Fall 2018 Magazine by PIA of Tennessee

Fall 2018 • Tennessee

PAGE 14

WALKIN’ IN MEMPHIS … INSIDE THIS ISSUE 7

Dos and don’ts of social media

Keep prospects talking

Take on direct writers

PIATN’s 2018 Annual Convention celebrates insurance and Elvis

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Departments 4 Fall 2018 • Tennessee

In brief

7 Legal 9 Sales 11 E&O 25

Point of view

Readers’ service and advertising index

Officers and directors directory

Cover story 14 Walkin’ in Memphis … PIATN’s 2018 Annual Convention celebrates insurance and Elvis

Feature 21 Take on direct writers Remember your strengths when you talk to clients

Statements of fact and opinion in PIA magazine are the responsibility of the authors alone and do not imply an opinion on the part of the officers or the members of the Professional Insurance Agents. Participation in PIA events, activities, and/or publications is available on a nondiscriminatory basis and does not reflect PIA endorsement of the products and/or services. President and CEO of PIA Management Services Inc. Mark LaLonde, CPIA, CIC, AAI; Executive Director Kelly K. Norris, CAE; Communication Director Mary E. Christiano; Senior Magazine Designer Sue Jacobsen; Member Information Manager Jaye Czupryna. Postmaster: Send address changes to: Professional Insurance Agents of Tennessee, 504 Autumn Springs Court, Suite A-3, Franklin, TN 37067. “Professional Insurance Agents” is published quarterly by PIA Management Services Inc. PIA Management Services, 25 Chamberlain St., P.O. Box 997, Glenmont, NY 12077-0997; (518) 434-3111 or toll-free (800) 424-4244; email pia@pia.org. ©2018 Professional Insurance Agents. All rights reserved. No material within this publication may be reproduced—in whole or in part—without the express written consent of the publisher.

Cover design Patty Dykeman

In brief

from the executive director

Congratulations are in order! As I am writing this article, we have just completed our 2018 PIA of Tennessee Convention and Trade Show at the fabulous Guest House at Graceland Resort in Memphis. The convention was filled with fellowship, education, networking, and that “PIA Family” feel. Included in this issue are just a few of the pictures from the event. To see more, go to www.PIATN.com. We are excited about the event’s success, and already have begun planning for the 2019 convention in Middle Tennessee on June 19-20 at the Embassy Suites Hotel. A major part of our annual convention is the recognition of leaders from our industry. We were proud to recognize the following individuals: Agent of the Year–Michael T. Morat with Mike Morat Insurance in Memphis. Mike has been a leader on our board of directors, his local PIA chapter, and in his community. Company Representative of the Year–Jeffrey Janes with Sagemark Consulting in Nashville. Jeff is an avid supporter of the PIA and the independent agent industry. He works closely with agents helping them maximize their value to their clients, as well as assisting with more complex issues like perpetuation and succession planning. Jeff has been vital to the PIA of Tennessee and even assisted with the development of the PIA Advanced Commercial Line Tactics program (PIA ACT ). Customer Service Representative of the Year–Wendy Daggett with Alder & Cox Insurance in Hixson. Wendy was recognized as the very first recipient of this new award due to her constant dedication to her agency team and their clients.

Young Insurance Professional of the Year–Ben Taylor with Wilkinson Insurance in White House. Ben’s whole life revolves around service to his community, agency and nation. He is a young man who has served our country in military uniform, as the leader of Association committees and chapters and his agency. Presidential Spirit Award–Leighton Gregory Bush with Bush Insurance and Financial Services in Franklin. As a past president of the Association, immediate past treasurer, and incoming National Director, Leighton continues to be a perfect example of service and spirit. The highlight of the convention was the presentation of the Glen R. Page Distinguished Service Award to June Wilkinson Taylor from White House. June has served as National Director for the past 10 years, as well as many other leadership positions within the industry. As the successor to Glen Page as National Director, it was perfectly fitting that she was recognized with the PIA’s version of a “lifetime achievement” award. However, anyone who knows June is fully aware that her achievements are not all behind her. She will undoubtedly continue to give and serve the people and industry she truly loves. As you are reading this article, the Fall season is upon us. I would like to thank the members, partners and leaders of the PIA for all the assistance and contributions that made the convention so successful. We now turn our focus back to our members and helping them finish the year strongly. We are committed to bringing you resources and solutions. Let’s enjoy the cooler weather, admire the beautiful colors and race to the end of the year when many of us have our strongest quarters of the year. Sincerely,

Kristopher Mark Fisher, CPIA, LUTCF Executive Vice President & CEO

Professional Insurance Agents magazine

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expanded into Alabama, Florida, Louisiana, Mississippi, Pennsylvania, South Carolina and now Tennessee.

Norcross, Ga. 30071 www.accuagency.com

AccuAgency writes in Alabama, Florida, Georgia, Louisiana, Mississippi, Pennsylvania, South Carolina and Tennessee.

Senior executives Bob Capps, CEO Gordon Ragan, president Roger Walker, vice president

History Bob Capps founded AccuAgency in 1986 as a comparative rater for auto insurance in Georgia. What started as a one-person, one-product company has grown steadily and organically over the years. The comparative rater

In addition to our comparative rater, AccuAgency has a suite of products that can support all of the needs of an independent agency. These products include a web-based agency management system, which includes ACORD forms, document management and carrier downloads. AccuAgency creates and maintains independent insurance agency websites and provides web-marketing services to increase an agency’s online reach.

Philosophy AccuAgency’s philosophy is: “We are in the business of supporting our agents and their technology needs. From finding new ways to attract clients to making their quoting, selling and servicing more efficient. From day one, our company has focused on customer service. We have great products, but it is the personal, professional service that has kept us in business for over 30 years. While companies eliminate their outside marketing representative positions, we have representatives in many of our states. “With hundreds of years of combined insurance industry experience in top positions, we strive to offer customers the best service and the best value in the insurance industry.”

PIA of Tennessee and AccuAgency proud partners for independent agents

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platinum partner profile

Grange Insurance 671 S. High St.

We are Partners. Grange independent agents get more than a carrier, they get a partnership. We respect the sacred relationship between agent and client, and that at each interaction, we represent our agents.

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Trusted advisers. Grange understands and supports the relationship between an agent and their client, and believes this bond is an integral part of our short- and long-term strategy. That’s why we build unique relationships that focus on the Ease of Doing Business® for our agents while remaining a stable, consistent partner. We partner with only the best agencies and seek out their feedback to help us make important decisions.

Senior executive Katherine Ethridge, district sales manager (615) 308-6572 ethridgek@grangeinsurance.com

History For more than 80 years, Grange has been a source of protection, trust and stability for its customers. Today, combined with our affiliate, Integrity Insurance, we offer customers business, auto, home and life insurance in 13 states. Because we believe that our customers deserve only the best counsel and partnership in making these decisions, we sell our products exclusively through independent agents.

Philosophy We are Committed, Connected, Partners for our agents. We are Committed. With an “A” excellent rating from A.M. Best and $3 billion in assets, Grange is a stable, reliable partner that makes decisions based on doing what’s right for our agents and customers. We are Connected. And, while we have the stability of a larger carrier, we’re still small enough to know our agents and their individual business needs. Whether it’s our easy-to-use online platforms, specialized claims representatives or dedicated underwriters, Grange is connected to its agents.

In today’s ever-changing economy, we know that partnering with independent agents is the way forward. Given the shift in risk caused by technology and consumer trends, the role of an agent as an experienced adviser is more important now than ever. Customers are relying on their agents to help them navigate the sharing economy and the continuing internet of things to make sure they have the appropriate coverages. Delivering on customer needs. From our personalized coverage options and financial strength to Grange’s excellent local claims service, you can rest assured that your customers are with a company that’ll serve them well. Competitive compensation. Instead of a one-size-fits-all approach to agencies, our commission and compensation programs are designed to reward those who demonstrate the greatest commitment to Grange. Professional marketing support. We give our agents the resources and marketing expertise they need to stay topof-mind with current and prospective customers. Award-winning technology. Grange agents get access to technology that delivers Ease of Doing Business® and gives them a distinct advantage on the competition. But, great technology is nothing without great support. At Grange, we offer tech support through instant message, email and phone six days a week.

Professional Insurance Agents magazine

Social-media advertising Bachelor style I am an even-keeled person. The highs or lows of life do not phase me. However, there are exceptions. I passionately believe certain things to be true: Han shot first; a meal should not be called brunch unless it includes a carving station and/or alcohol, preferably both (if it doesn’t, it’s just late breakfast). I also am passionate about Buffalo sports (i.e., the city, not the animal), and The Bachelor and The Bachelorette reality TV series. For those of you who aren’t familiar with the shows, they feature one eligible Bachelor or Bachelorette trying to find his or her “forever love” amongst 30 eligible suitors (27 of which only are interested in getting more Instagram followers). The show is a delightful train wreck filled with ridiculous feuds, exotic and not-so exotic locales, booze and very little actual love. For whatever reason (probably the feuds and booze) these series are mired in one controversy or another. The current controversy is how certain “contestants” have dubious social-media personas. Searches of recent contestants’ social-media profiles have turned up racist and sexist postings. This has gotten the show into hot water for not vetting its contestants properly. In their defense, the show runners say it is impossible to know everything about a person. The Bachelor started in 2002, two years before the founding of Facebook. Since the introduction of social-media platforms, the world has changed, and to some degree, the show has failed to change with it. This can be true for insurance agencies as well. Insurance laws and regulations are constantly being added and updated. So whether an agency was founded 50 years ago or two years ago, it is likely the rules and regulations have evolved in that time. If an agency fails to change with them, trouble could follow. Knowing the changes that affect agency advertising are particularly important as violating the law is incredibly easy to do. An insurance agency needs to know the rules and regulations regarding advertising to make sure it is vetting the information it puts on the agency social-media accounts properly. Of course, the rules and regulations apply in real life (or as the kids say “IRL”) as well as in the digital world, however social media presents special challenges. Postings on social media are public and are viewed by almost anyone. In contrast to traditional print media, the purpose of social media is to share information almost instantaneously. Unlike publishing an advertisement in a paper, or putting up a company webpage, the speed and ease of distributing a social-media message offers fewer inherent opportunities for the careful deliberation, editing and oversight of the content released. So, the need to know what can and can’t be done is especially important when discussing social www.piaTN.COM

legal

bradford j. lachut, esq. Director of government & industry affairs, PIA Management Services

media. With that in mind, let’s play a game. I will give you a series of reallife situations and you have to decide if they are legal.

No. 1: “Jason Tartick & Family Insurance,” a Tennessee agency, tweets: “Do you have insurance with Garret Yrigoyen Insurance Company? You are being ripped off! Get a better quote from us!!!” Permissible? No! “Jason Tartick & Family Insurance” would be in violation of Tennessee Code 56-8-104 (3). The section of the law prohibits the making, publishing, disseminating or circulating of malicious statements designed to injure the reputation of an insurance company. (Author’s note: Jason is a good Buffalo boy and he would never make a comment like this. One can only assume a rouge employee made it). No. 2: The “Rachel Lindsey Agency” is licensed and does business in New Hampshire. It posts a picture on Instagram and writes: “Everyone who likes this post will be entered into a raffle to win a vacation to Disney World valued at $1,500!” Permissible? Yes! However, this is a recent change. Prior to 2016, agencies in New Hampshire were prohibited from holding raffles in which the value of the prize exceeded $1,000. The law was amended in 2016 to remove any cap on prizes. As long as a raffle is at no cost to the 7

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participants (including no requirement to purchase a policy) and open to all customers, including those who are not policyholders it is permissible. (RSA 402:41 I(f).) No 3: “Arie Luyendyk Jr. Insurance,” which operates in New York state, posts on Facebook: “We offer the highest-quality insurance from name brands like Insureco and Indemnity Plus! Check us out!” Permissible? No! By posting the statement above, the “Arie Luyendyk Jr. Insurance” violates New York State Insurance Law Section 2122, which requires that any public announcement referring to an insurance company, an agent or broker must, “set forth therein the name in full of the insurer referred to and the name of the city, town or village in which it has its principal office in the United States.” No. 4: “JoJo Fletcher & Associates,” an agency in New Jersey tweets: “Friday special! First 10 of our clients to sit down for a coverage review get free tickets to a taping of the Bachelorette Men Tell All Special, a $50 value!” (Author’s note: I would argue that the value is priceless.)

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Permissible? Yes! Generally, New Jersey agencies may not offer anything of value, not listed in the insurance contract, to a current or potential insureds to induce them to purchase new insurance or renew their policy. This would be considered rebating. However, there is an exception that allows an agency to offer items that are below a certain value threshold, which was increased in 2017. Only offers of consideration greater than $100 can constitute rebating (increased from $25). N.J.A.C. Section 11:17A-1.2 states: “Inducement means money or any favor, advantage, object, valuable consideration or anything other than money which has a cost of or a redeemable value greater than $100.” Marketing is vital to the sustainability and growth of any agency. This is especially true of social-media marketing when the cost of advertising is minimal and the reach of the campaign can be global. However, as tantalizing as the benefits of social-media marketing are, agencies must be aware of the applicable laws or that inexpensive Facebook marketing campaign can turn into an expensive insurance department fine. Remember, a communication does not have to be published in the pages of a magazine or newspaper to be considered an advertisement for purposes of insurance regulation. The above are just a sampling of the advertising rules of which agencies should be aware. It is best to do your homework before you begin a campaign. so that you do not find yourself left stranded on Iceland’s Eyjafjallajokull Subglacial Volcano after you lose a two-on-one date. Wait. That’s not right. I mean before you get fined by the insurance department (far less cool, but probably much safer). Lachut is PIA Management Services’ director of government & industry affairs.

Contact Tina Nickell, CPIA 615-771-1177

advantageservices@piatn.com

Professional Insurance Agents magazine

Eight questions that keep prospects talking When asked why salespeople don’t close more sales, a company president answered instantly, “They don’t ask enough questions.” He went on to add, “They’re so focused on getting prospects to buy they don’t engage them. That takes asking lots of questions.” He is on to something important: We are in such a hurry to get across what we want to say to our prospects that we ignore what they want from us. As it turns out, today’s prospects won’t tolerate such insensitive behavior. Instead, they will find someone who will listen to them and take their business elsewhere. Where does this leave salespeople? What are they to do if they can’t advance their agenda? How are they going to close sales? To put it bluntly, a salesperson’s agenda is irrelevant; it does not count. What the prospect cares about is what demands our attention.

sales

john graham Principal, GrahamComm

The purpose of meeting with prospects is to recognize and understand what is going on with them. That takes getting them talking about what they know best: themselves. They don’t get many chances to do this. Others are too busy with their own lives to listen. This gives salespeople the unique opportunity to stop talking, start asking

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questions—and listening. Once you start listening to people, they tend to listen to what you have to say in return. Since salespeople learn when they’re listening, here are eight questions that get prospects talking: No. 1: “I’m curious: Why did you agree to meet with me today?” Everyone in sales knows that just because they ask for a meeting doesn’t mean a prospect will say yes. Often, they get turned down. When someone says yes, inquisitive salespeople don’t stop there. They wonder why. They want to know what is going on and why prospects are interested. The more they know from the start, the better. No. 2: “What would you like to have happen as a result of this meeting?” Gathering information will help you keep an open mind so you can avoid making mistakes. By filling in the picture, you will stay on track as you plan your next moves. No. 3: “What are the specific issues you want to address?” One mistake salespeople can make is to gloss over, or even avoid, significant issues. They don’t want to turn off prospects. What they don’t realize is that digging down lets a prospect know they’re serious. Follow-up questions carry it a step further: How satisfied are you with your analysis? How would you feel if someone challenged it? No. 4: “As you see it, what hurdles must be overcome?” It is always a good idea to come at issues from various angles. It is a good way to find out the lay of the land, to better understand what is going on and to identify others who may be involved. The answer to this question can give you a more complete picture of what is involved. No. 5: “If my company offered exactly what you’re looking for, how would you describe it?” This is a pivotal question because it offers insight into what important to a prospect, something that is not as obvious as it may seem. It is a serious mistake to assume you are getting the message correctly. Frequently, words don’t have the same meaning to people. This question serves as a check to be sure you and your prospect are on the same page.

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Professional Insurance Agents magazine

No. 6: “How satisfied are you at this point in your decisionmaking process?” By asking where prospects are in making a decision, it’s easy to put them on the defensive so they’re less than candid. Instead, this question is designed to help expand the conversation, to let them know you are interested, but not nosey. If they are just getting started, you can follow up by asking about their expectations. If they are further along, you can ask how about possible concerns. No. 7: “Because those in your position are cost-conscious, what’s your thinking as to what the right solution should cost?” This question avoids the “What is your budget?” question, which usually results in a useless and vague answer. A followup question might go like this: “Can you tell me how you arrived at that figure?” No. 8: “It would be helpful if you would tell me what you feel about our meeting today.” You want to know if the meeting was helpful. Did it meet the person’s expectations? And finally, ask, “Can we talk about what should happen next?” This is the action step that establishes the agenda for the next meeting. Unless salespeople drive the conversation with strategic questions, meeting with prospects often results in too much talking and not enough listening. This leads to prospects who are less than satisfied and salespeople who are unable to move forward with confidence. Graham of GrahamComm is a marketing and sales strategy consultant and business writer. He is the creator of “Magnet Marketing,” and publishes a free monthly eBulletin, “No Nonsense Marketing & Sales Ideas.” Contact him at jgraham@grahamcomm.com, (617) 774-9759 or johnrgraham.com.

E&O

Curtis m. pearsall, cpcu, CPIA President, Pearsall Associates Inc.

Fact or fiction? E&O claim reporting period Is it fact or fiction that most errors-and-omissions claims are reported within a year after the underlying loss has occurred? Actually, this is fiction. In a recent study done by Utica National, the analysis focused on the date of the underlying loss compared to the date that the E&O claim was made against the agency. Interestingly, less than half (43.5 percent) of the E&O claims were reported within 12 months of the actual date of the underlying loss. Stretching the time period to two years and three years increased the percentages to 67.2 percent and 81.7 percent, respectively.

Why does this happen? Typically, when a loss occurs and is reported to the carrier, there is a time lag when the carrier is evaluating the claim and looking to determine whether there is coverage for the loss. If there is no coverage, the claim is denied,

whereupon the client starts to have a discussion with the agency as to why there was no coverage. This is when attorneys may start to get involved. The following is a real example: The underlying loss occurred in September 2008 and involved a slip and fall resulting in a torn rotator cuff injury. In the example, the agency’s client had a snow plowing service. When the claim was reported to the carrier, it was denied due to an exclusion in the policy, which involved the

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size of the lots that the snowplow service was handling. The current coverage had an exclusion for any lots larger than 5,000-square feet. The lot where the injury occurred was larger than 5,000-square feet. The key issue was that the prior policy the same agency had provided did not contain this exclusion. When the coverage was moved to a different carrier, that carrier had the 5,000-square foot exclusion, but this exclusion was apparently not brought to the attention of the client. As a result, the snow plowing business was working on lots bigger than 5,000-square feet and thus subject to the exclusion. Therefore, the claim was denied. It was not until five years later (i.e., in 2014), that an E&O claim was brought against the agency. The final settlement was just short of $20,000, not including legal expenses.

Why is this important? Industry reports are noting the tremendous activity in mergers and acquisitions within the industry. One report highlighted that M&A of insurance agencies broke all records in 2017 and were up 31 percent over 2016. If an agency owner is thinking of selling his or her business over the next couple of years, this trend of E&O late claims reporting could be relevant at the time of the agency’s sale. Agency owners who are looking to sell need to consider a key issue. Most claims-made policies refer to this provision as an “Extended Reporting Period” (also known as tail coverage). This coverage allows an insured to report claims that are made against the agency after a policy has expired or been canceled with the condition that the wrongful act that gave rise to the claim took place during the expired/canceled policy.

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Professional Insurance Agents magazine

With the above scenario, if the agency was sold effective December 2010, and had purchased a one-year tail (extending the period to report claims to December 2011), the claim would not have been covered under the tail since it was made against the agency after December 2011. Actually, anything short of a four-year tail still would have resulted in a lack of E&O coverage. It seems that agency owners (when they are selling) are buying only a one- or two-year tail coverage policy. This is leaving them extremely vulnerable to claims that are made after the one- or two-year period has expired. Think of it this way: Buying a two-year tail translates into a lack of coverage for 30 percent of the claims being made. Even stretching this out to a five-year tail still would result in 5 percent of the claims not being covered. Obviously, there is a cost to buying a tail and the longer the period, the more expensive the premium. Normally, the options are in annual periods of one, two, three, four, five and 10. For an agency owner paying an annual premium of $10,000, a two-year tail would cost $10,000, a five-year tail would run around $19,000 and a 10-year tail would come in around $20,000 (only $1,000 more). For agency owners who are looking to sell, they should do their homework and factor into the cost of the sale the premium for the “tail coverage.” The decision on the length of the tail may just determine how comfortable you are in enjoying your retirement. Pearsall is president of Pearsall Associates Inc. and special consultant to the Utica National E&O Program.

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Professional Insurance Agents magazine

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Walkin’ in Memphis … PIATN’s 2018 Annual Convention celebrates insurance and Elvis

he PIA of Tennessee Convention and Trade Show was held June 28-29, at The Guest House at Graceland, which celebrates Elvis Presley and his legacy. And, for the two-day convention, it honored everything that makes insurance professionals great. Convention attendees were wowed by what greeted them at the King of Rock ‘n’ Roll’s home as the establishment exuberates classic elegance and modern luxury. It was friendly, refined and uniquely Elvis.

www.piaTN.COM

In addition to the historic location, the convention also featured opportunities for networking and professional development, social events, a golf outing and a trade show.

Can’t help falling in love The royal treatment began during the welcome reception, held in The Founders room, which usually is reserved for only Founder members, who have exclusive access to Graceland. Convention attendees expressed how privileged they were to have unique access to the landmark.

A little (less) conversation

2018-2019 PIA of Tennessee President Adam Cox, CPIA, delivers his welcome address.

Some 60 exhibitors took part in the trade show, which offered attendees the opportunity to view the latest insurance products and services available to them. The conversations flowed as everyone networked; made new business contacts; and caught up with their peers. Tradeshow participants were encouraged to participate in the “Rockin’ booth” contest and The Steadpoint Group received the top honor.

Teddy bear Friday afternoon, over 60 golfers took part in the golf tournament honoring Herbert Montgomery, who was a past president of the association’s Memphis chapter. Held at the Cherokee Valley Golf Club, Olive Branch, Miss., the event raised nearly $4,000 to benefit The Memphis Exchange Club Family Center, which helps families who are dealing with anger and violence. Montgomery was a great supporter of the organization.

PIA of Tennessee welcomes PIA National President Timothy G. Russell, CPCU.

Memories Nationally known speakers shared inspirational words and led valuable education classes on The Market and Why Should They Choose You. Attendees could earn up to 7 continuing-education credits throughout the convention. The President’s Dinner wrapped up the convention at Presley Motors with a tour of the new automobile museum, and Elvis: The Entertainer Career Museum, the world’s largest and most comprehensive Elvis museum in the world, as well as many more exhibits. During the dinner, PIA of Tennessee presented awards to deserving insurance professionals. For more information on the award winners, see page 4 of this issue of the magazine.

The new 2018-2019 board of directors for PIA of Tennessee.

Separate ways We thank all who participated and helped make this rockin’ event. Plans already are underway for next year’s Convention and Trade Show. Save the date for June 19-20, 2019, at the Embassy Suites Hotel, Murfreesboro, Tenn. Nickell is PIATN’s member services representative.

Professional Insurance Agents magazine

The welcome reception went over well in The Founders Room.

The Awards Luncheon, which recognized the contributions of PIA members.

Joe Clayton with Capital Premium Financing (right) presents Alan Doyle with the CPIA designation.

The association donated monies to the Gilda’s Club in honor of both Herbert Montgomery, who passed away from cancer; and Steve Peay, who is a cancer survivor.

FBI Agent Tim Marsh meets with agents to discuss cyberattacks.

Jeff Janes with Sagemark Consulting warns, “If everyone else is doing it, stop doing it.”

John Fear says it all with these two questions.

John Fear discusses policy coverages with over a dozen agents.

(continued on page 18.) www.piaTN.COM

Opening session in the fabulous Guest House Theater.

Networking, fellowship and more at the annual trade show.

The Presidentâ&#x20AC;&#x2122;s Dinner at the Presley Motors Museum.

Conversations to help agents grow.

With over 60 participants, the PIA Golf Tournament raises nearly $4,000 to benefit the Memphis Exchange Club.

Participants could not ask for more beautiful weather on the incredible course at Cherokee.

Professional Insurance Agents magazine

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Take on direct writers Remember your strengths when you talk to clients

Direct writers are an equal opportunity nuisance to both commercial- and personal-lines professional independent agents, but are they really a threat? Is all that advertising effective, and just how much competition are they to the independent agency systems? Flipping through the TV channels, you canâ&#x20AC;&#x2122;t help but see their commercials. Theyâ&#x20AC;&#x2122;re fun, clever and memorable. State Farm, Geico, Progressive and Farmers are among the most notable insurance companies of our day. Their advertising budgets are robust, Geico alone, according to Compare.com, increased its advertising budget in 2013 from $1.12 billion to $1.18 billion, spending $6 of every $100 it collects in premiums on advertising. Commercial insurance direct writers like Sentry continue to gain market share, growing premium and premium equivalents by $187 million to $3.49 billion in 2016 according to its annual report. Federated, based in Owatonna, Minn., not quite as large but certainly a major player with $1.7 billion in premiums, is known nationally for its market specialization. No doubt, the brand awareness created through intensive and effective marketing strategies has had an impact on

the independent agent. However, they shouldnâ&#x20AC;&#x2122;t be scared off just yet. There is a compelling case to be made as to why business and personal insurance buyers are better served through the independent agency system.

Remember your strengths You know the advantages of working with a professional, independent insurance agent. However, when was the last time you focused on your strengths and highlighted the value clients will receive if they choose to work with you for their insurance-buying needs? The major challenge consumers face when working with direct writers gets directly to the value proposition independents must master and leverage, and that is their greater expertise. While captive agents usually are limited to just one insurance company in the options and recommendations they can explore with and on behalf of their clients, professional independent agents are able to access numerous options from various carriers. While the process can be complex, it provides the consumer with the coverage that truly aligns with their insurance needs, protecting them from uncovered claims.

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Independent agents must do more research compared to their captive colleagues to understand the unique characteristics of coverages from a broad array of carriers, and this analysis gives them a greater depth of understanding about what the marketplace has to offer, differences in coverages, underwriting appetites and competitive insights. This increased understanding of the marketplace and greater depth of knowledge is invaluable to the insurance buyer, and something they will not likely receive from a captive agent who has been trained on and limited to a singular product. Research into consumer-buying objectives and trends tell us that business owners and decision makers want more tailored expertise from their professional service providers. This too can play into the strength of the independent agent. By becoming a subject-matter expert in an industry or line of insurance, agents are better equipped to identify trends, risks and opportunities through their representation of a broader array of carriers. Independent agents must seize upon the presented opportunities. Agents must commit themselves to gaining expertise and then learning the skills to leverage that expertise in a fashion that connects with buyers. For example, many agents are caught in the commodity trap, forced into it by business owners and decision makers who donâ&#x20AC;&#x2122;t know how to buy insurance any other way than through bidding and quoting. Direct writers can be competitive on pricing and they can appear to be dominant in some categories of risks. Based on price, the typical insurance buyer may feel that his or her best choice is to move forward with the direct writer. In this scenario, the professional independent agent must help the buyer understand the limitations of working with a direct writer and present a broader view of the marketplace through the lens of multiple carriers. Providing insights regarding differences in coverages; claims handling; responsiveness; and how those couple with the risks at hand; as well as the objectives of the business is of enormous value to decision makers and will be rewarded when the agent sells the insurance policy.

What is next? The insurance marketplace will continue to morph in ways we have yet to imagine; new products and insurance delivery systems will create greater competition. Carriers like Nationwide and Liberty Mutual that once were direct writers now have transitioned to the independent system. Others, like Allstate, have diversified their go-to-market strategy and are exploring multiple distribution channels by going direct to consumer as well as relying on their agent distribution force. There are far greater threats facing independent agents than that of the direct writer. By 2020, Accenture Strategy estimates that disruptive models and digital platforms could account for as much as 15 to 20 percent of the property/casualty small- and mid-size enterprise market, furthering the pressures of competition. Mergers and acquisitions continue unabated. According to Deloitte, there were 537 broker deals made in 2017, up 18 percent from 2016. This year looks to be equally as disruptive. Small independent agencies now have the resources and market influence that once eluded them, which provides them with access to new markets, and again increasing the competition.

Professional Insurance Agents magazine

The marketplace is flush with capital, investors and private equity continuing to see opportunity in the insurance space. Although insurance has been a traditionally stodgy and inefficient industry, the bet is on that there is money to be made to increase efficiencies and profits through acquisition, increased use of technology automation and artificial intelligence, which will create more disruptions in the marketplace. These disruptions can either be a source of angst or a source of motivation to agents, propelling them forward to seize new opportunities and bring greater focus to their mission of helping clients to identify risks, select the right-fit carrier relationship with financing mechanisms that make the most effective and efficient use of their insurance dollars. By keeping their eye on what matters most to their clients; gaining and demonstrating expertise; and providing insights and data to help clients make more informed insurance-buying decisions, professional independent agents and the independent agency system will continue to thrive. The greatest risk facing independent agents today does not come from a direct writer or any of the other marketplace disruptions that are occurring; it comes from within, as does the solution. Toussaint works with agents and brokers to improve sales, service and client retention. She helps agents engage with employers to reduce their risks, insurance costs and improve their outcomes. Reach her at susan@oceanuspartners.com or (888) 496-1117.

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Foundations in marketing for the digital age When I attend PIA continuing-education events, I enjoy the fact that I can earn several credits over a single day. Most of the events I attend also feature opportunities to network and share ideas with my peers, so the value of these events is immeasurable. Recently, I attended an education event that was taught by John Fear, CPIA, CISR. He gave some great advice about social media, the errors-and-omissions perils an agency should be careful about and also what agencies can do to maximize the use of social media. It’s important to remember, the laws regarding what insurance agencies can do regarding social media vary from state to state and they are being updated frequently, so it’s a good idea to verify what you can and can’t do before you implement a social-media plan in your agency. Anyone who has ever taken an E&O course knows you can walk out of it so frightened of the potential problems that you may not want to sell insurance anymore. But, this class was great because Fear presented great suggestions about what a producer can do, in addition to what he or she can’t. One of the many great suggestions Fear discussed was making sure you get permission to connect with your clients on their Facebook or Twitter accounts (and, of course, getting their social-media information along with their email address). One of the many scenarios he shared was downright exciting: He suggested that an agency find a way to connect with a local charity that the agency supports. Imagine this scenario: John Smith comes into the office for an auto policy because his new dog is a Great Dane and he needs a bigger car and he knows ABC Agency loves animals. ABC Agency makes sure to get a picture of John and his puppy, and asks if they can post it on the agency’s Facebook page. ABC’s Facebook post with the picture of John and Fido said something like this: “ABC congratulates John and Fido on their new Subaru. We are happy to share that Fido was a rescue from the local animal shelter” And, they include a hashtag and tag the shelter. Now, of course, John loves his puppy and he is happy with his service from ABC Agency so, when the agency posts the photo and tags John, he “likes” it. All of John’s Facebook friends now know that ABC Agency is a community and pet-friendly agency, and they see John has given the agency a thumbs up. But it gets better—because the shelter and all of its supporters on Facebook also will see this post, since ABC Agency tagged it. All of John’s friends have an implicit referral. But, all of the shelter’s friends do, too.

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Pov

n. stephen ruchman, cpia Past president, PIANY

This practice makes great use of a new medium, but the marketing concepts on which it is based are older than me. The first is that the primary reason people use professional independent agents in the first place. We are local; we participate in our communities, and for that reason, people know us and they have confidence when they work with us. When clients work with us, they have made a decision not to work with someone halfway across the country, who doesn’t understand the unique needs of their communities. They know we care. I would argue that this age-old foundational relationship is even more important nowadays than it was before the millennials became a purchasing force. However, as Fear warned us, with new media we have new challenges, too. How many of us get calls on our cell phones and simply disregard them—we don’t even pick them up—because the number calling is unfamiliar? I know I do. If I do pick up a call because it’s a local number, but then realize the call is automated, I hang up automatically. We are growing more jaded about the communication we see, and with good reason. Media that makes communication more simple, makes scamming more simple, and so it goes. In the past, I was successful using telemarketers at my agency. I was 25

able to pick up many good accounts using them, but with the current environment, I’m not sure telemarketing is going to work. So, how do we pick up accounts? Cold calls aren’t my thing. They require a certain intestinal fortitude that most people, including myself, don’t have. I’ve always needed a referral. But having the door open a little, I was in! Telemarketing may be outdated. We need to reinvent our communication accounts. But, we still can rely on the foundational concept that differentiates us as professional independent agents: Because we are active in our communities. We can still participate: in chambers of commerce; with local charities; at our houses of worship. We just have to do it for the right reasons. We can’t join to sell, we have to join because it’s the right thing to do. That genuine concern for our communities and our neighbors is what makes us better. I’ve told this story before, but it remains true: I was recommended by a friend to the first organization I ever joined. He was an attorney, and he told me: “People know what you do. Don’t join the organization to sell insurance, because if you do, you won’t be successful. Join for the organization because you believe in its mission.” He was right. Eventually, people on the board came to me, they became clients and they referred me to clients. This soft sell is effective. If you join a group and proceed with the hard sell, you will lose out. Nowadays, I know that many firms require their sales and marketing people employees to be on social media and to take part in civic and community activities. That’s great! But, the old tenent of marketing remain the same.

Social media is great because it taps into the most time-tested and effective form of marketing: personal referrals. Every thumbs up; like; repost; and retweet is an endorsement that can get you in front of countless leads.

Likewise with advertising: Investing in advertising is a smart thing. Doing it on social media, and in community forums is far less expensive than the old days, when we advertised in print and the Yellow Pages. But, the same rules apply: When you advertise, you can’t expect direct leads from a single post or run. Ads can’t be measured by direct leads, they serve to build a reputation and the more impressions you make, the more success you will have—eventually. Social media is great because it taps into the most time-tested and effective form of marketing: personal referrals. Every thumbs up; like; repost; and retweet is an endorsement that can get you in front of countless leads. This is a modern application of an age-old concept: Asking for referrals is the most effective and affordable way to market yourself. Consider for example, supplemental insurance for Medicare. This product is being pushed to many with sketchy sales pitches over the phone. People

Professional Insurance Agents magazine

wisely are suspicious of these calls. But, if an agency has an expert who knows health coverages, it could be a great product to round out their book. You wouldn’t expect to sell this kind of coverage over socialmedia (although Facebook is by far the most popular social media site for baby boomers, and they are 19 percent more likely to share content compared to any other generation, according to Digital Trends). But, your clients have parents and grandparents who may need this. Having this expertise may help you stand out as a specialist. If you know your product; know the competition; and you establish yourself as a trusted community member, who cares about your clients because you are local, you may get referrals from social media. Conversely, parents and grandparents who may consult you on this coverage can lead you to children and grandchildren who will become future clients. … all you have to do is ask for referrals. This is the best way to get leads! Never fail to ask to be recommended. In person or on the internet: Wherever you go, do what you do for the right reason and ask for referrals. Ruchman is a retired independent agent and founder of Ruchman Associates Inc., the agency he started in 1961. A past president PIANY, he is an active supporter of the association, and he has sat on or chaired nearly every committee including the Executive Committee and the Long Island Advisory Council and PIANY’s Political Action Committee. Reach him at nsruchman@gmail.com.

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Fall 2018 Magazine

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2018 Convention Highlights