and sisters. I have the most amazing family and support system anyone could ask for. I am a single mom and that is the best job anyone can have. She is the most amazing daughter with a big personality and bravery that is second to none. I have been lucky to have been surrounded by inspiration and motivation my entire life and have them to thank for the success I have found. I find my strength in the eyes of my daughter and I know that I can not fail.

Q A

Can you tell us a little about your current responsibilities?

When I originally started in insurance I was a producer and sales was my only responsibility. In 2009, I was asked to leave the sales game and run the inside of the agency. I did everything from audits to certificates, billing inquires to claims filing and follow-up. I read carrier forms front to back and handled the marketing for the agency. I was able to build strong and lasting relationships with our insureds as we worked together to solve their insurance needs. It was able to give me a unique insight into insurance, one that not many producers have. So, when the opportunity came earlier this year to return to sales, I jumped at the chance. I am currently producing new business as well as running the inside of the agency and taking care of existing clients. I wear a lot of hats, but it makes every day a unique one with a new set of challenges. Having those 6 years of inside knowledge gives me the ability to talk to the insured’s with a different skill set. I am not just selling a product, I am selling a service and a relationship.

How and why did you choose insurance as your career? I am not your typical young agent that grew up in the industry. I was at a graduation party for my youngest sister and was approached by my dad’s best friend, Larry Koester, to leave my current position with the University and pursue a career in insurance. At the time the National Institute of Health was cutting its research funding and my career at the Cancer Center was questionable. After a lot of thought and back and forth I set up a meeting to see what this “insurance stuff” was all about. I am so glad that I took the leap of faith and went for it. I haven’t looked back once. Sure it is a completely different set of skills but I quickly found myself at home in front of people rather than behind a microscope.

Q A

Do you have any influences/role models that have helped shaped your career?

I was so lucky in who I was able to come to work for. Larry and Chris Koester really are incredible role models and have a way of making even the most difficult days fun. They foster an environment of joy paired with hard work. No one ever wonders if you are going to have a busy day, but you always know it will be a good one. Laughter rings through our office daily and I wouldn’t have it any other way. They taught me early that you can have a successful business and love who you work with. Our insured’s enjoy calling us and the personal relationships we have, make every aspect of working with Insurance One a great experience. One of my favorite things about working here is what we call our “4:00 problem solving sessions”. So often we will be having conversation about a coverage or a form and the open dialog we are able to have fosters this great brainstorm of ideas that allows us to discuss various solutions. The ability to voice your opinion and know you will be heard makes this an amazing agency and allows the young agents to grow and learn.

Q A

What do you think are the key challenges that young professional agents face in our industry?

I think the most difficult aspect of our industry for the younger professionals is that many business owners assume we are inexperienced and lack industry knowledge. I am not a “typical” insurance agent. I am not what business owners have grown accustomed to dealing with. The knowledge I have gained from my time on the inside of the agency gives me weapons to combat those barriers and allows me to prove my salt. I may not be what you are used to seeing, but I am the face of the next generation of agents that are coming up through the ranks. 9

Motivate Your

TEAM!

To succeed, you need buy-in. Buy-in creates motivation. Motivation creates action. And action creates results. What are some keys to motivation?

1. Establish agency goals with input. Of course, not ev-

eryone can sit in on agency planning meetings, but everyone can share in the process. a. Have managers solicit input from their respective teams. Ask for feedback on current business practices. Be respectful of all viewpoints: You might learn something you never knew about internal dynamics, client relationships, sales roadblocks, frustrations, employee or client hot buttons, etc.

Based on this list, what can you do as a manager to satisfy these needs? After all, a happy employee is a motivated employee.

4. Review plan progress regularly (at least quarterly), so everyone knows how the agency is performing versus plan. a. Treat these reviews as important milestones, not as afterthoughts. b. Include every department — you never know who might brainstorm the next idea for improvement or change.

2. Share annual or long-range plans, and show how they support individual goals. Highlight how proposed growth will 5. Live the plan and stay true to its original focus. Everylead to a better bonus, higher salary, promotion, move to a one will see when you veer from what you originally said new office … whatever concrete payoff you feel comfortable was important. This alone can kill motivation. If you want promising. to change the original course established for the agency, explain why and how the change affects how they should a. Put it in writing. Be specific. This can be done during be working. employee reviews and should be tied to annual goals. 6. Reward ongoing performance. Don’t wait for big end3. Recognize that money is not the supreme motivaof-year rewards. Even simple thank-you reminders can be tor. While salary is important, a study by Vickie Niebrugremarkably powerful. Give someone who worked overtime a ge found it is not the number one “want” for employees. gift card for the local coffee shop. Mention someone’s extra Niebrugge, Vicki, Declining Employee Morale: Defining the effort in the company blog. Leave a personal, handwritten Causes and Finding the Cure thank-you note in someone’s inbox. What employees say they value most: 1. Interesting work 2. Appreciation and recognition 3. Feeling “in on things” 4. Job security 5. Good wages 6. Promotion/growth 7. Good working conditions 8. Personal loyalty 9. Tactful discipline 10. Sympathetic help with problems 10

a. Don’t let personal biases affect feedback. A person you don’t have a strong personal connection to might be one of the biggest contributors to agency success. A positive word from you in these instances could be especially powerful.

7. Provide a feedback mechanism. Let employees know the agency’s plans are responsive and flexible. If they have ideas for improvement, provide a clear path for employee input, either formally or informally. a. Reward all suggestions, even if they aren’t ultimately implemented. This supports the continued flow of ideas and reinforces the notion that “no idea is a bad idea.” b. If people are reticent, set up a method for anonymous suggestions.

September 24th & 25th, 2015

Isleta Casino & Resort

Agency: Company: Interested in exhibiting at the TradeShow? Click here to sign up! 11

Beating the Competition... Thrilling the Customer Every so often I slip up and admit that I have something to do with "insurance" at social events. When this happened recently I was surprised by a different kind of story than I was used to hearing. Instead of complaining about delays, cancellations, and claims horror stories this is what I heard:

We as an industry have gotten some pretty rotten publicity regarding our service. The bad news is that much of it is well earned. Surly or uncaring agency and company employees finding reasons why claims should be declined rather than how we can help our customers have justified most of the horror stories that we've heard. The good news "You know, the most remarkable thing happened to me the is that this picture of expected service problems makes other day! I was downtown shopping and my son left his new "thrilling" the customers that much easier for those of us leather jacket on the front seat. When I returned fifteen minutes who care to change the image. later the jacket was gone - and so was the front passenger window.

Spend some time in a two pronged attack on claims service. First, review your procedures with your claims handlers. Eliminate everything that hinders fast claims service to the clients that are within your control. If you need to fill out forms that are time consuming, don't use your customers time to do so. If a claim is covered by the client's policy, don't be afraid to tell them so. Avoiding confirmation of coverage to allay E&O potential provides a safety valve for your agency, but will cast doubt on your expertise in the minds of your customers.

After filing a useless police report I returned home and called my insurance company. Since contacting an insurance company is like going to the dentist, I steeled myself for a battle. Instead, the phone was answered by a claim representative (once I got through the computer menu) who very politely took my information. When she had everything she needed, she asked whether I had a glass shop in mind or would like a recommendation. I took her recommended shop. She said she would contact them and they would be in touch with me shortly. She then transitioned to the homeowners claim for the jacket. Many agents will commit themselves on a claim if they Before she could finish getting the information for the homeowners claim, my call waiting signal alerted me to another call. Putting her on hold, I found myself speaking to an employee of the glass shop who told me that the claim representative faxed them the claim directly from her computer. She asked if I would like to come over to have the glass repaired now, that she would get the appropriate part delivered to the local shop within the next half hour. When we hung up I was back on line with the claim representative who indicated that a check was being prepared and sent today for the cost of the jacket, less my deductible. Three hours after the 'smash and grab' my window was repaired and I was at the store buying a 'new,' new jacket for my son."

Can you imagine the public relations that story garnered for the insurance company in question? More than a few people asked the story-teller for the name of the insurance agent and company. Unfortunately, the company was Prudential.

CSR

Could this story have been about your agency or the companies that you represent? The story and the positive public relations that was generated reminded me of the importance of thrilling the customers with service that you may engineer, but that they don't expect from insurance organizations.

personally are speaking to a customer, but refuse to permit their claims (or service) employees to do so as well. Why ? If we don't put competent, trained staff on claims are we making a serious mistake? Why does the client insure with your agency ? Is it to be impressed with a smooth, competent salesperson - or is it because they feel that any claim will be handled promptly, professionally and efficiently? You should have your most technically competent staff members handling claims for your clients. You should also strive with your companies to handle as many claims as possible to conclusion. This brings us to the second prong of your attack on claims practices. Stock companies seem to be backing off the delegation of claims handling to their agents. Visit your company claims managers and ask them to give you maximum authority to process claims from beginning to end in your office. Get a direct number and permission to share it with your clients for any claims that must be referred to the company. Why do we have to take claims in our office and send it to the company for handling when the direct writers enjoy the benefit of managing a claim in a single call? Claims is only one method available to us to "THRILL" customers, but may be the most important and most visible method to our clients. Let's make sure that we hear this type of story about your claim service in the future.

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PRSRT STD US POSTAGE

POSTMARK PRO

Erin Johnson13

Check out our new website! www.market-finders.com

Proudly Serving the Independent Agents of New Mexico since 1977

5201 F Venice Ave NE - P.O. Box 90280 Albuquerque, NM 87199-0280 (800) 530-8711 (505) 822-8711 Fax: (505) 822-1165 14

www.market-finders.com

by Caitlin Bronson

The second Affordable Care Act open enrollment season is finished, but many Americans are still woefully ignorant when it comes to healthcare. Roughly 42% of Americans— including those with earnings near the federal poverty line, who stand to gain the most from health reform—are unable to explain what a deductible is. Another 62% don’t understand the difference between an HMO and a PPO, and a full 37% of people are unaware there is a penalty for not having health insurance. Those are the findings from a study performed by researchers at the USC Schaeffer Center for Health Policy and Economics and the USC Dornisife Center for Economic and Social Research.

PRODUCER

42% of Americans can’t explain this simple health insurance term

“The results are worrisome because the success of the Affordable Care Act hinges on competition among insurers lowering premiums and increasing the quality of coverage,” said lead author Silvia Helena Barcellos. “This only happens when people know what they’re choosing. There is no incentive for insurers to offer their best plans if people are not making informed decisions when choosing among these plans.” The lack of knowledge is not to be blamed on the insurance community, however, says Bankrate.com analyst Doug Whiteman. “There is a big push to get the world out to demographics like lower income people, but they can be very difficult to reach. These are people working more than one job, who are looking after their families,” Whiteman said. “They are very busy people who don’t have time to watch TV or pay attention to the news.” Whiteman added that much of the lack of awareness is also likely self-imposed. According to a recent Bankrate survey, 17% of Americans who are planning on remaining uninsured past the March deadline are doing so primarily due to their opposition to the Affordable Care Act. “That is a staggeringly high percentage,” he said. The Bankrate survey also concluded that up to one-third of uninsured Americans plan to remain without health coverage despite the looming deadline. While Whiteman said he is hopeful some of these individuals will “wake up” in the coming days, he is still shocked and worried over the number. Already, lack of signups from young and healthy Americans—coupled with little information on enrollees in general—is causing health insurers immense difficulty in assessing rates for 2015 plans. 15

Virtual University’s Ask an Expert

Are lawns plants? ulty

VU Fac

Fire from a lightning strike did several thousand dollars worth of damage to an insured’s landscaped lawn. The adjuster says the $500 per-plant “trees, shrubs, and plants” sublimit applies to the lawn. Is the lawn a “plant” with an elaborate root system or is it a collection of plants?

“Our insured recently had lightning strike a tree at his residence. Luckily, the tree was far away enough from his house that there was no damage to the house. However, the tree caught fire, and as flaming debris fell to the ground, it caught the lawn on fire. His lot is almost a full acre in size and about three fourths of it was lawn, nearly all of which was burned up in the fire. “Our insured later had a landscaper come out and look at the grass, and he said the heat from the fire actually killed the grass and new sod would have to be laid. He gave our insured an estimate of $4,450. “The adjuster says the HO 00 03 10 00 pays $500 for the tree and $500 for the lawn. However, in looking at the policy, it says the $500 sublimit applies to ‘…any one tree, shrub or plant’ – but doesn’t mention lawns. Are ‘lawns’ not included in this list because they are considered ‘plants’ or does the $500 sublimit not apply to lawns?” Great catch of one of the lesser-known provisions of the Homeowners Policy. Welcome to the Insurance Nerds Club – those of us who read coverage forms for fun and relaxation! I do not think “plants” includes “lawns” in the context of the $500 sublimit. Here is the entire policy provision from the applicable HO 2000 form, with the key provisions highlighted (note the same wording – and same analysis – applies to the 2011 edition) E. Additional Coverages 3. Trees, Shrubs And Other Plants We cover trees, shrubs, plants or lawns, on the "residence premises", for loss caused by the following Perils Insured Against: a. Fire or Lightning; b. Explosion; c. Riot or Civil Commotion; d. Aircraft; e. Vehicles not owned or operated by a resident of the "residence premises"; f. Vandalism or Malicious Mischief; or g. Theft. We will pay up to 5% of the limit of liability that applies to the dwelling for all trees, shrubs, plants or lawns. No more than $500 of this limit will be paid for any one tree, shrub or plant. We do not cover property grown for "business" purposes. This coverage is additional insurance. [Note also that “lawns” is not included in the part which relates to the $500 sublimit.]

Note the key parts highlighted. At the beginning of the Additional Coverage, the provision distinguishes “plants” from “lawns.” And near the end of the excerpt, the statement regarding the 5% sublimit applies to “…plants or lawns.” And as you mentioned in your question, the $500 sublimit does not reference lawns. Here is my view. Trees, shrubs and plants can be individually identified, and thus could be easily counted for application of the $500 sublimit per tree, shrub or plant. Grass, of course, is something of a mass of individual plants, and given how large a lawn area can be – as in your insured’s case – it probably wouldn’t be equitable to subject lawns to the $500 sublimit. Therefore, a covered loss to all trees, shrubs, plants and lawns is limited to 5% of the dwelling (Coverage A) limit. For example, 16

if Coverage A is $200,000 – there would be up to $10,000 available for a covered loss to all trees, shrubs, plants and lawn, but no more than $500 for any one tree, shrub or plant. The only limit for lawns is the aggregate of $10,000 in this example. So, the correct way to adjust the loss to your insured’s tree and lawn is to determine 5% of the Coverage A amount. Within that amount of money, the insured could be paid up to $500 for the tree, and the remaining amount would be available for the lawn. Note the last sentence in the excerpt: “This coverage is additional insurance.” If the insured’s home was completely destroyed by fire, for example, and the entire $200,000 Coverage A limit was paid, there would still be available the additional $10,000 aggregate limit for covered fire damage to trees, shrubs, plants or lawns (but only $500 per tree, shrub or plant). Lastly, the deductible does apply to this type of loss. Continuing our example of $200,000 Coverage A, which would provide 5% for covered loss to trees, shrubs, plants and lawns, your insured has $10,000 available for the loss. If the tree that was hit by lightning was valued at $1,500 (tree plus debris removal), and the lawn replacement was $4,450 based on the landscaper’s estimate, here is how the deductible would be applied. Note first that the deductible is not applied to any sublimits (such as the $500 per tree), but to the entire covered loss. Here is how I calculate the claim payment – assume a $500 deductible: $1,500+ $4,450 = $5,950 - $500 deductible = $5,450 maximum payable, subject to any sublimits. However, since only $500 is payable for the tree, the amount payable would be $500 + $4,450 = $4,950. No deductible is then subtracted, since the insured has already “contributed” $1,000 toward the loss, due to the cost of a $1,500 tree (plus removal), and being able to collect only $500, due to the sublimit for trees. Another way of describing this is that the deductible is “absorbed in the loss.”

We Look at the Whole Landscape When it Comes to Premium Audits Mountain States understands the needs of our regional policyholders and their businesses. Our in-house premium audit services offer your clients convenience and the advantage of working with auditors they know and trust. Our state-of-the-art audits are thorough and consistent. This results in a final premium assessment that parallels your clientsâ&#x20AC;&#x2122; actual business exposure. For more information about our Premium Audit advantages, contact Amy Podsednik at 505.764.1445 or apodsednik@msig-nm.com.

The Mountain Stands Behind You.ÂŽ www.msig-nm.com Albuquerque, New Mexico 505.764.1400

Sandia Mountain Range Central New Mexico

Steve

ANDERSON.com by Steve Anderson (Always feel free to email me with comments, new ideas or products that have worked for you. I will check them out and spread the word!)

Three Problems with Running an Agency Without a Marketing Plan I recently presented at a National Alliance Dynamic of Personal Insurance event in Chicago. As I was on the plane home, I was thinking how few agencies seem to have a marketing plan. My portion of this program talked about the changing consumer and how insurance agents can generate a flow of prospects. An essential element of success has a plan. There are at least three problems when trying to grow an agency without a plan.

Problem #1: Too much to do – too little time. Insurance agents work hard (at least many of them). A common question is, “How can I get everything done that you suggest I need to do?” Part of the answer is to use available technology tools. People were surprised when I described how I can post three status updates on five different social sites every day by spending 30 minutes once a week. I have tools I use that help me leverage my time.

Problem #2: Leaving money buried in your existing book. Based on the best numbers I have been able to acquire, the average insurance agency has 1.4 to 1.6 policies per personal lines account. Agency owners know they need to round out accounts, but the numbers show they do not do it. An internal marketing plan for upgrading current coverage and rounding out accounts is a solution. It is not an easy solution. It takes work to set up and maintain. Once the initial work is done, it will pay off by building a better quality book of business. 18

Problem #3: Wasting hours of time. As an agency owner, you do not have time to waste. Every minute counts, especially if your goal is to spend less time working and more time doing what you love. An agency marketing plan is a way to leverage your time as well as your staff’s time. Without a plan, every new idea is the “next best thing.” It is called the shiny object syndrome. Every new marketing trick takes precedence. A marketing plan is a plan for a reason. It lets you know what you want to accomplish. It tells you the steps you are going to take to achieve your goals. At the same time, it allows for flexibility and changes. Finding and using technology resources to help you implement your plan certainly can save you time. However, the tools will not help if you do not know what you want to achieve. A marketing plan does not have to be fancy. You do not need to take days or weeks to create one. Just write down your goals and the three or four steps you can take to get started to make them happen.

For All That Matters

19 facebook.com/acuitywow

Homeowners Insurance Market

The homeowners insurance market grew by $3.7 billion in 2013, but this was slightly less than the $4.1 billion it grew in 2012. Still, that $3.7 billion represented 4.7% growth over the $77 billion it wrote in 2012. Almost three-fourths of the $3.7 billion growth came from regional IAs carriers who grew $2.6 billion, for a whopping 13% increase over the $20.3 billion they wrote in 2012. Mirroring their contraction in personal auto, national IA carriers wrote $1.2 billion less in homeowner premiums in 2013 than they did in 2012. Direct response writers wrote about $500 million more in homeowner premiums than they did in 2012, but still as a group controlled only 6.1% of the total market. The report later shows that USAA generated most of this growth. Captive agents did write $1.7 billion more in premiums in 2013 for a total $42.5 billion. This growth, which translates to 4.2% as a percentage, is slightly below the market average growth rate of 4.7%. As a result, exclusive writers lost 0.3 percentage points of market share.

Congratulations to Christopher Castillo, Asst, VP, Local Sales Leader with our member agency, Aon. He was recently featured in Albuquerque Business First’s 40 under 40. He was recognized as a top performer, nationally, with three different Fortune 500 companies!

Congratulations to our very own Renee Trujillo. She was recently promoted to our Insurance Programs position. Please give her a call if you have any questions regarding this transition. We leave you in her very capable hands!

We welcome Jacob Grant to the Big “I” family! He was hired as an intern and will be acting as our Social Media Director. He is going to help us better engage with you, our members. Give Jacob a call is you have any news you or your agency has to share!

Get your industry news, both locally (IIANM) and nationally (IIABA). As soon as we hear it, we pass it along to you in the most timely manner. Did you get last week’s correspondence? See below for important breaking news...

New Mexico Court of Appeals Declares Farm / Ranch Exclusion Unconstitutional On Monday, June 22, 2015, the New Mexico Court of Appeals declared that the provision of the New Mexico Workers’ Compensation Act, NMSA §52-1-6(A), excluding farm and ranch laborers from mandatory coverage is unconstitutional. In a ruling on consolidated appeals brought forth by two agricultural laborers, the Court ruled that its decision will apply to any workers’ claims that were pending as of March 30, 2012 (the date that the Second Judicial District Court ruled the exclusion unconstitutional in Griego v. New Mexico Workers’ Compensation Administration), and that were filed thereafter. Absent further case law, the New Mexico Workers’ Compensation Administration intends to fully enforce the Court of Appeals’ decision by requiring coverage for farm and ranch laborers by their employers.

Supreme Court Upholds ACA Subsidies by Wyatt Stewart Today, in a 6-3 decision, the Supreme Court ruled to uphold health insurance subsidies for 6.4 million Americans spread across 34 states. The ruling means that those who have purchased their health insurance through the federal exchange will see no change in the subsidies they receive from the federal government.

On the other side, the Obama Administration successfully argued that the term “established by the state” was a drafting error and that the writers of the ACA never meant to prevent Americans from buying insurance through the federal exchange.

BENEFITS

In the case, King v. Burwell, the plaintiffs unsuccessfully argued that consumers could only obtain subsidies through exchanges run by a state and, therefore, individuals living in the 34 states that did not establish a state exchange and are instead relying on the federal exchange for coverage are not eligible to receive subsidies. The basis for the plaintiffs’ argument was a section of the Affordable Care Act (ACA) that mandates subsidies be available to offset the cost of health care to those who have purchased health care in an exchange “established by the state.”

Although the Court’s ruling maintains the status quo regarding health insurance subsidies, the Big “I” believes the ACA remains a fundamentally flawed law with plenty of room for improvement. In fact, just yesterday, Sens. Johnny Isakson (R-Georgia) and Chris Coons (D-Delaware) introduced Big “I”-supported bipartisan legislation, S. 1661, the “Access to Independent Health Insurance Advisors Act,’’ which aims to exclude agent commissions from the Medical Loss Ratio formula.

In addition, the association is joining others in the industry in fighting the ACA’s excise tax or “Cadillac tax” in a strategic series of efforts aimed at protecting the independent agency system, insurance consumers and small businesses from the harmful tax hike. In the U.S. House of Representatives, Rep. Frank Guinta (R-New Hampshire) introduced H.R. 879, the “Ax the Tax on Middle Class Americans Health Plans Act of 2015,” which would fully repeal the tax. In addition, Rep. Joe Courtney (D-Connecticut) introduced H.R. 2050, the “Middle Class Health Benefits Tax Repeal Act.” With more than 100 cosponsors, this legislation would also repeal the tax. Efforts are underway in the Senate for companion legislation. Although the Supreme Court ruled today to maintain the status quo regarding ACA subsidies, the Big “I” will continue to work with others in the market as well as both parties in Congress and the Administration to fix some of the law’s major flaws. 21

Independent agents command an 80% market share of all commercial property-casualty lines, with more than half of that covering small businesses. But a daunting challenge lies ahead for those who aren’t prepared for competitive pressures, changing underwriting and servicing technology and shifting consumer preferences. The industry generally considers a business “small” when annual premiums are $50,000 or less. The 2014 Future One Agency Universe Study, though, pegs small commercial at less than $15,000. That’s because tens of thousands of small agencies in suburban and rural areas are writing local clients that are just as small. The study shows that in every category of agency size except jumbo firms, small business makes up at least half of commercial lines revenue.

Small But Mighty

by Peter Van Aartrijk

So how do you maximize the potential of this important business segment— without being swallowed by servicing it? Ask yourself these questions. What’s our small commercial sweet spot? Brian McNeely, a partner at Atlanta-based Reagan Consulting, says for most Best Practices firms, a $5,000 threshold is the “sweet spot” at which they “can make money on a full-service offering” while supporting it with resources and producers. Smaller accounts generate only enough revenue for a group or service center environment, McNeely says. While the commission isn’t enough to pay a producer, Best Practices firms recognize the value: Many accounts start below the $5,000 threshold, but grow above it. “You have to nurture them,” McNeely explains. Small commercial sales are also a good way for young producers to get their feet wet. That was true for Tyler Bartosh, who after just seven years in the business is already starting to see renewal business add up. Small commercial is “the biggest part of my book,” says the Top O’ Michigan Insurance producer. “It’s not the glorious $200,000 account, but you don’t write it one year and lose it the next.” Bill Ryan, executive vice president of San Francisco-based Sweet & Baker, says a small unit of inside sales reps concentrates solely on new business. “We have to place the kind of business we understand—business that is close by in proximity,” Ryan explains. And the business must fit “the carrier’s appetite from day one. If it doesn’t fit, we’re willing to walk away.” What are our most efficient carrier relationships? Small commercial is a big opportunity with carriers that are duking it out— no firm has more than a 6% market share, says Clint Harris, a consultant with Hartford-based Conning, an insurance investment management firm. 22

Tech-savvy carriers, particularly larger ones, continue to purchase small business books of other insurers—as happened in personal lines, Harris notes. As agencies merge, they too “have significantly supported the shift to large and technically capable insurers as the larger agencies and brokers seek to reduce their service responsibilities and expenses and improve margins.” Ryan sees carriers expanding appetites. “Ten years ago, only a couple of carriers were writing private schools,” he says. “Now, seven or eight want to look at our private school business.” Small technology accounts are another example, Ryan adds. Carriers see them as a growth opportunity and “want to write it before there is competition.”

owns a convenience store and a campground or a contractor who has a side business are more suitable to broader commercial packages. Mike Keane, president of small commercial at The Hanover, sees a few larger carriers pushing the more “generic product that’s easy to write.” But that doesn’t really help the independent agent, who needs “a CPP-type product that allows for flexibility and tailored coverage,” he says. “You have to deal with carriers that are providing both, not just those cherry-picking the easy stuff.” Can we improve our servicing process?

Bouchard Insurance works to improve efficiency. “We are operating about 20% more efficient than a year ago,” On the flip side, though, some national carriers push stanBarnaky says. The agency management system now ordardization in smaller accounts. “We used to see carriers ganizes all data in one place and prioritizes email requests want to commoditize $5,000 accounts, and now $15,000 so staff can respond more quickly to higher-value clients accounts will commoditize,” says Mary Sklarski, chief strate- and focus “on future tasks, like being more proactive on our gic development officer at San Francisco-based behemoth renewals,” he says. agency Woodruff-Sawyer. Justin Barnaky, select business unit manager at Bouchard Insurance in Clearwater, Florida, agrees. “Carriers all want all the same plain-vanilla business. No one is getting outside the box,” he says, lamenting the industry’s increased reliance on computers rather than underwriters. “They don’t want to write anything risky—and by risky I mean even a small hangnail.” Can we find the right coverage? Beau Massengille, principal at J.M. Insurance in Lebanon, Tennessee, likes the BOPs he has with carrier partners, especially since they provide a specific, competitive wholesaler endorsement that includes a lot of key coverages particular to their businesses.

Greco’s agency plans to grow small commercial 20–25% annually over the next few years. “We’re trying to streamline the entire workflow process,” he says. His firm segments accounts less than $15,000 in premium into a “family/ business division.” A staffer handles account changes and certificates via a dedicated email address, while an account manager focuses on selling and avoids “getting inundated for service work,” Greco says. He envisions pushing more work to carrier-sponsored service centers. Small accounts “have to be direct bill or premium-financed, period,” Greco adds, and carriers that “don’t do commercial lines download are on the backburner.”

Bartosh says his firm contacts small business clients 60–90 days prior to renewal. If there are no major changes, the “The BOP has come a long way,” says Tom Greco, partner management system takes over, generating a letter for with UNICO in Lincoln, Nebraska. “They’ve added so many renewal and getting the policy bound. “You definitely can’t sit down with them,” Bartosh says. “It’s a balance between bells and whistles to the policy, it’s almost overwhelming. [streamlining] service work so it’s still profitable but still proThere are really good options that were never available before. You can put $10 million in property on them—it used viding what clients need and can’t get on their own.” to be a $1 million maximum.” BOPs are easier to rate than package policies, he adds, and electronic download with carriers works more smoothly. While popular, BOPs sometimes aren’t enough. Even small firms need customization and total account solutions, agents say. “Those small accounts still have a lot of nuances that separate them,” Bartosh says, noting a client who 23

This mistake can raise workers’ comp by Caitlin Bronson claims cost by 51% Insurance agents and brokers would do well to remind corporate clients that timely reporting of workers’ compensation claims is critical. According to a recent study from the National Council on Compensation Insurance Inc., delayed injury reporting can increase eventual comp claim costs by up to 51% as the condition worsens. In fact, median costs for occupational injury claims reported within two weeks were the lowest – at $13,120 – and were higher for all claims brought two weeks or later. As an additional incentive for employers to encourage on-time reporting, NCCI researchers also discovered that attorneys are much more likely to become involved in comp cases the longer the reporting of the injury is delayed, pushing eventual costs even higher. Lawyers were involved 31.7% of claims made four weeks or more after the initial injury, as compared to just 12.8% of claims made the day of the accident. Early reporting helps employers better investigate the injury by collecting evidence and interviewing witnesses soon after the accident. It also helps employees understand the process of filing a claim, which will decrease the likelihood of the worker hiring an attorney. Many are not active in facilitating this kind of frank discussion, however, says J. Bradley Young, a partner with Harris, Dowell, Fisher & Harris, who works on comp cases. “I still deal with employers every day that feel that if they educate their workforce about comp laws, they’re simply telling their employees how to get more money out of comp claims,” Young said. “I don’t think that’s the case.”

CSR

Despite the clear data from NCCI, many workplaces do not encourage employees to be open about their accidents and injuries. Fear of being disbelieved or being perceived as lazy keeps many workers from coming forward, worsening their condition and making costly measures like surgery more likely. Unfortunately, such concern is warranted. According to

survey of more than 2,000 adults from Summit Pharmacy and Harris Poll, nearly two in five Americans believe “most workers’ compensation claims are made by people who don’t want to work.” Perpetuating that attitude in a workplace by treating injured workers poorly will only add to long-term claims costs, says Dr. Joel Morton, Summit Pharmacy president. “If a person who is acutely injured also has to worry about people assuming they’re ‘faking it,’ they may try to press through and make their injury even more significant,” Morton said. “That could be a hindrance eventually reflected in the employers’ workers’ comp rates if they end up having to pay for that injury.” Brokers have a significant role to play in beating back some of these misconceptions and encouraging early reporting. Taking the time to educate workers’ comp clients will have benefits for the broker as well, says Young. “The insured knows that brokers aren’t being paid for making that investment in the company,” he said. “It’s a value-added service, and insureds get that and appreciate it. Operations run more smoothly, and it gets reciprocated with loyalty to the broker.”

Laughter is good for the brain. Find the humor in whatever you do. Laughter will help you remember incidents better, and also generate a sense of security which supports a well-balanced mind.

Odds ends an d

Times The Jetsons Totally Predicted The Future Videophones

National Hot Dog Month. What better month to enjoy a delicious hot dog? The National Hot Dog and Sausage Council estimates that Americans eat over 7 billion hot dogs between Memorial Day and Labor Day, with 150 million consumed on the Fourth of July alone. Do your part.

Talking alarm clocks

20 Appetizers You NEED at Your Next BBQ!

Flat screen TVs

Thank goodness it’s grilling season! But just because you’re whipping up burgers, veggies, and hot dogs on the barbecue doesn’t mean you can forgo the first course...the appetizers! Set the tone for an awesome fiesta with these unforgettable apps. You’ll get your guests ready with some finger food and good fun.

Some Fun 4th Facts Dog treadmills

- There were 200 printed versions of the Declaration, but only 27 are accounted for. - “Yankee Doodle,” was originally sung prior to the Revolution by British military officers in mockery of the unorganized and buckskin-wearing “Yankees”. - John Adams and Thomas Jefferson both died on July 4, 1826. - The “Star Spangled Banner” was decreed the official national anthem in 1931.

Robot vacuums

- The tune of the National Anthem was originally used by an English drinking song called “To Anacreon in Heaven”. - 87.5% of imported U.S. flags and 97% of fireworks are from China. - In 1954, the words ‘under God’ were added to the Pledge of Allegiance. - The White House held its first 4th of July party in 1801.

TV watch

Share what you know. Teaching what you’ve learned to someone else can cement it in your brain. You’ll reinforce basic information in your brain and think through things in different ways based on people’s questions and the need to explain ideas effectively. 25

BURNS & YES, WE CAN DO THAT

WILCOX ACCESS IS OUR MIDDLE NAME. Our access to the widest range of domestic and international carriers means you can say yes to almost any hard-to-place risk. Give your clients what they want to hear with Burns & Wilcox.