“La Voz� is the official monthly publication of the
"The Voice" of Independent Agents since 1934
Independent Insurance Agents of NM
a L
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 Vice President Lorri Gaffney Communications Director Rachel Sheffield Insurance Programs Administrator Julie A. Franchini Member Services Associate Renee Trujillo
2011-2012 Officers
Features
o VZ
Thank You! To Our 2011 Company Partners
04
Big "I" Study Suggests Industry May Be On the Road to Recovery
07
Ask An Expert - "Wind Storm vs Falling Object"
11
The Six Cs of Successful Selling
12
Holiday Party Invite
15
10 Ways to Improve Your E-mail Marketing
17
Consumer Shopping for Auto Insurance Grows Online
18
Agent Liability for Property Undervaluation
20
Do You Prepare Your New CSRs for Success or Failure
23
Contingent Commissions Fall Again
25
In Every Issue Tech Talk
08
Education Edge
26
ABEN - The Next Big Thing in Continuing Education
27
November's Clickable Calendar
28
Odds n Ends
29
IIANM's 2011 Partners Program
30
Advertiser Index Acuity
21
Chair Scott Jones
American Mining Insurance Company
13
Burns & Wilcox
16
Vice-Chair PJ Wolff
FUSA Insurance Agency
06
Market Finders, Inc.
10
Mountain States Insurance Group
22
New Mexico Health Insurance Alliance (NMHIA)
14
New Mexico Mutual
02
Risk Placement Service
24
Trustco / HCIT
14
Secretary/Treasurer Diana Hobbs National Director Sam Conlee Immediate Past Chair Kathy Yeager
2011
independent insurance agents of new mexico
Partners Program
Letcher, Golden & Associates
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Big “I” Study Suggests Industry May Be
T
he Independent Insurance Agents & Brokers of America (IIABA or the Big “I”) announced the release of its 2011 Best Practices Study which found that organic growth improved, albeit modestly, and profitability held constant across most of the study’s six revenue groups. “The results of this year’s Best Practices Study indicate good news after several years of negative growth, shrinking profit margins and declining agency values,” says Madelyn Flannagan, Big “I” vice president of agent development, research and education. “Most study participants benefitted from the growth strategies deployed over the last couple of years when the recession suddenly amplified the pressure of a prolonged soft market.” Other findings from the 2011 Best Practices Study include: • Big Picture: Most study participants benefitted from the growth strategies deployed over the last couple of years when the recession suddenly amplified the pressure of a prolonged soft market. A strong focus on total account development, increased advertising/marketing activities, and producer hiring/development/management strategies gave most agencies a competitive advantage when the economy began to rebound in 2010, and stopped or reversed the revenue decline that first became apparent in the 2006 study. Generally, the smaller revenue-sized agencies reported flat growth, while the larger commercial agencies reported improvement over the 2010 study results. Organic growth for the $10-25 million group increased from 0.7% to 2.4% and the more than $25 million group increased from 1.2% to 3.3%. • Cutting the Fat: As with revenue growth, the agencies benefitted from steps taken over the last couple of years to control and lower expenses. Profitability remained flat in all study groups with an average Pro Forma EBITDA margin of 26.2% for agencies with revenue less than $5 million and 20.0% for agencies with revenue above $5 million. Margins had decreased continuously since 2006 when they were at their highest in the study’s then 13 year history. • Rule of 20: In recent years, the Rule of 20 outcomes, a quick measure for determining whether an agency is creating value for its shareholders, have fallen significantly short of the desired score of 20 for most of the study groups. The 2011 results leveled off at an average score of 13.2 for the “Less than $5 million” agencies and increased to an average 11.7 for the “More than $5 million” agencies. • Revenue per Employee, an industry standard productivity measure, also remained flat with the average for the
on the
“less than $5 million” agencies just over $150,000 and the “more than $5 million” at $172,000. These averages are down only slightly from the revenue per employee levels reached prior to the start of the soft market. The resulting drop in revenue forced agencies to concentrate on better utilizing new and existing technology to support sales and marketing efforts and to contain costs. As a result, productivity remained stable. • Personal lines, once again, had positive growth rates (an average of 3.1% for the less than $5 million and 3.8% for the more than $5 million). However, group medical grew more last year with an average of 3.0% for the less than $5 million and a strong 4.2% for the more than $5 million, up more than 3% from last year. • Commercial lines continued to see negative growth but far less negative than last year. Many agents said they are starting to see some commercial insurance rates hold at their current levels. This could indicate that the 2012 results are bound to improve providing the economy doesn’t stall again. “While the 2011 results are not stellar, they do indicate that Best Practices agencies are rebounding from the devastating effects of the recession and soft market, and are poised for new growth and stronger profitability, the key components of agency value,” says Robert Rusbuldt, Big “I” president & CEO. “Overall, we are pleased, but not surprised, that the independent insurance agency system remains strong and stable.” Every three years, the Big “I” collaborates with Reagan Consulting to select “Best Practices” firms throughout the nation for outstanding management and financial achievement in six revenue categories (less than $1,250,000; $1,250,000 to $2,500,000; $2,500,000 to $5,000,000; $5,000,000 to $10,000,000; $10,000,000 to $25,000,000; and more than $25,000,000). Agencies are nominated by either a Big “I”-affiliated state association or an insurance company and qualified based on -operational excellence. Financial and benchmarking information for the participating agencies are also reviewed and updated. The Best Practices Study was initiated by the Big “I” in 1993 as the foundation for efforts to improve agency performance and create higher valued agencies. The survey and study of leading independent insurance agencies documents the business practices of these “best” agencies and urges others to adopt similar practices. Twelve insurance companies and four industry vendors provide financial support for the research and development of the Best Practices study – Applied Systems, Addis Intellectual Capital, Central Insurance Cos., Chubb, EMC Insurance Companies, Encompass Insurance, Erie Insurance, Great American Insurance Group, The Hanover Insurance Group, Harleysville Insurance, Imperial PFS, InsurBanc, Kemper Preferred, Liberty Mutual Agency Corporation, MetLife Auto & Home and Zurich North America.
Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011
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The Anderson Agency Report
Your Agency Needs A Phone App
M
obile phone usage continues to grow. Verizon now sells its version of the iPhone. And new phone models based on the Android operating system continue to be released. According to Mobclix (www.moblix.com), the top-ranked paid app in the iPhone App store on January 4, 2011, was Angry Birds. The top-ranked free app was Pimple Popper Lite. Based on that, you might not think mobile apps are relevant for your business. Think again. When you dig deeper into the numbers, a different picture starts to emerge. The top six insurance apps in the iPhone App Store (as of January 4) were: 1. State Farm Pocket Agent (rank: 75) 2. GEICO GloveBox (rank: 92) 3. iFarmers (rank: 245) 4. Progressive (rank: 263) 5. Allstate Mobile (rank: 421) 6. eSurance Mobile (rank: 644) These rankings are pretty impressive. There are over 300,000 apps currently available at the Apple App Store. Clearly, customers of these companies think these apps are important enough that they take the time to download them to their phones. (See Figure 1) There are a few agencies that have created apps, and they also rank fairly well when compared to the total number of apps available (see Figure 2) 1. Drescher Insurance Agency (rank: 6,017) 2. The Insurance Dude (rank: 2,247) 3. TCP Insurance (rank: 2,896) 4. Treutel Insurance (rank: 5,009)
How to get a mobile app Common app elements The table below details the features that are most common across all of these applications.
The Big “I” currently has a Trusted Choice mobile App under development that will be ready in the 1st quarter of 2012. Agencies will be able to purchase the App for a fraction of what it would cost for an agency to develop. Look for details soon! Consumers’ expectations of what constitutes “good service” is constantly changing. Having a customized BlackBerry, Android, and iPhone app for your agency will help set you apart from your competition.
Top 10 Things Your Customers Will Do When They Have Your Phone App 10. Take a picture, send it to you, and have it go into your database, all in one step. 9. It is interesting to note that the eSurance app doesn’t provide users with the ability to contact the company from within the application. The app does, however, enable users to report a claim, and includes a push to call feature that provides a direct connection to the company’s claim reporting hotline. A significant difference between the carrier apps and agency apps is the ability to display customer policy information. Because carriers can connect directly to their policy management databases, they are able to display policy information on their applications. This is more difficult for an agency application to provide. However, these same things can be done using some agency-facing online services currently available.
will help them know what to do next. 8.
Providing a mobile app makes you the easiest person for customers to do business with, which means they will likely stay with your agency longer. Mobile apps also keep your customers away from Web searches. When they can always find you on their phones, they are unlikely to need to look you up online and see ads for other insurance providers.
Communicate and work with you when they are
on the move using the push-to-call, push-to-text, push-to-email features of your app. 7.
Get an interactice map and turn-by-turn direc-
tions to your office. 6.
Read notices or news updates from you.
5.
Get a copy of their proof of automobile liability
Why should you have a mobile app? Today, a person’s mobile phone is the one thing that is constantly with him or her. It allows instant gratification. Instant means you don’t have to wait for it to start up. Your phone is always on and always available. When you provide a mobile app to your customers, it gives your agency a powerful, personal presence.
If they are in a car accident, your phone app
insurance ID card any time they need it. 4.
Get a self-service certificate of insurance.
3.
Send you a request for a policy change.
2.
Make an online payment.
1.
Stay with your agency because you are so
easy to work with. Duke Williams is the founder of SehMobile.com, SimplyEasierPayments. com, Sehhey.com, and Simply-easier-acord-forms.com. In addition to running these businesses and thinking up new products, Duke is a national speaker and teacher of how to do business on the Internet for insurance agents.
Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011
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Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011
VU Fa
culty
Windvs Storm
FallinG .Object * But if the wind merely snapped the tree branch and gravity took over, making it fall straight down on top of the roof, a stronger argument can be made that the act of falling was the predominant cause. Faculty Response
I think you'd have a point if the limb fell of its own weight, perhaps due to disease or decay. However, it sounds like that damage occurred in the same manner that it does in tornadoes and hurricanes where much of the damage is not the direct force of wind but rather damage arising from windblown objects. These are typically considered part of the windstorm loss.
"During a wind storm, a tree branch breaks off the tree and lands on the roof of a house, damaging the roof, chimney, and there is resulting water damage to interior walls. The insurance company claims the damage is caused by wind. We believe the damage is caused by the tree branch - falling object. If the Faculty Response A question to ask is, would the wind lifted up the shingles and there was resulting damdamage have occurred without the windstorm? Was the age, it is a wind loss, but the wind did not directly cause branch decayed? If not, there’s a strong argument for damage to the structure - the tree did. At stake is a large wind being the proximate cause. percentage windstorm deductible. Who’s right? Is this a wind loss or a loss caused by a falling object?" Faculty Response This might be relevant if this was the endorsement being used to effect the windstorm deductUnder your 1991 ISO HO-3 policy, this usually isn't ible. It's the endorsement language from HO 03 10 04 91 an issue since both windstorm and "falling objects" - Windstorm or Hail Percentage Deductible endorsement: are covered. In fact, the "falling object" named peril is material only for Coverage C/interior damage For the premium charged, we will pay only that part of each loss since the damage to the structure is on a named excluwhich exceeds the Windstorm or Hail Deductible Clause percentsions basis. However, as revealed in a follow-up email to age stated above, in the event of direct physical loss to property the "Ask an Expert" question above, the policy is written covered under Section I caused by Windstorm or Hail. with a 1% windstorm deductible, so we're looking at a (Editor's Note: According to the ISO form portfolio, this thousand+ dollar deductible rather than $250. endorsement is currently available only in Puerto Rico. Faculty Response I believe that the wind was the The 1991 version of this form did not indicate that it was exclusive to Puerto Rico, though the ISO manual may proximate and controlling cause of loss. The limb did not have. As a result, at least one domestic U.S. company fall by its own weight, but was blown into the structure, was using it at the time.) if I understand the events. It doesn't sound like the loss would have occurred in the absence of the windstorm.
Faculty Response
The insurer is apparently citing the “land rule” or the “first cause” test. The wind is the efficient cause that sets the other causes in motion to produce the loss. If your state courts follow that rule, then the insurer is correct. This is a wind loss.
If your state allows a more flexible analysis under the “predominant cause” rule (some states do), whether or not the wind or the fall is more important would depend on the facts. * If the branch broke off and flew sideways such that its downward trajectory would not have hit the house without the wind pushing it along, then I think the wind is the predominant cause of the loss.
I think an argument could be made that the wind only did "direct damage" to the tree limb... a stretch I'll admit. By contrast, here is the language from the HO 04 94 04 91 - Windstorm or Hail Exclusion endorsement: For a premium credit, we do not insure for loss caused directly or indirectly by windstorm or hail. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. Direct loss by fire or explosion resulting from windstorm or hail damage is covered. Notice that this language refers to loss caused directly "or indirectly" by windstorm, with an exception for ensuing fire or explosion. That language is absent from the deductible endorsement which might be material to an argument based on intent or ambiguity.
Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011
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C
The 6
s of Successful
elling by John Chapin
Successful selling can be broken down into 6 key areas or character traits which in this article we will refer to as the 6 Cs. If you are new to sales, or are struggling a bit, you’ll find that by focusing on these 6 keys, sales success will quickly follow. If you are already a highly successful salesperson, refocusing on these 6 factors will make you even more successful. The 6 key characteristics necessary for sales success:
C
To be successful in sales you have to be committed to your customers, your company, and yourself. When you are 100% committed to your customers, you’ll go above and beyond and focus on delivering more than customers expect. This is a prerequisite to selling at the highest levels. 100% commitment to your company means being completely committed to your “internal” customers: your manager and other salespeople, other people in other departments, and all other personnel within your company. Finally, 100% commitment to yourself means you will do whatever it takes to reach all your personal and professional goals including being the absolute best salesperson you can possibly be.
C
onfidence
Confidence means complete belief in your ability to do your job at the highest levels and also belief that you have all the tools necessary to meet all your commitments listed in point number one above. You may need some additional skills or you may need to work on areas such as product knowledge or time management, but with confidence you know you are up to the task and will do what needs to be done to fill in those gaps.
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C
onsideration for Others
ommitment
Consideration for others means you are as nice a person as possible in both your personal life and professional life. It means you have empathy for all those you come into contact with regardless of who they are. It also means you are able to put yourself in other peoples’ shoes and you are able to place other people ahead of you when necessary. It means you do what’s right and what’s best for the other person without regard to your own personal loss or gain.
C
ompetence
When you are competent you speak intelligently about your industry and you stay up to date on the latest news and industry trends. You also know as much about your competitions’ product as you know about your own. Competence means you continue to educate yourself and get better at what you do. If you are new and have some gaps in areas such as product knowledge, competence means you are honest with customers about what you don’t know and that you do whatever you have to do to get correct answers and follow up in a timely fashion.
Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011
C
ommunication
To be at the top in sales you must be good at open, honest, direct communication. Good communication means staying in touch, it means you don’t hesitate to communicate when there is a potential issue or problem and you don’t leave any loose ends or questions unanswered. Good communication also means staying in touch in order to build long-term relationships.
C
ompetitiveness
Top salespeople are highly competitive and they will do whatever it takes to win, ethically of course. They are extremely motivated and do not rest on their laurels or on last weeks, last months, or last year’s numbers. They continue to push themselves to grow both personally and professionally. At the same time, they also realize that both sales and life are team sports and they do all they can to help, work with, and cooperate with the people in their lives..
By focusing on and developing, or further developing, the 6 key characteristics above, not only will you have more sales success and make more sales, you’ll also find that your personal life will benefit greatly too.
John Chapin is an award winning sales speaker, sales trainer, coach, and co-author of the gold-medal winning "Sales Encyclopedia" a comprehensive how-to guide on selling. "Sales Encyclopedia" is written for sales professionals in all industries at any level of experience. Utilizing more than 21 years of sales experience and as a number one salesperson in three industries, John co-founded Complete Selling Incorporated, a company helping salespeople significantly increase sales and find their motivation. If you would like access to John's free white paper on what it takes to be successful in sales along with a monthly newsletter, you can visit John's website at http://www.completeselling.com For permission to reprint, or to reach John, email him at johnchapin@ completeselling.com.
“insurance from people who know mining”
I n s u r a n c e for: We offer Workers’ Compenasation Insurnace
c c
Coal mines: surface and underground coal truckmen
c c
quarries sand and gravel digging
c c
other types of mining mining related risks
For more information, contact Bryant Brown, V.P. Marketing • 1.800.448.5621, x 249. 3490 Independence Drive • Birmingham, Alabama 35209 WWW.AMERICANMINING.COM Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011
Page 13
Displaced clients?
Supporting nM BrokerS! We’re here to help you SuCCeeD!
Find us at NMHIA.com or call 800-204-4700.
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
SM
SM
SAVE THE DATE
DECEMBER 1, 2011 6” x 4” post card - front
Instead of our usual Holiday Party,
New Mexico Mutual & IIANM will come together to celebrate the holidays and New Mexico Mutual’s SAVE20th THEanniversary. DATE SM
SM
AsMexico always, anyone in the New Mutual & IIANM insurance industry is invited to come together to celebrate attend this very special gathering New Mexcio Mutual’s 20th anniversary. December 1, 2011 December 1, 2011 4:00pm 4:00pm - 7:00pm- 7:00pm
NewMutual Mexico Mutual Office New Mexico Office Singer Blvd. NE 3900 Singer3900 Blvd. NE Invitation to follow Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011
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Lessor’s Risk
The Lessor’s Risk insurance your clients need to cover any slip up. When it comes to Lessor’s Risk coverage, Burns & Wilcox is the top banana. We offer coverage for virtually any tenant occupied building. Plus, our unlimited access to admitted and non-admitted markets means we offer the broadest protection possible. So remember, when it comes to Lessor’s Risk, there’s one company who never slips up – Burns & Wilcox, the largest independent wholesale broker and underwriting manager. Albuquerque, New Mexico | 505.822.0018 toll free 866.643.8538 | fax 505.822.0092 scottsdale.burnsandwilcox.com • Commercial • Personal • Professional • Brokerage • Binding • Risk Management Services
We’re living in a state of constant e-mail attack. With such high volumes of e-mail, readers are forced to make split-second decisions about the value of a message. How do you avoid the trash - or worse, SPAM blocker - and grab your reader’s attention? Use these tips to stand out in any in-box and give your readers something to be remembered.
1 2
If you’re going to use a person’s name in the “from” line, it should be one that your readers will recognize. When in doubt, stay consistent: use your organization’s name. E-mails should be no more than four scrolls long. In other words, a person reading the e-mail on their smartphone should not have to scroll (or, in the case of the iPhone, swipe) more than four times to get to the end of the message.
3
If you find that you’re getting blocked/ spammed by readers, place the “Click here to unsubscribe” link at the top of your e-mails. If the link is hard to find, people will click “Report as spam” in their own e-mail system.
4 5 6
Many readers are checking e-mails on their smartphones. Show your readers that you speak the mobile language; make your e-mails very mobile friendly. Images within the body of an e-mail should be 480 pixels or less. Images larger than 480 pixels distort the appearance of your e-mail on smartphones and make mobile reading more difficult. When uploading images into an e-mail, add “alt tags” - an alternative text (a standard feature in most
10
e-mail marketing systems). If your image doesn’t load properly in a reader’s in-box, it will display your chosen text, not the menacing red “X.”
7 8 9 10
Consider a re-engagement campaign to reach out to inactive readers. Typically these campaigns involve several e-mails over the course of a few months. One of the e-mails should highlight the benefits of your newsletter. Re-engagement takes time and effort, but it’s worth it. It will clean up your lists, improve deliverability, and allow you to focus on your loyal readers. There is no best time or day to send an e-mail. Send when you want to send. If you have access to optimization scheduling, take advantage of it. Optimization delivers your e-mails to each reader based on their e-mail habits over time. If your e-mail contains a table of contents, make sure to double space the links. The extra line leaves enough room for smartphone readers to click with their large, often clumsy thumbs. Remember that e-mails aren’t web sites. You don’t need to have all of the information in the body of an e-mail. Use catchy headlines and noteworthy details, but don’t make it too long. If the reader wants to know more, they’ll click.
ways to IMPROVE your e-mail marketing
Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011
Page 17
It is important for agents to keep abreast of the latest research about online consumer shopping and purchasing. The 2010 comScore survey contains a number of trends that independent agents can use to design their own Internet strategies and to employ available technology tools to duplicate the speed and convenience that the direct carriers provide, while adding the personal advice and service that they uniquely can offer.
Consumer Shopping for Auto Insurance
C
When it comes to consumer attitudes on purchasing, independent agents still have an edge. by Ron Berg, MetLife Auto & Home Ron Berg is the Senior Technology Research Specialist within the Agency Services & Technology unit of MetLife Auto & Home, based in Warwick, RI. MetLife’s web site is www. metlife.com. Ron Berg can be reached at rberg1@ metlife.com. Ron produced this article for ACT. For information about ACT, please visit www.iiaba.net/ act. This article reflects the views of the author and should not be construed as an official statement by ACT, IIANM nor of MetLife Auto & Home, nor should it be interpreted as MetLife Auto & Home’s endorsement of comScore or the report. Page 18
Grows Online
omScore’s latest assessment of the online auto insurance landscape reflects contin ued growth in quoting and purchasing auto insurance online (2010 comScore Online Auto Insurance Report). Most consumers still buy off line, however, and want to deal with a person. Independent agents can continue to succeed in this new environment if they build their own online presence with an engaging website, use social media to develop “fans”, incorporate online consumer quoting coupled with rapid follow up and demonstrate they add value to the process. It is important for independent agents to be fully aware of the trends revealed in comScore’s latest research as they develop their online strategies, and this article seeks to present those highlights. The 58-page report covers trends regarding online quoting and purchasing, information about customer preferences, agent versus direct-channel purchasing, as well as aspects of customer self-servicing and loyalty. For this survey, comScore relied upon input from 1 million U.S.based consumers, as well as insights from a panel of over 2,000 U.S. online consumers.
Online Quoting
Online quoting continues to be the first stop to consumers researching auto insurance. Online quoting increased 21% from the previous year’s survey to a total of 38.8 million quotes submitted online. In 2009, 54% of all consumers went online to get auto insurance quotes, and 72% have gone online to find auto insurance information at some point in their lives. The economy continues to be a driver in shopping around for insurance. 21% of consumers reported they are “more likely” to shop around for insurance due to the economic conditions. We see this play out online with the majority (83%) going directly to insurer websites, versus only 17% going to aggregators and online agencies (Insurance.com, NetQuote, etc.). Of the quotes done on carrier sites, the usual “direct” suspects lead the pack: GEICO (28.8% of all quotes), Progressive Direct (28%), and Esurance (13.8%). Independent Agents (IAs) have a say in all this, as a full 22% of consumers went to a multiple-carrier agent. This is a decrease of 3% from the previous year, so the focus on improving agent website functionality becomes critical – with the inclusion of website comparative rating tools, as well as direct-to-carrier quoting links offered by carriers as agency website add-ons.
Online Purchasing
A record 2.8 million policies were purchased online in 2009 – an increase of 22% from the previous year. For some perspective, only 700,000 policies were purchased online in 2004. The opportunity for IAs lies with assisting the consumer in understanding his/her insurance needs. 78% of consumers are still purchasing offline, and by far the largest reason is that they want to speak with someone who can guide them. 71% listed this as their primary reason for purchasing offline. The key is making it easy for the consumer to find agents on the Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011
Web, as well as connecting the consumer to the agency via technology tools like online quoting on the agency website, live chat, online forms requesting agent call-back and using social media. Additionally, more consumers are able to sign all needed policy documents online. A full 82% reported using online tools such as electronic signature in 2009. Overall, consumers are expecting easy-to-use functionality and rapid service.
in making their purchase were: more convenient to use website or 24 hour toll free number (27%); faster to purchase online or through toll free number (23%); got a quote with a toll free number and decided to purchase (23%); prefer website or toll free number (16%). Agents can employ available technology tools to offer the same convenience and speed as the direct carriers, but add on top of that the personal advice and local presence they offer.
Agency carriers are producing better long term retention. 39% of all shoppers switched their auto insurance in 2009. However, State Farm and Nationwide had the highest retention of those consumers staying with their insurer five years or more. GEICO and Progressive had the lowest five-year retention. While price was the biggest driver for switching insurers (49%), having a real person with whom the insured can visit with was third at 13%, after “protecting my assets/possessions.”
17% of respondents indicate they purchased a policy through an affiliation with an association or a group. 31% indicated they would definitely purchase “pay-as-youdrive” insurance – more evidence that consumers are looking for discounts wherever possible.
Self-Servicing
Retaining customers is crucial for both agents and insurers. One of the most important aspects is payments. 55% of customers pay for their bills on a monthly basis. While a little over one-quarter of all customers pay their premiums in full up front to obtain discounts, there is a large opportunity to provide ease of use functionality to the customer who makes monthly payments, by providing this functionality through the agent’s website (as well as at the carrier’s site) – to keep the agent’s website in the forefront of the customer’s mind. Many carriers provide eService links that can be placed on their agency’s website, allowing clients to go the agency website first and then link to the carrier’s sign in and make a payment function. In total, 34% of customers pay their bills online – either at the insurance carrier’s eService website, or by online banking.
Online Activity Varies with Age
For those shopping online for auto insurance, the biggest increases were between ages 18-24, and 25-34. All age ranges over 35 decreased. 23% of 18-24 year olds purchased their policies online in 2009, compared to only 9% for 55+. Percentages purchasing online decreased for each range: 18-24: 23% 25-34: 21% 35-44: 18%
45-54: 15% 55+: 9%
Conversely, the percentage of those purchasing through an agent rises from 60% to 70% as age ranges increase.
Buying With or Without an Agent
The top four reasons consumers give to have bought through an agent include: wanted real person to visit with or call (38%); have always used an agent (34%); wanted local agent from one company who could help with all insurance needs (26%); agent quoted best price (25%). The top four reasons consumers chose not to go through an agent
Where are the Opportunities?
The majority of consumers are going online to research auto insurance premiums. Agent websites can attract a larger portion of those by improving site functionality with quoting and making their site easy to find with social networking and SEO (search engine optimization). 22% of those in the comScore survey went to local agents to get quotes. 26% of consumers looked online for a local agent, either on a search site or on a carrier’s website. 78% are still purchasing offline. Agents can continue to provide a crucial link in helping consumers find a great price matched with the coverage they need. While the direct giants like GEICO and Progressive Direct still get the most quotes online, the agent-based insurers have the lead in total premiums written. Consumers still put more faith in the agent-based insurers, and they also have the best retention versus direct writers. 25% of the respondents have individual auto and homeowners or renters insurance with different carriers. There is a significant opportunity here if the agent can attract more consumers to educate them on the price and flexibility advantages of writing all of their insurance needs with one carrier. And 54% said they have additional insurance policies outside of auto and homeowners, primarily life. 34% pay their bills online. Links to carriers’ eService sites placed on agency websites are one way to keep the clients in touch with agency websites. In addition, 82% of online purchasers were able to sign all policy documents online at the time of purchase, which is up from 76% in 2009. Carriers and agents should work together to offer this same eSignature capability for online forms. While the clear trend is toward more online activity without the involvement of an agent, savvy agents can start to divert a lot of this online business by using Internet tools to duplicate the speed and convenience the direct carriers are providing. Agents can now optimize their websites with online quoting and eServicing capabilities and links, as well as attract more traffic using social networking. Including customer self-service functions on agency websites not only provides more customer preference options, but keeps the agency website in the customer’s field of view.
Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011
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Agent Liability for Property Undervaluation by Bill Wilson
M
ore than 60% of U.S. homes are undervalued by an average of 25%, according to Marshall & Swift/ Boeckh. In some cases, as much as 73% of an agency's book of homeowners business may be undervalued by an average of 35%, according to MS/B. The problem isn't limited to homes either - 75% of commercial buildings could be undervalued by an average of 40%. If an insured suffers an underinsured loss, whose fault is it? According to one recent court decision, it could be the agent's. In Martinonis v. Utica National Insurance Group, the Massachusetts Court of Appeals held the agent liable for failure to adequately insure a home based on the long-term relationship between the agency and client. The client’s regular reliance on the agent's advice and assurances regarding policy limits created a special relationship. The agent obtained a homeowners policy for the plaintiffs whose home was subsequently destroyed by a fire. The insurer paid the policy liability limit of $469,000 in full. The plaintiffs contended that the actual damages were $1,164,012.43 and that the agent was negligent in failing to advise them to obtain higher limits. The trial court awarded summary judgment in the agent’s favor. The Court of Appeals reversed, stating: “[T]here is no general duty of an insurance agent to ensure that insurance policies procured by him provide coverage that is adequate for the needs of the insured…[however] in an action against the agent for negligence, the insured may
Special relationships between insureds and agents can muddle the policy limitation lines.
show that special circumstances prevailed that gave rise to a duty on the part of the agent to ensure that adequate insurance was obtained.” The insureds presented facts demonstrating an almost 10year relationship with the agent, including procurement and advice on insurance policies placed with him on a variety of other properties, which led them to rely on his expertise. The agent had previously advised the insured that their contents limit was inadequate and, following his advice, they increased that amount. However, they contended that, after expressing concerns about their dwelling limit, the agent assured them that the limits were proper. They thought the $469,000 dwelling limit was too low. The assessed value of the house was around $400,000 and the insureds expressed concern that the assessing authorities were slow to catch up with market value. They also knew that houses in their area were selling for more than $1 million. "There is no general duty of an insurance agent to ensure that the insurance policies procured by him provide coverage that is adequate for the needs of the insured,” according to the Court of Appeals. “The agent does not, in general, have a fiduciary duty to the insured in this regard ... Nevertheless, in an action against the agent for negligence, the insured may show that special circumstances prevailed that gave rise to a duty on the part of the agent to ensure that adequate insurance was obtained." In the court's opinion, the plaintiffs presented adequate evidence of such special circumstances, in opposition to the agent's motion for summary judgment. Their testimony about the long relationship with the agent, the reliance placed on his review of the adequacy of their insurance, his specific assurance on past occasions in response to inquiries that the policies had adequate limits of liability, and the specific assurance in this case that the limits were proper were sufficient to defeat a motion for summary judgment. The agent's defense rested largely on the fact that no separate compensation, in addition to normal commissions on premiums, was requested by or paid to the plaintiffs to reflect the services he rendered in supplying counsel and advice. However, according to the court, the absence of separate compensation does not mean that special circumstances giving rise to a duty of care did not exist. The facts were enough to create a material issue of fact in the eyes of the court as to whether special circumstances exist on the issue of duty sufficient to survive summary judgment. To read the entire article, click here. You will have to log-in in order to view the entire article. If you do not know your Big “I” website user name and password, email rachel@iianm.org to request your login.
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Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011
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Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011
Page 23
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Do You Prepare Your New CSR’s For
Success Or Failure?
I
know this seems like a silly question, but I find that many agencies do very little to prepare the new CSR for success. Some new CSRs are given a haphazard training program that lasts for couple of days and sometimes, for just a couple of hours. In order for that new employee to get started on the right foot you must have created a training matrix outlining: How will I find and hire the “right” person? What training will the individual receive? Who will do the training? When will the training be accomplished? The first time many agencies look for a new CSR is when an existing employee resigns. Usually the departing employee gives two weeks notice, causing the agency owner or manager to conduct a frantic hiring process.
by Jack Fries
The new CSR should be trained by the most competent persons for each of the various duties required by the job. For example: whichever person best uses the agency automation, should train a person on the use of the agency’s technology. Next. The dates and times of the training should then be established. The training cannot be haphazard. If an unforeseen emergency arises and delays the training, new dates and times must be established to insure that the training is accomplished. Once the training has been completed both the new employee and the trainer should sign off, acknowledging that the training has been completed and that the newest CSR fully understands what he/she has been trained to do. Success in anything requires a plan. Without a plan an agency owner or manager, and for that matter the new CSR, has little chance in achieving in a success.
Sometimes, the employee is hired based on the “mirror test.” In other words, a mirror is placed under the prospective employee’s nose and if they fog up the mirror, they are hired. In order to have a successful hiring, the agency owner or manager should first outline the criteria for the job. This should include: prior training, prior employment, personality, computer knowledge, and office skills. I believe that an agency should be conducting continuous interviews for future employees.
Have you checked out the “Agency Management” section on our web site? We have gathered a collection of informative agency management resource manuals that you can customize for your office.
They should keep a file with the resumes of those who would make good CSRs. When a position becomes available the agency owner or manager then has a list of prospective employees that they could call and possibly hire before interviewing never before seen prospective employees. A training matrix should be created for the new employee. Remember the only thing worse than training someone who leaves, is not training them and having them stay. The training matrix should include the various aspects of the job. For example: underwriting requirements for various companies; use of the agency technology; and other aspects of the job. Once the training needs have been established, a decision must be made as to who will do the training. Many agencies have the departing employee train the new employee. I believe this is a grave mistake. The departing employee has already informed you of their decision to leave. What makes you think that they have a desire to train the new employee adequately?
Fries & Fries Consulting • P. O. Box 66 • Alexandria, KY 41001 phone (859)441-4528 • fax 1-800-887-5874 • e-mail dfries@jackfries.com
Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011
Page 23
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Contingent Commissions Fall Again 2010 percentage of premium at two-thirds of 1%.
K
nowing that IIABA Best Practices Agencies rely heavily on contingent commissions, industry data on the subject is always of great interest to member agencies. When A.M. Best sends out their annual compilation of p-c insurer required financial statements, it is always interesting to see what total contingency payments were for the prior year. The 2011 Edition of Best’s Aggregate & Averages Property/Casualty Edition shows that 2010 contingency payments totaled $2.8 billion and, on a percentage basis, are just shy where they were before the run-up leading to the Eliot Spitzer suit against Marsh McLennan in 2004. As you can see in the below chart, contingent commissions increased from the level they have been for 2009 and 2010 to much higher levels in 2004 to 2006 before falling back again to twothirds of one percent (1%) of net written premiums (that is, insurer premiums “net” of reinsurance). Total contingent payments are above where they were from 1998 to 2002, but on a percentage basis it is a dead heat with lowest level contingent commissions on a percentage basis from many years. Contingent commissions are paid to many insurance agencies appointed with various insurance companies, and the dollars are disclosed by insurers when they file their required statutory financial statements each year. Typically, they are paid to Source: Best’s Aggregates & Averages Property/Casualty, 2011 Edition appointed agents of insurance companies based on formulas that provide for incentives to reward frontline underwriting by agencies, proactive risk management and achieve volume and growth. In 2010, the IIABA Best Practices Study Update shows that of the agencies that were nominated and selected for participation, the average was about 10% of revenues from contingents and 50% of profits from contingent commissions. Best Practices agencies under $1.25 million in revenue tend to take in less, but contingent commission income is very important to all size Best Practices agencies as shown in the table below.
Source: 2010 IIABA Best Practices Study
The Best Practices Study Update is a “must have” for those agencies that want to become the best they can be. It includes in-depth financial analysis of agencies nominated by insurers and Big “I” state associations that are then selected to participate. The 2010 Study can be purchased from the Big “I” Education Department. Order forms for the existing study and can be downloaded at www.independentagent.com under the education, Best Practices and Order Forms. Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011
Page 25
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 Classes 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:
Kitty Leslie - November 8 - 9
8am - 5pm
Instructor:
Jeff Straight
- November 10
Instructor:
Jack Cleary - December 6 - 7 8am - 5pm
Instructor:
Jeff Straight
- December 8
Click here for a full listing of our education program.
8am - 5pm 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.
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Page 26
)
E-Mail:
Signature:
) Go on-line: www.iianm.org or E-mail: rachel@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 - * November 2011
INTRODUCING
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Additionally, ABEN’s help desk is standing by 24/7 to assist you, should you encounter any difficulty with the technology. With ABEN courses you get the benefit of best information out there, with the convenience of internet technology and the full educational experience you can only get through ABEN’s platform.
For more information and to view course listings click here
Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011
Page 27
November
2011
Clickable Calendar
Sunday
Monday
Tuesday
1
Click on class title to register
Wednesday
Thursday
2
3
Saturday
4
5
11
12
18 17 Office Office Closed Closed 25 23 24
19
P&C
Pre-licensing Class
Friday
L&H
6
7
8
9
13
14
15
16
20
21
22
Pre-licensing Class
10
Dec 1st
26
Holiday Party!
Classifieds
27
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29
30
New Mexico’s Job Bank 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. 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!
Odds n Ends Preparing for a Rainy Day Experts in personal finance often recommend having an emergency fund in case the unexpected hits - a layoff, an injury, some event that interrupts your paycheck. Such a safety net should cover at least six months worth of living expenses. To calculate how much you need to save: • Collect your financial records for the past year, including bank, credit card and ATM receipts. • Make a grid listing 12 months across the top and your expenses down the left side. • Fill in the amount you spend during each month and total for the year. • Divide by 12 to get your average monthly expenditures. • Multiply your average by six (6) which will give total of what you should have for a comfortable safety net
How Can You Increase Your IQ? The best known method to improve underlying intelligence is hard work. Teenage dropouts lose between 1.5 and 5 points of IQ for every year of school they miss. People who work in challenging jobs that require problem-solving skills see gradual increases in their IQ scores, while those whose jobs involve mindless repetition see their test scores erode over time. Read the entire article Take a Test: What’s Your Brain Grade?
5 Tips for Fall Gardening Even before winter-prep season kicks into full swing, your garden may benefit from your extra attention. Acting now may even save you a few extra bucks. The Daily Green's "The Green Cheapskate" blog recently shared advice on how to stretch garden season while stretching your hard-earned dollar. In fact, author Jeff Yeager calls this the "best time of year for all kinds of garden activities." Click here to view.
Gratitude is the inward feeling of kindness received. Thankfulness is the natural impulse to express that feeling. Thanksgiving is the following of that impulse. ~Henry Van Dyke