IIANM Staff

2011-2012 OfficersChairScott JonesVice-ChairPJ WolffSecretary/TreasurerDiana HobbsNational DirectorSam ConleeImmediate Past ChairKathy Yeager

FeaturesThis 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

Thank You! To Our 2011 Company Partners 04

Big "I" Study Suggests Industry May Be On the Road to Recovery 07

Ask An Expert - "Wind Storm vs Falling Object" 11

The Six Cs of Successful Selling 12

Holiday Party Invite 15

10 Ways to Improve Your E-mail Marketing 17

Consumer Shopping for Auto Insurance Grows Online 18

Agent Liability for Property Undervaluation 20

Do You Prepare Your New CSRs for Success or Failure 23

Contingent Commissions Fall Again 25

Acuity 21

American Mining Insurance Company 13

Burns & Wilcox 16

FUSA Insurance Agency 06

Market Finders, Inc. 10

Mountain States Insurance Group 22

New Mexico Health Insurance Alliance (NMHIA) 14

New Mexico Mutual 02

Risk Placement Service 24

Trustco / HCIT 14

Tech Talk 08

Education Edge 26

ABEN - The Next Big Thing in Continuing Education 27

November's Clickable Calendar 28

Odds n Ends 29

IIANM's 2011 Partners Program 30

In Every Issue

Advertiser Index

"The Voice" of Independent Agents since 1934

President/CEOThom Turbett

Vice PresidentLorri Gaffney

Communications DirectorRachel Sheffield

Insurance Programs AdministratorJulie A. Franchini

Member Services Associate Renee Trujillo

“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.

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Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011 Page 7

he independent insurance agents & Brokers of america (iiaBa or the Big “i”) announced the release of its 2011 Best practices study which found that organic growth improved, albeit modestly, and profitability held constant across most of the study’s six revenue groups.“the results of this year’s Best practices study indicate good news after several years of negative growth, shrink-ing profit margins and declining agency values,” says madelyn flannagan, Big “i” vice president of agent devel-opment, research and education. “most study participants benefitted from the growth strategies deployed over the last couple of years when the recession suddenly ampli-fied the pressure of a prolonged soft market.”

Other findings from the 2011 Best Practices Study include:• Big Picture: most study participants benefitted from the growth strategies deployed over the last couple of years when the recession suddenly amplified the pressure of a prolonged soft market. a strong focus on total account development, increased advertising/marketing activities, and producer hiring/development/management strate-gies gave most agencies a competitive advantage when the economy began to rebound in 2010, and stopped or reversed the revenue decline that first became apparent in the 2006 study. generally, the smaller revenue-sized agencies reported flat growth, while the larger commer-cial agencies reported improvement over the 2010 study results. organic growth for the $10-25 million group in-creased from 0.7% to 2.4% and the more than $25 million group increased from 1.2% to 3.3%.

• Cutting the Fat: as with revenue growth, the agencies benefitted from steps taken over the last couple of years to control and lower expenses. profitability remained flat in all study groups with an average pro forma eBitda margin of 26.2% for agencies with revenue less than $5 million and 20.0% for agencies with revenue above $5 million. margins had decreased continuously since 2006 when they were at their highest in the study’s then 13 year history.

• Rule of 20: in recent years, the rule of 20 outcomes, a quick measure for determining whether an agency is creating value for its shareholders, have fallen signifi-cantly short of the desired score of 20 for most of the study groups. the 2011 results leveled off at an average score of 13.2 for the “Less than $5 million” agencies and increased to an average 11.7 for the “more than $5 mil-lion” agencies.

• Revenue per Employee, an industry standard produc-tivity measure, also remained flat with the average for the

“less than $5 million” agencies just over $150,000 and the “more than $5 million” at $172,000. these averages are down only slightly from the revenue per employee levels reached prior to the start of the soft market. the resulting drop in revenue forced agencies to concentrate on better utilizing new and existing technology to support sales and marketing efforts and to contain costs. as a result, productivity remained stable.

• Personal lines, once again, had positive growth rates (an average of 3.1% for the less than $5 million and 3.8% for the more than $5 million). However, group medical grew more last year with an average of 3.0% for the less than $5 million and a strong 4.2% for the more than $5 million, up more than 3% from last year.

• Commercial lines continued to see negative growth but far less negative than last year. many agents said they are starting to see some commercial insurance rates hold at their current levels. this could indicate that the 2012 results are bound to improve providing the economy doesn’t stall again.

“while the 2011 results are not stellar, they do indicate that Best practices agencies are rebounding from the devastating effects of the recession and soft market, and are poised for new growth and stronger profitability, the key components of agency value,” says robert rusbuldt, Big “i” president & ceo. “overall, we are pleased, but not surprised, that the independent insurance agency system remains strong and stable.”

Big “i” Study SuggeStS induStry May Be on the

every three years, the Big “i” collaborates with reagan consulting to select “Best practices” firms throughout the nation for outstand-ing management and financial achievement in six revenue catego-ries (less than $1,250,000; $1,250,000 to $2,500,000; $2,500,000 to $5,000,000; $5,000,000 to $10,000,000; $10,000,000 to $25,000,000; and more than $25,000,000). agencies are nominated by either a Big “i”-affiliated state association or an insurance com-pany and qualified based on -operational excellence. financial and benchmarking information for the participating agencies are also reviewed and updated.

the Best practices study was initiated by the Big “i” in 1993 as the foundation for efforts to improve agency performance and create higher valued agencies. the survey and study of leading indepen-dent insurance agencies documents the business practices of these “best” agencies and urges others to adopt similar practices.

twelve insurance companies and four industry vendors provide financial support for the research and development of the Best prac-tices study – applied systems, addis intellectual capital, central insurance cos., chubb, emc insurance companies, encompass insurance, erie insurance, great american insurance group, the Hanover insurance group, Harleysville insurance, imperial pfs, insurBanc, Kemper preferred, Liberty mutual agency corporation, metLife auto & Home and Zurich north america.

T

obile phone usage continues to grow. Verizon now sells its version of the iphone. and new phone mod-els based on the android operating system continue to be released.

according to mobclix (www.moblix.com), the top-ranked paid app in the iphone app store on January 4, 2011, was angry Birds. the top-ranked free app was pimple popper Lite. Based on that, you might not think mobile apps are relevant for your business. think again.

when you dig deeper into the numbers, a different picture starts to emerge. the top six insurance apps in the iphone app store (as of January 4) were:

1. state farm pocket agent (rank: 75)

2. geico gloveBox (rank: 92)

3. ifarmers (rank: 245)

4. progressive (rank: 263)

5. allstate mobile (rank: 421)

6. esurance mobile (rank: 644)

these rankings are pretty impressive. there are over 300,000 apps currently available at the apple app store. clearly, customers of these companies think these apps are important enough that they take the time to download them to their phones. (see figure 1)

there are a few agencies that have created apps, and they also rank fairly well when compared to the total number of apps available (see figure 2)

1. drescher insurance agency (rank: 6,017)

2. the insurance dude (rank: 2,247)

3. tcp insurance (rank: 2,896)

4. treutel insurance (rank: 5,009)

Your Agency Needs A Phone App

M

the anderson agency report

Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011 Page 9

Common app elements

the table below details the features that are most common across all of these applications.

it is interesting to note that the esurance app doesn’t provide users with the ability to contact the company from within the application. the app does, however, enable users to report a claim, and includes a push to call feature that provides a direct connection to the company’s claim reporting hotline.

a significant difference between the carrier apps and agency apps is the ability to display customer policy information. Because carriers can connect directly to their policy management databases, they are able to display policy information on their applications. this is more dif-ficult for an agency application to provide. However, these same things can be done using some agency-facing online services currently available.

Why should you have a mobile app?

today, a person’s mobile phone is the one thing that is constantly with him or her. it allows instant gratification. instant means you don’t have to wait for it to start up. Your phone is always on and always available. when you provide a mobile app to your customers, it gives your agency a powerful, personal presence.

providing a mobile app makes you the easiest person for customers to do business with, which means they will likely stay with your agency longer.

mobile apps also keep your customers away from web searches. when they can always find you on their phones, they are unlikely to need to look you up online and see ads for other insurance providers.

How to get a mobile app

the Big “i” currently has a trusted choice mobile app under development that will be ready in the 1st quarter of 2012. agencies will be able to purchase the app for a fraction of what it would cost for an agency to develop.

Look for details soon!

consumers’ expectations of what constitutes “good service” is constantly changing. Having a custom-ized BlackBerry, android, and iphone app for your agency will help set you apart from your competition.

Duke Williams is the founder of SehMobile.com, SimplyEasierPayments.com, Sehhey.com, and Simply-easier-acord-forms.com. In addition to running these businesses and thinking up new products, Duke is a national speaker and teacher of how to do business on the Internet for insurance agents.

Top 10 Things Your Customers Will Do When They Have Your Phone App

10. take a picture, send it to you, and have it go

into your database, all in one step.

9. if they are in a car accident, your phone app

will help them know what to do next.

8. communicate and work with you when they are

on the move using the push-to-call, push-to-text,

push-to-email features of your app.

7. get an interactice map and turn-by-turn direc-

tions to your office.

6. read notices or news updates from you.

5. get a copy of their proof of automobile liability

insurance id card any time they need it.

4. get a self-service certificate of insurance.

3. send you a request for a policy change.

2. make an online payment.

1. stay with your agency because you are so

easy to work with.

Page 10 Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011

Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011 Page 11

Page 10 Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011

Faculty Response

Vu faculty

"during a wind storm, a tree branch breaks off the tree and lands on the roof of a house, damag-ing the roof, chimney, and there is resulting water damage to interior walls. the insurance company

claims the damage is caused by wind. we believe the damage is caused by the tree branch - falling object. if the wind lifted up the shingles and there was resulting dam-age, it is a wind loss, but the wind did not directly cause damage to the structure - the tree did. at stake is a large percentage windstorm deductible. who’s right? is this a wind loss or a loss caused by a falling object?"

under your 1991 iso Ho-3 policy, this usually isn't an issue since both windstorm and "falling objects" are covered. in fact, the "falling object" named peril is material only for coverage c/interior damage

since the damage to the structure is on a named exclu-sions basis. However, as revealed in a follow-up email to the "ask an expert" question above, the policy is written with a 1% windstorm deductible, so we're looking at a thousand+ dollar deductible rather than $250.

i believe that the wind was the proximate and controlling cause of loss. the limb did not fall by its own weight, but was blown into the structure, if i understand the events. it doesn't sound like the loss would have occurred in the absence of the windstorm.

the insurer is apparently citing the “land rule” or the “first cause” test. the wind is the efficient cause that sets the other causes in motion to produce the loss. if your state courts follow that rule, then the insurer is correct. this is a wind loss.

if your state allows a more flexible analysis under the “predominant cause” rule (some states do), whether or not the wind or the fall is more important would depend on the facts.

* if the branch broke off and flew sideways such that its downward trajectory would not have hit the house with-out the wind pushing it along, then i think the wind is the predominant cause of the loss.

* But if the wind merely snapped the tree branch and gravity took over, making it fall straight down on top of the roof, a stronger argument can be made that the act of fall-ing was the predominant cause.

i think you'd have a point if the limb fell of its own weight, perhaps due to disease or decay. However, it sounds like that damage occurred in the same manner that it does in tornadoes and hurricanes where much of the damage is not the direct force of wind but rather damage arising from windblown objects. these are typically considered part of the windstorm loss.

a question to ask is, would the damage have occurred without the windstorm? was the branch decayed? if not, there’s a strong argument for wind being the proximate cause.

this might be relevant if this was the endorsement being used to effect the windstorm deduct-ible. it's the endorsement language from Ho 03 10 04 91 - windstorm or Hail percentage deductible endorsement:

For the premium charged, we will pay only that part of each loss which exceeds the Windstorm or Hail Deductible Clause percent-age stated above, in the event of direct physical loss to property covered under Section I caused by Windstorm or Hail.

(editor's note: according to the iso form portfolio, this endorsement is currently available only in puerto rico. the 1991 version of this form did not indicate that it was exclusive to puerto rico, though the iso manual may have. as a result, at least one domestic u.s. company was using it at the time.)

i think an argument could be made that the wind only did "direct damage" to the tree limb... a stretch i'll admit.By contrast, here is the language from the Ho 04 94 04 91 - windstorm or Hail exclusion endorsement:

For a premium credit, we do not insure for loss caused directly or indirectly by windstorm or hail. Such loss is excluded regard-less of any other cause or event contributing concurrently or in any sequence to the loss.Direct loss by fire or explosion resulting from windstorm or hail damage is covered.

notice that this language refers to loss caused directly "or indirectly" by windstorm, with an exception for ensuing fire or explosion. that language is absent from the deduct-ible endorsement which might be material to an argument based on intent or ambiguity.

Win d S t o r m . FallinG Object

Faculty Response

Faculty Response

Faculty Response

Faculty Response

v s

by John chapin

Successful selling can be broken down into 6 key areas or character traits which in this article we will refer to as the 6 Cs. If you are new to sales, or are struggling a bit, you’ll find that by focusing on these 6 keys, sales suc-cess will quickly follow. If you are already a highly successful salesperson, refocusing on these 6 factors will make you even more successful.

ommitment to be successful in sales you have to be committed to your customers, your company, and yourself. when you are 100% committed to your customers, you’ll go above and beyond and focus on delivering more than customers expect. this is a pre-requisite to selling at the highest levels. 100% com-mitment to your company means being completely committed to your “internal” customers: your manager and other salespeople, other people in other depart-ments, and all other personnel within your company. finally, 100% commitment to yourself means you will do whatever it takes to reach all your personal and professional goals including being the absolute best salesperson you can possibly be.

onfidence confidence means complete belief in your ability to do your job at the highest levels and also belief that you have all the tools necessary to meet all your commit-ments listed in point number one above. You may need some additional skills or you may need to work on areas such as product knowledge or time management, but with confidence you know you are up to the task and will do what needs to be done to fill in those gaps.

C

C

C

ompetence when you are competent you speak intelli-gently about your industry and you stay up to date on the latest news and industry trends. You also know as much about your competitions’ product as you know about your own. competence means you continue to educate yourself and get better at what you do. if you are new and have some gaps in areas such as product knowledge, competence means you are hon-est with customers about what you don’t know and that you do whatever you have to do to get correct answers and follow up in a timely fashion.

C

ellingCs of Successful

The 6

THe 6 keY CHARACTeRISTICS NeCeSSARY FOR SAleS SuCCeSS:

onsideration for Others consideration for others means you are as nice a person as possible in both your personal life and professional life. it means you have empathy for all those you come into contact with regardless of who they are. it also means you are able to put yourself in other peoples’ shoes and you are able to place other people ahead of you when necessary. it means you do what’s right and what’s best for the other person without regard to your own personal loss or gain.

Page 12 Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011

Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011 Page 13

John chapin is an award winning sales speak-er, sales trainer, coach, and co-author of the gold-medal winning "sales encyclopedia" a comprehensive how-to guide on selling. "sales encyclopedia" is written for sales profession-als in all industries at any level of experience.

utilizing more than 21 years of sales experience and as a number one salesperson in three industries, John co-founded complete selling incorporated, a company helping salespeople significantly increase sales and find their motivation.

if you would like access to John's free white paper on what it takes to be successful in sales along with a monthly newsletter, you can visit John's website at http://www.completeselling.com for permission to reprint, or to reach John, email him at johnchapin@completeselling.com.

C ommunication to be at the top in sales you must be good at open, honest, direct communication. good commu-nication means staying in touch, it means you don’t hesitate to communicate when there is a potential issue or problem and you don’t leave any loose ends or questions unanswered. good communication also means staying in touch in order to build long-term relationships.

C ompetitiveness top salespeople are highly competitive and they will do whatever it takes to win, ethically of course. they are extremely motivated and do not rest on their laurels or on last weeks, last months, or last year’s numbers. they continue to push themselves to grow both personally and professionally. at the same time, they also realize that both sales and life are team sports and they do all they can to help, work with, and cooperate with the people in their lives..

By focusing on and developing, or further developing, the 6 key characteristics above, not only will you have more sales success and make more sales, you’ll also find that your personal life will benefit greatly too.

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Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011 Page 15

As always, anyone in the insurance industry is invited to

attend this very special gathering

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Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011 Page 17

ways to IMPROVE your e-mail marketing

We’re living in a state of constant e-mail attack. With such high volumes of e-mail, readers are forced to make split-second decisions about the value of a

message. How do you avoid the trash - or worse, SPAM blocker - and grab your reader’s attention? Use these tips to stand out in any in-box and give your readers something to be remembered.

If you’re going to use a person’s name in the “from” line, it should be one that your readers will recognize. when in doubt, stay consistent: use your organiza-tion’s name.

E-mails should be no more than four scrolls long. in other words, a person reading the e-mail on their smartphone should not have to scroll (or, in the case of the iphone, swipe) more than four times to get to the end of the message.

If you find that you’re getting blocked/ spammed by readers, place the “click here to unsubscribe” link at the top of your e-mails. if the link is hard to find, people will click “report as spam” in their own e-mail system.

Many readers are checking e-mails on their smart-phones. show your readers that you speak the mobile language; make your e-mails very mobile friendly.

Images within the body of an e-mail should be 480 pixels or less. images larger than 480 pixels distort the appearance of your e-mail on smartphones and make mobile reading more difficult.

When uploading images into an e-mail, add “alt tags” - an alternative text (a standard feature in most

1 e-mail marketing systems). if your image doesn’t load properly in a reader’s in-box, it will display your chosen text, not the menacing red “x.”

Consider a re-engagement campaign to reach out to inactive readers. typically these campaigns involve several e-mails over the course of a few months. one of the e-mails should highlight the ben-efits of your newsletter. re-engagement takes time and effort, but it’s worth it. it will clean up your lists, improve deliverability, and allow you to focus on your loyal readers.

There is no best time or day to send an e-mail. send when you want to send. if you have access to optimization scheduling, take advantage of it. optimi-zation delivers your e-mails to each reader based on their e-mail habits over time.

If your e-mail contains a table of contents, make sure to double space the links. the extra line leaves enough room for smartphone readers to click with their large, often clumsy thumbs.

Remember that e-mails aren’t web sites. You don’t need to have all of the information in the body of an e-mail. use catchy headlines and noteworthy de-tails, but don’t make it too long. if the reader wants to know more, they’ll click.

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omscore’s latest assessment of the online auto insurance landscape reflects contin ued growth in quoting and purchasing auto insurance online (2010 comscore on-line auto insurance report). most consumers still buy off line, however, and want to deal with a person. independent agents can continue to succeed in this new environment if they build their own online presence with an engaging website, use social media to develop “fans”, incorporate online consumer quoting coupled with rapid follow up and demonstrate they add value to the process.

it is important for independent agents to be fully aware of the trends revealed in com-score’s latest research as they develop their online strategies, and this article seeks to present those highlights.

the 58-page report covers trends regarding online quoting and purchasing, information about customer preferences, agent versus direct-channel purchasing, as well as aspects of customer self-servicing and loyalty. for this survey, comscore relied upon input from 1 million u.s.-based consumers, as well as insights from a panel of over 2,000 u.s. online consumers.

Online Quotingonline quoting continues to be the first stop to consumers researching auto insurance. on-line quoting increased 21% from the previous year’s survey to a total of 38.8 million quotes submitted online. in 2009, 54% of all consumers went online to get auto insurance quotes, and 72% have gone online to find auto insurance information at some point in their lives.

the economy continues to be a driver in shopping around for insurance. 21% of consumers reported they are “more likely” to shop around for insurance due to the economic conditions.

we see this play out online with the majority (83%) going directly to insurer websites, versus only 17% going to aggregators and online agencies (insurance.com, netQuote, etc.). of the quotes done on carrier sites, the usual “direct” suspects lead the pack: geico (28.8% of all quotes), progressive direct (28%), and esurance (13.8%).

independent agents (ias) have a say in all this, as a full 22% of consumers went to a multiple-carrier agent. this is a decrease of 3% from the previous year, so the focus on improving agent website functionality becomes critical – with the inclusion of website com-parative rating tools, as well as direct-to-carrier quoting links offered by carriers as agency website add-ons.

Online Purchasinga record 2.8 million policies were purchased online in 2009 – an increase of 22% from the previous year. for some perspective, only 700,000 policies were purchased online in 2004.

the opportunity for ias lies with assisting the consumer in understanding his/her insurance needs. 78% of consumers are still purchasing offline, and by far the largest reason is that they want to speak with someone who can guide them. 71% listed this as their primary rea-son for purchasing offline. the key is making it easy for the consumer to find agents on the

C

by ron Berg, metLife auto & Home

It is important for agents to keep abreast of the latest research about online consumer shopping and purchasing. The 2010 comScore survey contains a number of trends that

independent agents can use to design their own Internet strategies and to employ available technology tools to duplicate the speed and convenience that the direct carriers provide,

while adding the personal advice and service that they uniquely can offer.

ron Berg is the senior technology research specialist within the agency services & technology unit of metLife auto & Home, based in warwick, ri. metLife’s web site is www.metlife.com. ron Berg can be reached at rberg1@metlife.com. ron produced this article for act. for information about act, please visit www.iiaba.net/act. this article reflects the views of the author and should not be construed as an official statement by act, iianm nor of metLife auto & Home, nor should it be interpreted as metLife auto & Home’s endorse-ment of comscore or the report.

When it comes to consumer attitudes

on purchasing, independent agents still have an edge.

Consumer Shopping for Auto Insurance

Grows Online

Page 18 Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011

Page 18 Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011 Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011 Page 19

45-54: 15% 55+: 9%

web, as well as connecting the consumer to the agency via technology tools like online quoting on the agency website, live chat, online forms requesting agent call-back and using social media. additionally, more consumers are able to sign all needed policy documents online. a full 82% reported using online tools such as electronic signature in 2009. overall, consumers are expecting easy-to-use func-tionality and rapid service.

agency carriers are producing better long term reten-tion. 39% of all shoppers switched their auto insurance in 2009. However, state farm and nationwide had the high-est retention of those consumers staying with their insurer five years or more. geico and progressive had the low-est five-year retention. while price was the biggest driver for switching insurers (49%), having a real person with whom the insured can visit with was third at 13%, after “protecting my assets/possessions.”

Self-Servicingretaining customers is crucial for both agents and insur-ers. one of the most important aspects is payments. 55% of customers pay for their bills on a monthly basis. while a little over one-quarter of all customers pay their premi-ums in full up front to obtain discounts, there is a large opportunity to provide ease of use functionality to the customer who makes monthly payments, by providing this functionality through the agent’s website (as well as at the carrier’s site) – to keep the agent’s website in the forefront of the customer’s mind.

many carriers provide eservice links that can be placed on their agency’s website, allowing clients to go the agency website first and then link to the carrier’s sign in and make a payment function. in total, 34% of custom-ers pay their bills online – either at the insurance carrier’s eservice website, or by online banking.

Online Activity Varies with Agefor those shopping online for auto insurance, the biggest increases were between ages 18-24, and 25-34. all age ranges over 35 decreased.

23% of 18-24 year olds purchased their policies online in 2009, compared to only 9% for 55+.

percentages purchasing online decreased for each range:

18-24: 23% 25-34: 21% 35-44: 18%

conversely, the percentage of those purchasing through an agent rises from 60% to 70% as age ranges increase.

Buying With or Without an Agentthe top four reasons consumers give to have bought through an agent include: wanted real person to visit with or call (38%); have always used an agent (34%); wanted local agent from one company who could help with all insur-ance needs (26%); agent quoted best price (25%). the top four reasons consumers chose not to go through an agent

in making their purchase were: more convenient to use web-site or 24 hour toll free number (27%); faster to purchase online or through toll free number (23%); got a quote with a toll free number and decided to purchase (23%); prefer web-site or toll free number (16%). agents can employ available technology tools to offer the same convenience and speed as the direct carriers, but add on top of that the personal advice and local presence they offer.

17% of respondents indicate they purchased a policy through an affiliation with an association or a group. 31% indicated they would definitely purchase “pay-as-you-drive” insurance – more evidence that consumers are looking for discounts wherever possible.

Where are the Opportunities?the majority of consumers are going online to research auto insurance premiums. agent websites can attract a larger portion of those by improving site functionality with quoting and making their site easy to find with social networking and seo (search engine optimization). 22% of those in the comscore survey went to local agents to get quotes. 26% of consumers looked online for a local agent, either on a search site or on a carrier’s website.

78% are still purchasing offline. agents can continue to provide a crucial link in helping consumers find a great price matched with the coverage they need. while the di-rect giants like geico and progressive direct still get the most quotes online, the agent-based insurers have the lead in total premiums written. consumers still put more faith in the agent-based insurers, and they also have the best retention versus direct writers.

25% of the respondents have individual auto and hom-eowners or renters insurance with different carriers. there is a significant opportunity here if the agent can attract more consumers to educate them on the price and flex-ibility advantages of writing all of their insurance needs with one carrier. and 54% said they have additional insurance policies outside of auto and homeowners, primarily life.

34% pay their bills online. Links to carriers’ eservice sites placed on agency websites are one way to keep the clients in touch with agency websites. in addition, 82% of online purchasers were able to sign all policy documents online at the time of purchase, which is up from 76% in 2009. carriers and agents should work together to offer this same esignature capability for online forms.

while the clear trend is toward more online activity without the involvement of an agent, savvy agents can start to divert a lot of this online business by using internet tools to duplicate the speed and convenience the direct carriers are providing. agents can now optimize their websites with online quoting and eservicing capabilities and links, as well as attract more traffic using social networking. includ-ing customer self-service functions on agency websites not only provides more customer preference options, but keeps the agency website in the customer’s field of view.

Page 20 Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011

M ore than 60% of u.s. homes are undervalued by an average of 25%, according to marshall & swift/Boeckh. in some cases, as much as 73% of an agency's book of homeowners business may be undervalued by an average of 35%, according to ms/B. the problem isn't limited to homes either - 75% of commercial build-ings could be undervalued by an average of 40%. If an insured suffers an underinsured loss, whose fault is it? According to one recent court decision, it could be the agent's.in martinonis v. utica national insurance group, the mas-sachusetts court of appeals held the agent liable for fail-ure to adequately insure a home based on the long-term relationship between the agency and client. the client’s regular reliance on the agent's advice and assurances regarding policy limits created a special relationship.

the agent obtained a homeowners policy for the plaintiffs whose home was subsequently destroyed by a fire. the insurer paid the policy liability limit of $469,000 in full. the plaintiffs contended that the actual damages were $1,164,012.43 and that the agent was negligent in fail-ing to advise them to obtain higher limits. the trial court awarded summary judgment in the agent’s favor.

the court of appeals reversed, stating: “[t]here is no general duty of an insurance agent to ensure that insur-ance policies procured by him provide coverage that is adequate for the needs of the insured…[however] in an action against the agent for negligence, the insured may

show that special circumstances prevailed that gave rise to a duty on the part of the agent to ensure that adequate insurance was obtained.”

the insureds presented facts demonstrating an almost 10-year relationship with the agent, including procurement and advice on insurance policies placed with him on a variety of other properties, which led them to rely on his expertise. the agent had previously advised the insured that their contents limit was inadequate and, following his advice, they increased that amount. However, they contended that, after expressing concerns about their dwelling limit, the agent assured them that the limits were proper.

they thought the $469,000 dwelling limit was too low. the assessed value of the house was around $400,000 and the insureds expressed concern that the assessing authorities were slow to catch up with market value. they also knew that houses in their area were selling for more than $1 million.

"there is no general duty of an insurance agent to ensure that the insurance policies procured by him provide coverage that is adequate for the needs of the insured,” according to the court of appeals. “the agent does not, in general, have a fiduciary duty to the insured in this regard ... nevertheless, in an action against the agent for negli-gence, the insured may show that special circumstances prevailed that gave rise to a duty on the part of the agent to ensure that adequate insurance was obtained."

in the court's opinion, the plaintiffs presented adequate evidence of such special circumstances, in opposition to the agent's motion for summary judgment. their testimo-ny about the long relationship with the agent, the reliance placed on his review of the adequacy of their insurance, his specific assurance on past occasions in response to inquiries that the policies had adequate limits of liability, and the specific assurance in this case that the limits were proper were sufficient to defeat a motion for sum-mary judgment.

the agent's defense rested largely on the fact that no separate compensation, in addition to normal commis-sions on premiums, was requested by or paid to the plaintiffs to reflect the services he rendered in supplying counsel and advice. However, according to the court, the absence of separate compensation does not mean that special circumstances giving rise to a duty of care did not exist. the facts were enough to create a material issue of fact in the eyes of the court as to whether special circum-stances exist on the issue of duty sufficient to survive summary judgment.

to read the entire article, click here.

You will have to log-in in order to view the entire article. if you do not know your Big “i” website user name and password, email rachel@iianm.org to request your login.

Agent Liability for Property Undervaluation

Special relationships between insureds and agents can muddle the policy limitation lines.

by Bill wilson

TRUST.

For All That Matters

Page 20 Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011 Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011 Page 23

TRUST.

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Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011 Page 23

know this seems like a silly question, but i find that many agencies do very little to prepare the new csr for success. some new csrs are given a haphazard train-ing program that lasts for couple of days and sometimes, for just a couple of hours. in order for that new employee to get started on the right foot you must have created a train-ing matrix outlining:

How will i find and hire the “right” person?

what training will the individual receive?

who will do the training?

when will the training be accomplished?

the first time many agencies look for a new csr is when an existing employee resigns. usually the departing em-ployee gives two weeks notice, causing the agency owner or manager to conduct a frantic hiring process.

sometimes, the employee is hired based on the “mirror test.” in other words, a mirror is placed under the prospective em-ployee’s nose and if they fog up the mirror, they are hired.

in order to have a successful hiring, the agency owner or manager should first outline the criteria for the job. this should include: prior training, prior employment, personal-ity, computer knowledge, and office skills. i believe that an agency should be conducting continuous interviews for future employees.

they should keep a file with the resumes of those who would make good csrs. when a position becomes avail-able the agency owner or manager then has a list of prospective employees that they could call and possibly hire before interviewing never before seen prospective employees.

a training matrix should be created for the new employee. remember the only thing worse than training someone who leaves, is not training them and having them stay. the training matrix should include the various aspects of the job. for example: underwriting requirements for vari-ous companies; use of the agency technology; and other aspects of the job.

once the training needs have been established, a decision must be made as to who will do the training. many agen-cies have the departing employee train the new employee. i believe this is a grave mistake. the departing employee has already informed you of their decision to leave. what makes you think that they have a desire to train the new employee adequately?

Do You Prepare Your New CSR’s For Success Or Failure?

I the new csr should be trained by the most competent persons for each of the various duties required by the job. for example: whichever person best uses the agency au-tomation, should train a person on the use of the agency’s technology.

next. the dates and times of the training should then be established. the training cannot be haphazard. if an unforeseen emergency arises and delays the training, new dates and times must be established to insure that the training is accomplished.

once the training has been completed both the new em-ployee and the trainer should sign off, acknowledging that the training has been completed and that the newest csr fully understands what he/she has been trained to do.

success in anything requires a plan. without a plan an agency owner or manager, and for that matter the new csr, has little chance in achieving in a success.

Have you checked out the “Agency Management” section on our web site? we have gathered a collection of informative agency management resource manuals that you can customize for your office.

by Jack fries

Fries & Fries Consulting • P. O. Box 66 •Alexandria, KY 41001 phone (859)441-4528 • fax

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nowing that iiaBa Best practices agencies rely heavily on contingent commissions, industry data on the subject is always of great interest to member agencies. when a.m. Best sends out their annual compilation of p-c insurer required financial statements, it is always interesting to see what total contingency payments were for the prior year. the 2011 edition of Best’s aggregate & averages property/casualty edition shows that 2010 contingency payments totaled $2.8 billion and, on a percentage basis, are just shy where they were before the run-up leading to the eliot spitzer suit against marsh mcLennan in 2004.

as you can see in the below chart, contingent commissions increased from the level they have been for 2009 and 2010 to much higher levels in 2004 to 2006 before falling back again to two-thirds of one percent (1%) of net written premiums (that is, insurer premiums “net” of reinsurance). total contingent payments are above where they were from 1998 to 2002, but on a percentage basis it is a dead heat with lowest level contingent commissions on a percentage basis from many years.

contingent commissions are paid to many insur-ance agencies appointed with various insurance companies, and the dollars are disclosed by insur-ers when they file their required statutory financial statements each year. typically, they are paid to appointed agents of insurance companies based on formulas that provide for incentives to reward frontline underwriting by agencies, proactive risk management and achieve volume and growth.

in 2010, the iiaBa Best practices study update shows that of the agencies that were nominated and selected for par-ticipation, the average was about 10% of revenues from contingents and 50% of profits from contingent commissions. Best practices agencies under $1.25 million in revenue tend to take in less, but contingent commission income is very important to all size Best practices agencies as shown in the table below.

the Best practices study update is a “must have” for those agencies that want to become the best they can be. it includes in-depth financial analysis of agencies nominated by insurers and Big “i” state associations that are then selected to participate. the 2010 study can be purchased from the Big “i” education department. order forms for the existing study and can be downloaded at www.independentagent.com under the education, Best practices and order forms.

Contingent Commissions Fall Again 2010 percentage of premium at two-thirds of 1%.

K

Source: Best’s Aggregates & Averages Property/Casualty, 2011 Edition

Source: 2010 IIABA Best Practices Study

Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011 Page 25

Full Name:

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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.

Click here for a full listing of our education program.

Instructor: Kitty Leslie - November 8 - 9 8am - 5pm

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rachel@iianm.org

Page 26 Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011

IIANM’s

EducationEDGE

High quality continuing education for independent insurance agents, brought to

you via live streaming video.

the agents and Brokers education network (aBen), founded by state associations of independent insur-ance agents, is dedicated to bringing highly relevant, interactive, and professionally produced continuing education programs to independent agents in the most convenient and economical ways possible.

aBen's Live webcasts will stream professional instructors right into your office, along with related course material. You can follow along with the presenter’s powerpoint, submit questions, take notes, get full access to written materials, and you have the ability to ask questions and chat with other students.

The Next BIG Thing in Continuing education!

additionally, aBen’s help desk is standing by 24/7 to assist you, should you encounter any difficulty with the technology.

with aBen courses you get the benefit of best information out there, with the convenience of internet technology and the full educational experience you can only get through aBen’s platform.

For more information and to view course listings click here

INTRODuCING

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Page 26 Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011 Independent Insurance Agents of New Mexico - www.iianm.org - * November 2011 Page 27

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looking to fill a position within your agency? Trying to find a job but don’t know where to look?Whether you are looking for somewhere new to share your special skills or an employer looking for quality, professional employees, we are there to lend a helping hand. Click here to take advantage of IIANM’s Job Bank.Do you have an agency you’re trying to sell, or in the market to buy one? Check out our Classifieds!

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Office

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Dec 1st

HolidayParty!

Gratitude is the inward feeling of kindness received. Thankfulness is the natural impulse to express that feeling. Thanksgiving is the following of that impulse. ~Henry Van Dyke

Odds n Ends

5 Tips for Fall Gardeningeven before winter-prep season kicks into full swing, your garden may benefit from your extra attention. acting now may even save you a few extra bucks.

the daily green's "the green cheapskate" blog re-cently shared advice on how to stretch garden season while stretching your hard-earned dollar. in fact, author Jeff Yeager calls this the "best time of year for all kinds of garden activities."

click here to view.

the best known method to improve un-derlying intelligence is hard work. teen-age dropouts lose between 1.5 and 5 points of iQ for every year of school they miss. people who work in challenging jobs that require problem-solving skills see gradual increases in their iQ scores, while those whose jobs involve mindless repetition see their test scores erode over time.

How Can You Increase Your IQ?

read the entire article

take a test: what’s Your Brain grade?

experts in personal finance often recommend having an emergency fund in case the unexpected hits - a layoff, an injury, some event that interrupts your paycheck. such a safety net should cover at least six months worth of living expenses.

to calculate how much you need to save:

• collect your financial records for the past year, including bank, credit card and atm receipts.• make a grid listing 12 months across the top and your expenses down the left side.• fill in the amount you spend during each month and total for the year.• divide by 12 to get your average monthly expenditures.• multiply your average by six (6) which will give total of what you should have for a comfortable safety net

Preparing for a Rainy Day