2010 March La Voz by Independent Insurance Agents of NM

NEW MEXICO’S EXPERTS IN WORKERS’ COMPENSATION INSURANCE

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

www.NewMexicoMutual.com

Jump Into Spring! IIANM Brings back the Mutual Benefits Program! Starting March 1, for March, April & May, you can benefit by submitting applications for new business with New Mexico Mutual and receive even more by putting that business with them. IIANM is pleased to offer this visa gift card program that can benefit you and New Mexico Mutual, the largest financial supporter of IIANM.

Independent Insurance Agent ®

With new rates for 2010, New Mexico Mutual also launched their three new companies October 1 and wants you to take a look at what they can do for your customers. The Mutual Benefits program is designed to benefit you when you submit applications for new business. Even better you'll receive an additional gift card when you bind that new business with New Mexico Mutual in any of their companies.

Make this a great Spring! The benefits will be distributed as Visa gift cards that you can use yourself, give to your family or anyone else you choose!

Qualifications for Spring Program: • CSR receives $50.00 gift card for five new applications submitted to and quoted by underwriting • For a bound policy with premium from $5,000. to $24,999., CSR receives a $25.00 gift card.

Independent Insurance Agent ®

• For a bound policy with premium from $25,000. to $49,999, the CSR and agent each receive a $50.00 gift card • For a bound policy with premium over $50,000 the CSR and the agent each receive a $100.00 gift card. • Program will run from March 1, 2010 thru May 31, 2010 • Must be a member of IIANM to participate.

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We can help you climb higher. Do you need a program for contractors in New Mexico? CBIC provides coverage including: General Liability, Property, Inland Marine and Automobile.

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Contact: Craig Hedrick, (800) 866-2242, craigh@cbic.com Do you need a program for contractors in New Mexico? ContractorsCBIC Bonding and Insurance Company - Bestincluding: Rated â&#x20AC;&#x153;Aâ&#x20AC;? (Excellent), Licensed in 50 states, Property, U.S. Treasury Listed provides coverage General Liability,

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

IIANM Staff President/CEO Thom Turbett, CIC VP Of Membership Services Lorri Gaffney Director Of Communications Rachel Sheffield Director Of Insurance Programs Carmen Reese Porter, ACSR, CISR Director Of Education Jeff Straight, CIC, LUTCF, AAI Receptionist / Member Services Associate Renee Trujillo

2009-2010 Officers

Features

La Voz

"The Voice" of Independent Agents since 1934

The Danger of the Stockholm Effect

Small Business: The New Black in Cyber-crime Targets

Creating Customer Surveys - It's Easy!

Finding a Great Financial Advisor

L&H Trends: Obama Budget Proposal Includes Employee Ben Changes 17 On the Hill: • McCarran-Ferguson Act Repeal Efforts Could Include Medical Mal Insurance • Big "I" Opposes Efforts to Apply Payroll Taxes to Non-wage Income 19 NMM & IIANM Scholarship Golf Tournament

Crime Loss Identified As Emerging Risk in 2010

Big "I" National Webinar Schedule for March

The Truth About Lying

50th Annual Education Seminar!

In Every Issue Tech Talk

Education Edge

March's Clickable Calendar

Odds n Ends

IIANM's Partners Program

Advertiser Index Acuity

Chair Alma Franzoy-Capron

American Mining Insurance Company

Burns & Wilcox

Vice-Chair Kathy Yeager

CBIC Insurance

Colonial General Insurance Agency, Inc.

Litchfield Special Risks, Inc.

Market Finders, Inc.

New Mexico Mutual

Risk Placement Services (RPS)

Trustco / HCIT

Secretary/Treasurer Scott Jones National Director Sam Conlee Immediate Past Chair Angela Vasquez

Source: The Anderson Agency Report

Four Useful Web-Based Services: Part 2 Last month, I reviewed four Web-based services that I use in our home-based small business. They were DropSend, for sending large files; Email Finder, for doing reverse e-mail address lookups; CheckComposer, for accepting Check-By-Fax payments; and Google Voice, for a free, feature-laden telephone number. In this article, we'll explore four more useful services. Again, although your business is undoubtedly different than ours, some of these might be useful to you.

1. RURL—URL shortening service

2. EyeJot—Video e-mails At the July 2009 HIGH-TECC conference, Steve Anderson demonstrated the PRO Plus version of EyeJot, a service for quickly and easily creating video e-mails using a simple Webcam on your computer. Shortly after that presentation, I hired a salesman who needed training, and treated myself to the $99.95 upgrade from the free version I already had to PRO Plus. That allowed me to take a few minutes to create an advertising-free video e-mail, with my own logos and photo, which looks more professional. The PRO Plus version lets you create and send video e-mails up to five minutes in length. Over a 10-day period, I created 16 four to five minute video "lessons" on everything from our basic sales pitch to knowledge about our competitors. Realistically, it took about 30 minutes per lesson to get each one just right, and my salesman was able to replay them over and over. He learned the material faster and better than my last salesman, and took a lot less of my time getting him there. There are far more sophisticated ways to create videos, but EyeJot is an easy way to get into it, especially with their free version.

3. ZoHo—Online productivity and collaboration apps URLs, those blue and underlined links that take you somewhere on the Web, can get very long. They work, but are a real pain if you need to re-type them or read them to someone over the phone. TinyURL is a wellknown service, but I happen to prefer RURL. Simply copy the long URL, go to RURL.org, and paste it into the box. You immediately get a much shorter URL that takes you to the same place. Here's an example from a previous article. I was giving some technology travel tips and recommended a traveling extension cord. This shortened URL converts to a long one that contains over 100 characters, which you can see if you click this short link: http://rurl.org/20tf Page 6

We used SaleForce.com for my previous salesman. While SalesForce is an extremely strong and feature-rich service, it was very expensive, especially for our superficial use. This time around, I decided to use the CRM component offered (for free, as with all their applications) by ZoHo, a highly popular, upand-coming player in the online collaboration area.

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

We started with a free, single-user version of the ZoHo CRM application, which turned out to be functionally similar to the $750/yr. single-user license we had with SalesForce. Surprisingly, we also got customer support when I requested it. We have since upgraded to include extra features and a three-user, paid license, still at a nominal cost. ZoHo also offers spreadsheets, databases (which I've used and found works fine), docs, and wikis— and all of this represents less than a third of their offerings.

conversely, they can show me their screen, or let me control it. For the audio, you can either use computer microphones and speakers, or you can just conduct your call on the phone, which is what we do. GoToMeeting is a service provided by Citrix, the same people who provide GoToMyPC (and GoToMyPC for Mac), one of the earliest online services and one that I still use extensively today.

The “Find An Agent” Feature 4. GoToMeeting—Online meetings There are many benefits to having a disbursed workforce, cost savings being among the most prominent, of course. There is one big disadvantage, however, and that is the inability to say, "Come over here and let me show you something." GoToMeeting solves that problem. This is a fee-based online service that is well worth the cost. For $49/month you get an account with unlimited meetings. There is no limit on the number of sessions or length of the sessions, and you can invite up to 15 attendees. You can start a session from a Mac or a PC (I have a Mac, but most of my people have PCs) and attendees can be on either as well. We don't happen to sell or service software in our operation, but GoToMeeting has demo and support possibilities. In our case, we use GoToMeeting mostly for training, when I'm trying to show someone how to do something. Over the years, this technology has come a long way from the early days of WebEx, GoToMeeting's main competitor, when each user had to download and install software in order to attend a meeting. Today, both systems operate without requiring users to install any software. With GoToMeeting, I start a session and give my employees a short URL. Once they log in, our two computers are connected. They can see my machine (and I can pass control) and,

In the top right hand corner of our home page, (iianm.org) next to the “search” area, you will notice the words, “FIND AN AGENT” Consumers may click here to locate independent agents in their neighborhood and surrounding area. Try it out by clicking on “FIND AN AGENT” and entering your information. Make sure that we have your correct address, phone number and web site. If you notice any out of date info, you can correct it by logging in to our site, then clicking on “manage my account”. If you need your log-in credentials, please send and e-mail to rachel@iianm.org to request one.

by G. Barry Klein G. Barry Klein is a former insurance agent who maintains UltimateInsuranceLinks.com as an industry service.

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

Page 7

The Danger of the Stockholm Effect

The "Virtual Office!" The "Hot Desk," "E-Mail," "Electronic Data Linking," and all of the other devices of modern technology have radically changed the role of sales people and sales managers. by Bob Ayrer

ore and more we see sales people working from inhome offices, or at remote sites not connected with the business they represent. They no longer come into the company office regularly, and with the "downsizing" (or "rightsizing" -- pick your euphemism) the average sales manager is directing more and more people in their "span of control," which means they spend less time with each sales person. The end result is a distancing of the field salesperson from the company. This obsessive frenzy of cost reduction and consolidation has a hidden cost which is just now surfacing -- at least in symptomatic and anecdotal form. During the last World War, a surprising phenomenon appeared in a study of the behaviors of prisoners of war. Cut off from the customary social supports to which they were accustomed, a number of prisoners began to identify with their enemy captors. They became docile, compliant -- even collaborative -- with the enemy. Following the name of the study, this phenomenon became known as the "Stockholm Effect." In the current craze to economize and reduce costs, many companies have reduced their travel and convention expenses. They have eliminated their periodic sales meeting "events" which brought their far-flung sales organization together. They have limited their spending on newsletters, sales contests, regional and national gatherings, home office visits, etc., and the modern equivalent of the Stockholm Effect is beginning to show. When the company you serve in sales becomes a screen on a computer; when the majority of the interaction with "home office" is negative (customer service problems, missals on the timeliness of your reports, "to do" lists which interfere with your ability to make a living, and the current cost containment program seems to ignore your customers’ needs and wishes), there is a tendency for field sales people to transfer alliances to the customer. Page 8

What are the symptoms? An article in Sales & Marketing Magazine discussed a company’s worst nightmare -- your best sales people banning together and taking your customers away, either to their newly formed company or to a competitor. Often you will see an indirect relationship between gross margins and the time a sales person is in the field. When allegiances transfer, the margins go down. Time in the field goes up and margins go down! You may see excessive back-charges authorized by the sales person. You may see overly generous discounts on small purchases; "John is a good customer. I’ve got to give him the best price on everything he buys, even if it is a small quantity." Often you will see their activity change. They will start inventing reasons to spend time with their "buddy" customers. They claim that it is their "relationship" which keeps the account for the company. They begin to get their "social" needs met by the customer! They lose their professional distance and objectivity with regard to the customers. Because these "key" customers tend to be large and important (that’s why the sales person called on them so often isn’t it?), manager will rationalize the stories and accept the excuses for reduced margins and lack of proper activity in the marketplace. "I can’t be opening up new accounts and taking care of my book of business too. Do you want me to jeopardize our best customers?" The best way to avoid falling into this pattern with your sales people is to practice some or all of the following; • Plan and hold more company-based meetings on a positive theme (not a bitching session on things which have gone wrong). • Publish and distribute a regular newsletter with relevant information to the sales people. Have very clear sales plans and activity schedules which are non-negotiable work plans. • Be sure that managers spend the majority of their time working with their sales staff, not being the "key account" sales person or the company cop. • Repeat and repeat the cheer leading sessions letting the sales people know how much you appreciate the good job they are doing.

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

• Set high standards of performance for the sales people, their activity and their "coached" behaviors, and have a reward system for success in executing their personal plan -- not just "commission on sales." • Good management (actually "leadership") will avoid the transfer of loyalties and give you a winning team. There are six (6) keys to creating the conditions that support your employees motivation. They are: 1. ASK FOR PERFORMANCE. Describe how the job is being done now, and how you want it done from now on. Then require the employee to do it that way. 2. USE POSITIVE REINFORCEMENT - AND PERSONALIZE IT! Don't take acceptable work for granted. Recognize acceptable work and thank people for doing it. Recognize each step of improvement as it occurs. 3. BUILD RELATIONSHIPS! Don't be a "buddy" to your employees; treat them as unique human beings.

Homeowners Catastrophe Insurance Trust

4. UNDERSTAND YOUR EMPLOYEE'S POINT OF VIEW! Learn to listen and ask questions before you give directions or advice. 5. MODEL WHAT YOU WANT! Approach your own time and work with a sense of urgency. Use your time efficiently. Set and meet goals. Show employees that the job really does matter and that quality is important! Most important, show them that deadlines are real. 6. REFUSE TO ACCEPT POOR PERFORMANCE! Demonstrate that standards are important - and that, in itself, is motivational. Focus on behavior. Take the time and spend the money to keep your sales force integrated with your company, motivate them with the "R’s" of good management, "Responsibility, Recognition, Reward," and you will avoid the Stockholm Effect in your organization. Bob Ayrer can be reached through: www.ImprovingSales.com

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.

Just contact:

Trustco, Inc. - HCIT Program Administrator

2063 East 3900 South Ste. 100, Salt Lake City, UT 84124 1-800-644-4334 / Fax: 801-278-9051

www.hcitins.com

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

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

Page 9

trust.

acuity.com

Small Business: The New Black In by poor defenses of mom-and-pop Cybercrime Targets Enticed shops, hackers turn away from hardened

Hacking banks and large businesses? That's sooo 2008. ackers and computer criminals this year are taking a new aim -- directly at small and midsize businesses, according to experts who spoke at Visa's annual security event. The consensus: Smaller businesses offer a much more attractive target than larger enterprises that have steeled themselves with years of security spending and compliance efforts. "As the security becomes better at large companies, the small business begins to look more and more enticing to computer criminals," said Charles Matthews, president of the International Council for Small Business. "It's the path of least resistance." Matthews quoted industry research that states small businesses are far less prepared to defend themselves against cyberattack. "Nearly one-fifth of small businesses don't even use antivirus software," he said. "Sixty percent don't use any encryption on their wireless links. Twothirds of small businesses don't have a security plan in place. These numbers are both surprising and disturbing." And many small businesses still don't know they are targets, according to Chris Gray, director of innovation policy at the Canadian Chamber of Commerce and another member of the panel. "According to a brief survey we conducted, about two-thirds of small and medium-sized businesses believe that large companies are the main target for cybercrime," he reported. "Yet 85 percent of the fraud we see in business occurs in small and mediumsized businesses." David Hogan, senior vice president and CIO for the National Retail Federation, who spoke on a separate panel at the summit, said only about 60 percent of Level 3 businesses -- the level just above the momand-pop shops -- have met the Payment Card Industry's Data Security Standards (PCI DSS) for protecting credit card data. Compliance at Level 4 " the smallest businesses -- is generally believed to be even worse. So with all of the hoopla surrounding PCI compliance -- not to mention numerous public breaches disclosed in the news and retail trade media -- why aren't

defenses of banks and large enterprises

more small businesses paying attention to security? The key problems are a lack of resources and time, according to Merrill Phelan, manager of IS and programming for the Washington Metro Airport Authority. "You really have to work hard to maintain PCI compliance," Phelan said. "And although PCI all makes sense on paper, sometimes it seems like the security standards written for Fort Knox -- do we really need all of those requirements for a small business? The simple answer is yes" In the past, small businesses have been able to protect credit card data on their premises by using secure, dedicated point-of-sale hardware and connections provided to them by banks or financial institutions. But as small businesses begin to explore methods of doing business online, they are also beginning to handle their own credit card data, noted Paul Cook, managing director at Barclaycard, the credit card arm of the U.K.-based Barclays Bank. "That can be very dangerous, both for the small business and for its customers," Cook observed. "Those businesses need the equivalent of the bank-owned terminal for their Websites -- enough secure payment pages that they don't need to worry about securing the credit card data themselves." Small businesses should rely more heavily on banks and third-party security services to handle the entire credit card purchase process; that way they don't ever end up handling large amounts of credit card data. "We'd like to take the responsibility for handling that data out of their hands," Cook said. McDonald's for example , use described a payment system that essentially achieves this goal, allowing franchises to accept credit cards without ever storing any credit card data. Phelan suggested that small businesses take that idea one step further. "If you can reset your business model so that you're no longer subject to PCI requirements because you aren't handling credit card data at all, that's the best solution," he said. "That's not as crazy as it sounds -- there are ways to accept credit card payments without ever touching the data itself."

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

Page 11

Colonial General Insurance Agency

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

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

Transportation Department

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Commercial Auto

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Truckers

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Physical Damage

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Commercial Contract

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NB Mexican Truckers

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Local Radius

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Personal Lines

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Garage

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Intermediate Radius

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Professional Liability

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

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

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Masterpiece Company

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Homeowners

Preferred Commercial Lines Division P.O. Box 14770 Scottsdale, AZ 85267 8475 E. Hartford Drive, Suite #100 Scottsdale, AZ 85255 Phone: (480) 991-7889 Wats: (800) 848-8860 Fax: (480) 948-1394 www.colonialgeneral.com Page 12

You will never pay a fee to access our companies. No volume or binding contracts. Independent Insurance Agents of New Mexico - www.iianm.org - * March 2003

Create Customer Surveys - It's Easy!

hat do your clients think of you? What do they

want from you? What will keep them from going to another agency? The only way to find out is to ask them. And the easiest way to ask is to use a Webbased survey tool. There are many tools available, including Zoomerang, QuestionPro, SurveyMonkey, and SurveyGizmo.

While each is unique, they all include templates and tools that help make it easy to create simple surveys. Template libraries allow you to peruse sample surveys at no cost. This can help you figure out how to ask questions to obtain the information that will help you most. Setting up your online survey is a simple pointand-click process. Just type your question and choose the answer range you want (e.g., a 1-5 scale, etc.).

more about the art and science of customer retention surveys. For example, at QuestionPro, there is a tutorial on how to create a survey that measures customer loyalty. You can export the survey responses into an Excel spreadsheet and perform statistical analysis. Each site mentioned here offers a free trial version. Subscription fees are based on the number of questions in a survey and the number of anticipated responses.

Whether or not you choose to use an online survey

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tool, the information available can help you learn

Now you can increase your technical knowledge and show professionalism by working on an insurance designation. IIANM offers convenient professional designation programs that keep independent agents on the leading edge:

Turn Your Career Goals Into Reality!

For more information, please visit us here.

Accredited Customer Service Representative

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

Page 13

Finding a Great Professional Advisor

by Chris Burand

an, it is hard to find good help these days! I continually hear this when consulting with agents, and they’re right! I constantly discover huge accounting errors, legal problems, and operational issues all courtesy of professional advisors. I’m not a CPA or an attorney, so if someone without these credentials like myself is finding material errors, quality is a serious problem. Part of the problem is these advisors do not know enough about insurance agencies. Many do not accept the fact that insurance agencies are different and have unique needs. They want to treat agencies like any other business. I have written often about the need for professional advisors to understand the unique requirements of independent insurance agencies. To summarize, the following points are key: 1. Trust Account Ratio: Knowledge and understanding of the trust ratio is critical. Ask your professional advisors to define this key ratio for you so you can be sure they understand it. 2. Buy-sell agreements: A. Set formulas (such as 1.5 times revenues or 6 times EBITDA) are rarely accurate and many courts do not uphold them. In fact, for some circumstances, courts have almost banned valuations based on such formulas. Yet, attorneys are consistently writing buy/sell agreements with set formulas and many of those formulas have no basis in reality. For example, when the formula completely ignores whether the agency is in trust or out of trust, the buyer may have to pay the price to purchase the agency and eventually replenish 100% of the trust monies! I have seen this increase the effective purchase price by millions. B. Very few attorneys are qualified business appraisers. If they are not qualified business appraisers, how can they write a proper valuation formula? C. Many attorneys claim they can write a valuation clause for an insurance agency because they have written them for many other businesses. Insurance agency valuations are quite unique and knowledge of appraisal methodology in other industries (assuming they have such knowledge) does not qualify one to value insurance agencies. Page 14

3. Taxes: I have seen many tax returns where the CPA did not understand the importance of trust monies and the mix of cash and accrual accounting that is a virtual must in every insurance agency. Incorrect tax returns could cost an agency thousands of dollars in penalties or even result in bankruptcy. 4. Employment contracts: Employment contracts may seem fairly standard, but again, insurance agencies are unique. An attorney must have very strong insurance knowledge to write a proper agreement that classifies business correctly. Professional advisors clearly need specific technical expertise if they are to provide agency owners with competent advice. If your professional advisors do not have this knowledge, then the next best solution is to team them with an agency consultant that does know insurance agencies and can analyze contracts well. Solving these critical technical issues is only half the battle. The other half is the advisor’s personality, professionalism, and ethics. The Wall Street Journal ran a study some time ago regarding how to find the best service providers, both from a competency perspective and whether they are likely to over charge the customer. The study applied to taxi drivers, plumbers, attorneys, consultants, and accountants. The key factor? How busy the service provider is. The busier they were, the less likely they were to overcharge the clients and the more value the client received because these busy service providers do their jobs much more efficiently and effectively relative to the value gained. This means they may charge more per hour, but the total cost will be less and the return on investment will be greater. Keep in mind that this means they may not want to sit around and chitchat. They are unlikely to spend time protecting fragile egos as many advisors do. (Picture the divorce lawyer that is great at listening to stories but lousy at winning cases.) Ideally, if you could have both, it would be great. However, if you prefer the ‘sensitive’ approach, you should discuss this with your consultant up front. You should also expect to pay more because protecting egos requires more time than simply finding and implementing technical solutions.

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

Protecting egos is something many professional advisors excel at doing, albeit at a cost of often incompetent technical advice. I have worked with many agents who loved their advisors, but they never got their issues resolved. These advisors always left everyone feeling good after each visit, but they left behind serious, unresolved issues. For example, one agency learned during a very nasty dispute between partners that the beloved advisor had not valued the agency properly, had not identified that the agency did not own all their accounts, and had not identified serious accounting problems. Another example is the attorney that used a lease agreement for an employment contract. Or the CPA that practically bankrupted the agency because he did not understand agency bill and would not ask. Or the sales guru that everyone loved but the producers’ sales never increased. While well-meaning, many professional advisors are predators feeding on fragile egos. They are smart enough to know that many business owners prefer to maintain their ego rather than improve their business, regardless of what the business owner says. Their strategy is to provide exactly what the customer wants, which makes sense because the customer is paying the bill and given these advisors’ success, the demand for such an approach is clear.

The very best professional advisors may be able to do both: protect the client’s ego and provide correct technical advice. But many business owners’ egos are so fragile, they are so insecure, that any advice that contains even a wisp of constructive criticism will result in total disregard of that advisor’s advice. I often joke with audiences that when I get certain phone calls from some agents searching for help, I ask how many consultants they have gone through. I ask because I’ve learned that some agency owners trying to solve a problem will get angry with the first consultant who gives them an answer that hurts their ego. They will discount the second consultant too. They will usually listen to the third one. Finding the right advisor then depends on your goal as much as it depends on finding someone that truly knows insurance agencies. If you are seeking a true pro, find the busiest professional specializing in the insurance industry. If you know you’re sensitive or one of your partner’s egos are sensitive, let them know this up-front. No wrong answer exists, but the difference is critical. This will help the advisor help you achieve your real goal. NOTE: None of the materials in this article should be construed as offering legal advice, and the specific advice of legal counsel is recommended before acting on any matter discussed in this article. Regulated individuals/entities should also ensure that they comply with all applicable laws, rules, and regulations.

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WWW.AMERICANMINING.COM Independent Insurance Agents of New Mexico - www.iianm.org - * March 2009

Page 15

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L&H Trends

by Dave Evans

Obama Budget Proposal Includes Employee Benefit Changes

ecently we were provided the first actual glimpse of President Barack Obama’s proposed budget for 2011. The 2010 budget created large deficits in an attempt to revive the economy and reverse the job losses created by the 2008 economic meltdown. With unemployment still in the double digits, trying to curb federal spending without stalling the economy requires great finesse. The budget proposes overall 2011 spending of $3.834 trillion and discretionary spending of $1.415 trillion. The projected budget deficit for 2011 is $1.267 trillion or 8.3 percent of GDP, down from $1.556 trillion or 10.6 percent of GDP in 2010. While it will take time to fully understand the implications of some of the budget’s nuances and provisions, observers can glean that the Bush era income tax reductions for higher earning Americans will sunset as the higher marginal income tax brackets return for 2011. People earning $250,000 or more will see their federal income taxes increase. However, that does not mean workers who earn less than $250,000 will necessarily see their tax bills remain the same for 2011. From an employee benefits, standpoint the budget includes: • An extension of the federal subsidy for Consolidated Omnibus Budget Reconciliation Act (COBRA) benefits from its current expiration date of Feb. 28 until Dec. 31. • A proposal that would require employers to offer their employees an automatic individual retirement account (IRA) if they are not offered a qualified retirement plan. Employees could opt out of the automatic IRA. • A number of regulatory initiatives in the retirement plan area, including regulations on 401(k) fee transparency, unbiased investment advice to participants, clearer disclo-

sure regarding target date funds and promoting the availability of annuities and other forms of guaranteed lifetime income streams. • An increase in Agents need to prepare capital gains and corporate clients for qualified dividends possible changes in tax tax rates to 20%, rates, 401K plans and IRAs. effective in 2011 for single taxpayers earning more than $200,000 a year or $250,000 for families, among other tax proposals. Several other looming issues will also need to be solved, including any final health care reform legislation and the accompanying cost. Also, the estate tax is scheduled to disappear in 2010, returning to 2001 levels beginning in 2011, Congress will have to decide on the level of exemption and the tax rate for 2011 and beyond. And, should Congress restore the estate tax in 2010, there will remain the thorny issue of what the estate tax rate will be for people who died prior to any change in the 2010 zero federal tax rate. The bottom line is that a number of provisions will affect companies’ benefits programs and their employees, including increasing the pay levels for employees to take advantage of the “savers” credit for contributing to a retirement plan. Also, the budget proposal mentions promoting the use of lifetime annuities as a distribution option from retirement plans. There is no doubt that the final budget legislation will provide opportunities for agents to assist their clients in utilizing new and/or improved avenues for employees to save for retirement. Agents should stay tuned and share their feedback with elected officials.

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

Page 17

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On the Hill

by Margarita Tapia

McCarran-Ferguson Act Repeal Efforts Could Include Medical Malpractice Insurance Property-casualty and business associations join forces in opposition letter to Congress. The Big “I” and other property-casualty and business associations recently sent a joint letter to all 435 members of the U.S. House of Representatives expressing opposition to including medical malpractice insurance in efforts to amend or repeal the McCarran-Ferguson Act. The letter is an effort to educate members of Congress and their staff about some misconceptions regarding medical malpractice insurance. The letter reads, “It is important to note that medical malpractice insurance is not a health insurance product. It is a property/casualty insurance liability product, underwritten by property/casualty companies for medical professionals and facilities. In fact, the only thing even health-related about medical malpractice insurance is simply its name and the fact that the medical profession and medical facilities purchase it. Its inclusion in legislation to repeal McCarran-Ferguson for health insurance is misplaced.” The Big “I” and its partners on this effort are concerned that “At a time when Americans are calling on their government to get health care costs under control, this legislation could increase those costs and ultimately create another medical liability availability crisis.” A Congressional Research Service (CRS) report recently confirmed the pro-competitive nature of McCarran-Ferguson’s antitrust provisions and that efforts to further limit McCarran-Ferguson’s antitrust provisions could lead to less competition, undercutting the fundamental purpose of the federal antitrust laws. In addition to the Big “I,” the letter was signed by the American Insurance Association, the National Association of Mutual Insurance Companies and the Property Casualty Insurers Association of America, among others. Click here to read the full text of the letter.

Big “I” Opposes Efforts to Apply Payroll Taxes to Non-Wage Income Association joins forces with other small business trade groups in letter to Congress. The Big “I” joined forces with other small business trade associations in a letter to congressional leaders expressing the associations’ strong opposition to any effort by Congress to apply payroll taxes to non-wage income. The letter was sent to Senate Majority Leader Harry Reid (D-Nev.), Senate Minority Leader Mitch McConnell (R-Ky.), Speaker of the House Nancy Pelosi (D-Calif.) and House Minority Leader John Boehner (R-Ohio) and says, “Congressional leaders and the Obama Administration are reportedly considering applying some or all of the Medicare Hospital Insurance (HI) tax to non-wage income, including capital gains, dividends, interest, rental, trust, S corporation, and some partnership income.” The Big “I” is concerned that such a tax increase would greatly hurt America’s small businesses that are already struggling to meet payroll, create jobs and prevent having to put up a permanent “closed” signed. “Expanding the application of the Medicare payroll tax to non-wage income is an unprecedented policy that would undermine the principle that Medicare is an earned entitlement, damage the integrity of the Medicare Trust Fund, and hurt Main Street businesses and jobs.” The Big “I” was the only insurance producer group to sign the letter.

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

Page 19

Click here for Nomination Form Click here for Registration Form

Crime Loss Identified As Emerging Risk in 2010

Bad economic climate creates increased risk for commercial clients.

by Paul Buse

he Global Risks 2010 report presented at the World Economic Forum in Davos-Klosters, Switzerland contains many trends of interest to independent agents, including those related to crime loss. Not only did the report identify a troubled economy’s influence on crime loss potential, but a recent article in the Wall Street Journal noted the same link through a feature story about increasing thefts of semi-trucks and their payloads. The economy-crime correlation seems logical, but do industry numbers bear this out? And, how can an independent agent use this information? A clear trend emerges when fidelity and burglary/theft insurance industry statistics from 1966 to 2008 are compared to unemployment statistics as published by the Bureau of Labor Statistics from 1960 through 2009. Graphed below are fidelity losses per U.S. citizen adjusted for inflation to 2005 dollar equivalents. It’s evident that with each peak in unemployment, there are one or two subsequent peaks in insured fidelity losses. An even more obvious correlation is achieved by smoothing per-capita losses with a rolling three-year average, as represented by the darker red line below.. A similar result emerges if the same exercise is carried out for burglary/theft, but it is harder to distinguish since insured burglary/theft losses have been falling consistently since the 1960s. Standalone mercantile, office or paymaster burglary/theft policies have become less common because these coverages have been combined with standard property/liability packages. In fact, it is surprising to see that the drop in burglary/theft standalone coverage is so pronounced and that insured losses have fallen from about $2 per person in the U.S. in 1967 to about 10 cents per person in 2008. For independent agents, these trends present a reason to contact commercial clients and review their coverage for employee dishonesty and other crimes. Chubb and its Federal Insurance Company, both major writers of crime coverage, estimate that half of all commercial entities are uninsured or are grossly underinsured for crime. Given that crime exposure will increase with unemployment now at 10%, this is an important conversation to have. Second, most agents have direct appointments that will bring them access to fidelity and crime coverages. Agents might be surprised what is available through their commercial package providers, and this may be a worthwhile investigation since commissions for crime coverage tend to be higher than most other property-casualty policies. The list below shows the top 10 writers of fidelity and crime/theft coverages according to A.M. Best. Fidelity premiums tend to be dominated by the writers of financial institutions like banks and credit unions but the list contains many company groups whose coverages agents likely have access to. Third, do not assume that a smaller entity is not significantly exposed to crime risk. Often, these businesses need to be reminded of the risk and the fact that coverage can be secured as part of their BOP or SMP packages. Last, a wealth of fidelity and crime insurance information is available on the Big “I” Virtual University by searching with the key words “crime & fidelity.”

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

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Big “I” National Webinar Schedule

Spring Break Special - How to Help Your Students Win InVEST Scholarships Date: March 2, 2010 3 p.m. EST Presenter: Jennifer Robinson Every year, InVEST awards scholarships to InVEST graduates who are pursuing a career in insurance. Learn what students need to include and improve on to catch the eye of the scholarship judges. Register here. Nonprofit Executive Liability Series: Increase Productivity & Service with Effective Information Management Techniques Presenter: Kel Plasket, CPCU, AAI Tuition: $59 per "seat" CE Credits: None March 15, 2010 at 2:00pm ET. (90 min.) Register Having difficulty in finding specific client information quickly? Does staff routinely search multiple sources of data to find what they are looking for? Do they trust the information contained in the database as being accurate or are paper files still being pulled? Is there duplication of effort, multiple touches of documents and an increasing backlog of unprocessed transactions? Are electronic policies received from carriers being printed? Has the ability to attach documents made your management system look like the old paper client file?

ACORD Certificate Changes Presenter: Bill Perkins and Bill Wilson Tuition: $79 per "seat" March 24, 2010 at 2:00pm ET. (75 min.) Register Largely in response to regulatory pressure from several states, ACORD has expedited the publication of new versions of its ACORD 24 and ACORD 25 certificates of insurance forms. The changes to these forms could comprise the single most dramatic revision in over 30 years. This webinar examines the major changes and related marketplace issues. They say that 13 is unlucky, so perhaps that explains why ACORD swiftly went through the working group process following the 13th edition of the ACORD 25 certificate of insurance in January 2009. This group produced a new September 2009 edition that incorporates possibly the most significant changes since the ACORD 25 was introduced in November 1977. This form’s speedy revision more likely resulted from at least three states’ concern with the cancellation clause language based on recent regulatory directives. Click here for the Webinar outline. The content of this webinar is not optional...you MUST know this information. Attending this webinar IS optional…but it’s at your own risk. Your E&O carrier thanks you in advance for registering. Independent Insurance Agents of New Mexico - www.iianm.org - * March 2009

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The Truth About Some people can’t tell a lie, others can’t tell the truth and unfortunately, most people

can’t tell the difference.

Lying

an you tell when someone is pulling the wool over your eyes? Whether you’re an attorney selecting a jury, a manager interviewing a new agent or a salesperson making a presentation, your ability to quickly and accurately discern the truth greatly enhances your effectiveness. Fortunately, having the ability to sort fact from fiction is an important communication skill that can be learned. Aside from conmen, compulsive liars and some politicians, most people become uncomfortable when telling a lie and transmit their deceitful behavior through their body language. While they may sound convincing, their gestures speak louder than their words. Consequently, they reveal their deceit non-verbally. While it’s not always easy to spot deceptive behavior, there are many subtle yet discernible clues to the trained eye. Body language is a mixture of movement, posture and tone of voice. Studies show that nonverbal communication has a much greater impact and reliability than the spoken word. Therefore, if a person’s words are incongruent with his or her body language, you would be wise to rely on the body language as a more accurate reflection of their true feelings. During the selling process it’s important to remember that body language is not a one-way street. While you’re evaluating your prospect’s body language for signs of honesty and credibility, he or she is subconsciously observing and reacting to your gestures as well. The truth sometimes hurts and few business or personal relationships could survive the harsh reality of total honesty. While honesty is certainly the best policy, it’s not always diplomatic or socially acceptable to be completely honest. To spare the feelings of others, we have learned the usefulness of telling half-truths, fibs and white lies. During the selling process, some people have difficulty saying “no” and will actually tell you that they are interested in order to avoid potential conflict. As the pressure of making a decision builds, prospects will frequently use half-truths or lies to either stall or disengage from the selling sequence. While your prospect’s words say “yes,” his or her body language indicates

“no way.” By being able to recognize the inconsistency between your prospect’s words and his or her gestures, it is often possible to flush out concerns, overcome their objections and make the sale. Eye, nose and mouth movements, along with hand gestures, are the four major nonverbal cues typically associated with lying. When a person is doubtful or lying, they’ll often use their fingers to block their mouth as if they were filtering their words. This hand-to-mouth gesture is commonly referred to as “speak no evil.” The second hand gesture associated with deceit is called “see no evil,” and it occurs when a person rubs or touches their eye(s). The third hand gesture “hear no evil” is displayed when a person covers or puts their finger into their ear. If people use one of these gestures while they’re talking, it indicates that they are being deceitful. On the other hand, if they are displaying one of these gestures while someone else is talking it indicates that they doubt the truthfulness of what is being said. These three gestures should be considered red flags. When you encounter one of these gestures during your presentation, it is a good idea to gently probe the subject matter with open-ended questions to encourage your prospect to voice his/her concern. In addition to the three hand-to-face gestures, eye movement is another reliable indication of deceit. It’s normal for a person to look up to his or her left when thinking about the past and up to the right when thinking about the future. If you ask a person a question from his or her past and they look up to their right, they’re making up a response. According to Paul Ekman, professor of psychology at the University of California, San Francisco, two of the most common micro gestures associated with deceit are the nose wrinkle and mouth curl. The nose wrinkle is the same gesture that occurs naturally when you smell something offensive. The other facial micro gesture is a slight downward curl of the corners of the mouth. Even liars, who make a conscious effort to suppress all of their major body gestures, will still transmit micro gestures. People sometimes lie, but their body language always tells the truth!

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

Page 25

SPONSORS & EXHIBITORS CLICK HERE

Please click here for class descriptions and registration form.

IIANM’s

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

Pre-Licensing Study Materials

Pre-Licensing Classes

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

Study materials are NOT included in class prices.

Property & Casualty Review Class (2 days)

Life & Health Review Class (1 day)

Regular Price: $150 Member Price: $120

Regular Price: $115 Member Price: $90

Instructor: Instructor:

Kitty Leslie Jack Cleary

- March 16 - 17 8am - 5pm - April 13 - 14 8am - 5pm

Instructor: Instructor:

Click here for a full listing of our education program.

Manny Mansour - March 18 8am - 5pm Bob Ouellette - April 15 8am - 5pm

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

Class Name/Date: Full Name:

Method of Payment:  Bill Agency (Members Only)

First Name for Badge:

 Check Enclosed (Payable to IIANM)

Agency / Company:

 M/C  Visa  Disc  Amex

Address:

Amount:

(all prices include tax)

Card No:

City, State, Zip:

Exp. Date:

Telephone: ( Fax: ( Send in your registration:

)

Signature:

E-Mail:

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

Page 28

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 - * March 2009

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

Sunday

Monday

Tuesday ACSR #1 Homeowners 8CE Hours

CE = continuing education hours

Wednesday ACSR #6 Commercial Property 8CE Hours

Thursday

Friday

AAI 81A Principles of Insurance 8CE Hours

Saturday

Education Seminar 15CE Hours

9 P&C Pre-licensing Class

10 P&C Pre-licensing Class

L&H Pre-licensing Class

Classifieds

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

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

Page 29

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

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

Gold ACUITY, headquartered in Sheboygan, Wisconsin, is a property and casualty insurer that operates in nineteen states, writes $750 million in premium through over 900 independent agencies, and manages $2 billion in assets. The only company in the nation to be named six consecutive years to the Great Place to Work Institute’s top five mid-sized companies, ACUITY employs 850 people. At Mountain States, we are dedicated to helping protect the assets of our policyholders by providing them with sound, affordable insurance products. We do this through an expanding network of professional independent agents. We believe in sustaining a strong chemistry with our agents and policyholders. It is our prime reason for narrowing our focus to the Mountain States/ Southwest region. The Republic Group offers personal property, dwelling fire, personal automobile and commercial lines of insurance through independent agents primarily in Texas, Oklahoma, Louisiana, Mississippi and New Mexico. Our companies have flexibility to offer the insurance coverage most insureds need, whether for home, automobile or business. Competitive rates and coverages are available for both standard and non-standard risks, which meet our underwriting criteria. Travelers Insurance Company is a National Company serving the needs of our Independent Agents’ all across America, from the East Coast to the West Cost and everything in between, we offer a wide variety of Commercial and Personal Lines products. We have an intimate knowledge of all lines of insurance and can offer solutions that are truly in-synch with the needs of your customers.

Silver

Letcher Golden & Assoc.

Bronze Colonial General Insurance Agency

♦

Preferred BOP

♦

Property

♦

Inland Marine

♦

Professional Liability

♦

Commercial Liability

♦

Workers Compensation

Transportation Department

♦

Commercial Auto

♦

Truckers

♦

Physical Damage

♦

Commercial Contract

♦

NB Mexican Truckers

♦

Local Radius

♦

Personal Lines

♦

Garage

♦

Intermediate Radius

♦

Professional Liability

With 2,500 active producers under contract, Colonial General operates in eight states throughout the South-West. Our offices are located in Murray, Utah and Scottsdale, Arizona.

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

Personal Lines Department

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