PENNSYLVANIA

ALSO INTHISISSUE:________________

Agency-carriertechnology agreements

2012 CompanySatisfaction Index

AS THE

TURNS

M A R K E Tslowly

Precautions

and Possibilities

As the market slowly turnsThe soft market has lingered for so long that many agents don’t remember (or never witnessed) what a hardening market will mean for their business. Chris Burand offers an in-depth look at the complexities and challenges to come — and the opportunities for savvy agents.

Page 12

Agency-carrier technology agreementsThose same technological advances that streamline agencies’ workflows cancomplicate them, sometimes limiting critical access to policy data stored oncarriers’ websites. The following pages chronicle one agency exec’s experience — and her plea for others to prioritize fair technology agreements.

Page 20

2012 Company Satisfaction IndexIt has never been easier, or quicker, to provide feedback on your carriers’performance. Speak now — via IA&B’s Company Satisfaction Index (CSI) — or for two years hold your peace.

Page 26

12

20

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ContentsP R I M A R Y A G E N T M A G A Z I N E

Copyright 2012. All rights reserved. No material may be reproduced in whole or in part without written consent of the publisher. The information in this publication is general in nature and is not intended to serve as legal, accounting, financial,insurance, investment advisory or other professional advice as to any reader’s particular situation. Users are encouraged to consult withcompetent legal, financial, insurance, investment advisory and or other professional advisors concerning specific matters before makingany decisions and we disclaim any responsibility for any decisions or actions by readers. Statements of fact and opinion in PrimaryAgent are the responsibility of the authors alone and do not imply an opinion on the part of the officers or the members of the IA&B.Participation in IA&B events, activities and/or publications is available on a non-discriminatory basis and does not reflect IA&Bendorsement of the products and/or services.

Subscriptions: Non-member price: $2.25 per copy or $15 per year.

All communications for publications, including news, features, advertising copy, cuts, etc., must reach the editor by 1st of month two monthsprior to publication. Advertising rates furnished upon request.

Address inquiries to:Primary Agent Editor5050 Ritter RoadMechanicsburg, PA 17055-0763Phone (800) 998-9644 or (717) 795-9100 Fax (717) 795-8347

Periodical postage paid at Mechanicsburg, Pa. and additional entry post office.

Postmaster: Send address changes to above address.Primary Agent (ISSN 1543-3110), Permit # 638-620, Issue # 2012-5 is published monthly by IA&B Service Group Inc., a subsidiary of IA&B.

2 Chair of the Board’s Message3 Member FAQ4 State News6 Preventing E&O8 Coverage Corner10 Tools You Can Use

11 Glance at Events25 IA&B Partners28 Technology Update32 Advertisers Index32 Classified Ads32 Last & Least

In every issue

Mission StatementPrimary Agent delivers ideas to help InsuranceAgents & Brokers’ members negotiate their uniqueposition as guardians of trust between insuranceconsumers and companies while facing thechallenges of maintaining a small business. PrimaryAgent also supports IA&B’s mission to preserve andadvocate the American Agency System.

Get social with IA&B

OfficersRobert B. Hall, CPCU, CLU, ChFC, ARM, ARM-P

Chair of the BoardWest Chester, Pa.

Norman F. Basso, CPCUVice Chair of the BoardYork, Pa.

David Rosenkilde, CICImmediate Past Chair of the BoardReisterstown, Md.

MembersJoyce M. Bailey, CIC, CRM, CPIW

Newark, Del.

Henry “Butch” Bradley, Jr.Forest Hill, Md.

Timothy P. BurrisMifflintown, Pa.

N. Lee Dotson, CIC, AAIWilmington, Del.

John L. FrankenfieldTelford, Pa.

G. Greg Gunn, CICLemoyne, Pa.

John B. HollisterMilford, Pa.

Diana M. Hornung Hanby, ACSRWilmington, Del.

Jocelyn R. Howard-Sinopoli, CIC, CISRButler, Pa.

Robert S. Klinger, LUTCF, CPIA+

Germantown, Md.

Douglas A. Loesel, CPCUErie, Pa.

Michael F. McGroarty Sr.Pittsburgh, Pa.

Ann Gallen Moll, CICReading, Pa.

April E. Ressler, CICAltoona, Pa.

Scott C. Rogers, CPIA*York, Pa.

David B. Wasson Sr., CICState College, Pa.

Lawrence A. Wilson, CIC, CPIA, CPCU, ARM**New Castle, Del.

* Pa. IIABA National Director** Del. IIABA National Director+ Md. PIA National Director

Board of Directors

[ 2 ]

Robert B. Hall, CPCU, CLU, ChFC, ARM, ARM-P

Chair of the Board’sM E S S A G E

Driving members to distinction.

Whatever tomorrow may bring

We’ve been holding our collective breath for quite sometime now, waiting for the always-promised yet ever-elusivenext hard market. The planets appear to be aligning. Couldour wait finally reach its end? And if (when) the markethardens, will it be all that we remembered and hoped for?

Only time will tell. But in this month’s feature, Chris Burandoffers IA&B members an exclusive look at his projectionsfor the market and what that will mean – the good, the badand the ugly (think: the repercussions of weakeningcarriers) – for independent agents.

I encourage you to read Mr. Burand’s article and heed hisadvice. Then fasten your seatbelt and, of course, lean onIA&B for resources and assistance … no matter whattomorrow brings. That’s what your association is here for.

Best,

Robert B Hall, ChFC, CLU, CPCU, ARM, ARM-PChairman of the Board

[ 3 ]

ANSWER:There is a big debate over whether the limits shown onthe certificate should be the limits provided by the policyor the limits currently available, after they have beenreduced by paid claims. The best way to look at this is tocheck what ACORD says about it.

ACORD instructions – Each ACORD form comes with aninstruction guide, which provides guidance on every fieldto check or fill out. For the General Liability (GL) “GeneralAggregate $” field, the instruction guide states as follows:

Enter limit: The general liability, general aggregate limitamount. Any questions about appropriate limits orapplicable policy coverage(s) should be answered by theissuing insurer(s). As used here, the limit should be listedas a whole dollar amount, as found on the policydeclarations page [emphasis added].

This language clearly instructs agents to indicate thelimits shown on the DEC page.

In addition, and to assuage any lingering concerns overpotential claims that those limits may in fact be impaired,the ACORD 25 contains a warning which specificallystates: “Limits shown may have been reduced by paidclaims.” This is certainly a more reasonable approach thanattempting to have an accurate, day-by-day account ofany reduction in limits before issuing a certificate.

DO YOU HAVE A QUESTION? Email it to us at iab@iabgroup.com. Please use “Primary Agent FAQ” in the subject line of your message. You can also fax your question to 717-795-8347. We look forward to answering your questions!

QUESTION: What aggregate limits should I indicate on the ACORD 25 for theCGL policy? The client’s aggregate limit could have been impaired by some claims.

Member FAQ

State NewsPrimary Agent | May 2012

[ 4 ]

It’s a wrap forIA&B’s MAPsMember agents weighed in on thehardening market and related resourceneeds at the nine stops in IA&B ofPennsylvania’s April 2012 Member AgentPanel (MAP) tour.

The MAP meetings also allowed associationstaff to recap recently launched IA&Bprograms and services and to sharelegislative and regulatory updates. And,during an open forum, attendees airedindividual agency struggles andbrainstormed solutions.

As always, participants’ feedback now willhead to the IA&B Board of Directors. Watchfor updates and outcomes of the spring2012 MAP meetings in Agent Headlines andupcoming issues of Primary Agent.

Reachingclients withTrustedChoice®

mobile appA new mobile app* is connecting Trusted Choice agents to existing andpotential clients in an innovative new way.Created through a collaboration of theProject CAP, Trusted Choice and IIABA (Big “I”) teams, the new Trusted ChoiceMobile App is a powerful tool for reachingand serving today's online consumers —wherever they are.

Designed to work on various mobiledevices, this resource allows consumers to find a local Trusted Choice agent, create their home inventory, document an accident, ask a question and readrelevant headlines — all from their smartphone or tablet computer.

Since real marketing is all about buildingrelationships that build your brand, thisapp can be customized with an agency’scolor scheme and logo. Best of all, the newTrusted Choice Mobile App is included as acomponent of most Project CAP agencymarketing packages or available separatelyfor a nominal monthly fee for I&ABmember agencies.

* A mobile app is a computer applicationthat runs on a smart phone or othermobile device. Most commonly, the appconnects the user to an Internet service.

http://projectcap.info/program-information/#

New MembersW E L C O M E

Edelman InsuranceManagement Group LLCYardley, Pa.

Carey Insurance Agency IncAvoca, Pa.

Carl W Peter Agency LLCNew Tripoli, Pa.

SPEAK UP!Support AgentPAC, yourvoice in the state Capitol.

iabgroup.com/AgentPAC

Court decides:Does additionallanguage in UIMrejection formrender it void?Insurers whose UIM rejection formsinclude additional language may wish torethink their verbosity. In Jones v.Unitrin, the Pennsylvania Superior Courtwas asked to determine whetherUnitrin’s UIM rejection form wasrendered void, as its additional languagewas not required and therefore did notspecifically comply with therequirements for the UIM rejection formas contained in the Pennsylvania MotorVehicle Financial Responsibility Law.Read IA&B’s brief to find out to whomthe spoils were awarded.

www.iabgroup.com/pa/jones_unitrin

There's no suchthing as a free lunchContemplating (or already) offering agift card, gas card or free lunch for anyclient who accepts a quote? That freelunch could cost you up to $5,000 andyour name on the InsuranceDepartment’s naughty list (read: consentorders). Bragging rights not included!

In Pennsylvania, the prohibition againstrebating and inducements is extremelybroad. With no minimum dollar amountset in the law, a free lunch of any valuewill not be palatable to the InsuranceDepartment. To fully digest thecompliance requirements, access IA&B’sresource on rebating.

If this has whetted your appetite formore violations to avoid, check outIA&B’s on-demand Compliance Pitfallsand Ethical Responsibilities seminar.

www.iabgroup.com/pa/rebating www.iabgroup.com/on-demand

New memberbenefit: shoppingthat paysIt has never felt better to shop ‘til youdrop. IA&B members have access to anew member benefit: Retail Benefits.The online shopping portal allowsmember agency staff to purchase any of300 million products from thousands ofretailers (think: Gap, Best Buy, Targetand Travelocity) … all while benefitingtheir agency or a charity.

Merchants offer discounted pricesthrough Retail Benefits, and participatingagencies receive — or donate to theirfavorite charity — up to 40 percent incash back rewards for every purchasemade by their staff through theshopping portal.

www.iabgroup.com/pa/retailbenefits

[ 5 ]

iabgroup.com/on-demandQuality educationin your own place…

at your own pace.EARN CE AND LOSS-CONTROL

CREDITS ANYWHERE THERE’S

A WEB CONNECTION.

New: Compliance Pitfallsand Ethical ResponsibilitiesLearn about Pennsylvania’s ten most violated insurance laws.

READ MORE AND REGISTER ATIABGROUP.COM/ON-DEMAND

[ 6 ]

CURTIS M. PEARSALLCPCU, AIAF, CPIA

Curtis M. Pearsall, CPCU, AIAF,

CPIA, president of Pearsall

Associates Inc. and special

consultant to the Utica

National E&O Program,

supplied this article.

Insurance Agents & Brokers

Service Group Inc. is the

exclusive agent for the Utica

E&O program in Delaware,

Maryland and Pennsylvania.

For questions regarding this

article or your E&O coverage,

contact IA&B at 800-998-9644

or iab@iabgroup.com.

Primary Agent | May 2012

Many carriers are reportingan increase in errors andomissions claim frequencycompared to 2011. One of thebiggest increases deals withthe cause code failure toprovide the proper coverage.One carrier reports that closeto 60 percent of its E&Oclaims are from this onecause code.

Often when this cause code is discussed, asignificant part of thedialogue concerns theupfront identification ofexposures a customerpresents. Failure to identifythese exposures andsubsequently offering

insurance proposals toaddress them has caused,and continues to cause, asignificant number of E&O claims.

Make sure thecustomer knowsThere is, however, anothersignificant issue resulting in asizeable number of E&Oclaims. This concerns the“mirror test” or, moreprecisely, the failure toperform it. Over the lastseveral years, with softmarket conditions and theeconomy, many agencieshave found it necessary toremarket their personal and

commercial accounts toadditional carriers in thehope of getting a degree of premium relief. It is fairly likely if an agentremarketed an account to three additional carriers,the potential exists fordifferences between theincumbent carrier and theseadditional markets.

In an effort to reduceinsurance expenses, acustomer might request thatcoverage be replaced with anew carrier due to thepremium savings. While thismay appear fine on theoutside, what if the coveragewith the new carrier is

TAKE A CHUNK OUT OF YOUR E&OEXPOSURE: PERFORM THE “MIRROR TEST”

PreventingE R R O R S A N D O M I S S I O N S

[ 7 ]

deficient in some areas compared tothe incumbent carrier? Maybe the sub-limits are less in some areas or thedefinition of “who is an insured” ismore limited.

The key, when you look tomove the account to a newcarrier, is to identify anycoverage differences, bringthem to the customer’sattention and seek thecustomer’s direction.

For example, say you move theaccount to another carrier, and the insured suffers a loss that wouldhave been covered by company A,but is not covered by the new carrierwith which you placed the account.When the customer faces an uninsuredloss and was not aware of thecoverage differences, you may verywell be questioned on why thecoverage was moved. Practicallyspeaking, if you don’t advise thecustomer of the differences when youmove the account, what would thecustomer probably think? In alllikelihood, the customer would believethe coverage was the same because ifit was less, you would have indicatedthat up front.

Bottom line, there is a good chance thecustomer will say moving the accountwouldn’t have been approved if thesacrifice in coverage was mentioned.The key, when you look to move theaccount to a new carrier, is to identifyany coverage differences, bring themto the customer’s attention and seekthe customer’s direction.

Highlight the differencesDifferences between various proposalscan be significant. This can involvesub-limits, the coverage grant, specificendorsements, definitions for areassuch as “who is an insured,” what isexcluded on one policy compared toanother and the carrier’s rating.

An E&O claim developed in recentyears where the agent moved theaccount from a carrier where thepremium was handled via an accountcurrent bill to one where the premiumwas paid on a direct-bill basis. Theagent was unaware of the change and,thus, the customer was unaware. Theaccount was cancelled for non-pay, aloss occurred and the carrier deniedcoverage because the policy had beencancelled. Guess who paid?

The highly recommended approach istaking all of the carriers you areconsidering and putting the details ona spreadsheet, noting all of thepertinent issues – limits, sub-limits,coverage grants, etc. Share thisspreadsheet with the customer andbring to their attention the detail thecustomer needs to be aware of. Thisenables your client to make aneducated decision – and that’s the key:The customer sees the differences anddecides. At a minimum, bring to theclient’s attention the differencesbetween the expiring policy and theother carriers you are considering.

The highly recommendedapproach is taking all

of the carriers you areconsidering and puttingthe details on a spreadsheet….Share this spreadsheet with the customer.

You must get the customer’s writtenapproval regardless of the finaldecision. This will be crucial if anunderlying claim later occurs and thecustomer then learns they didn’t havethe coverage they thought. If yourclient chooses the lower price with thelesser coverage, that’s fine – just get itin writing that they realized they weregiving up some coverage.

This issue may still be a concern evenif you keep the account with the samecarrier. This is probably more commonor more of an issue with excess andsurplus lines business because E&Scarriers are not required to provide aconditional renewal notice if they wantto add an exclusion on the renewal. Inthis situation, the important thing(again) is for your office to identify thedifferences on the renewal policy,bring them to the customer’s attentionand get the customer’s sign-off. Due tothe nature of E&S, it is best to do thisreview with the client before bindingthe coverage, in case the customersubsequently decides they don’t wantthe coverage.

While this detailed comparison isimportant on all coverages, there areprobably more things to consider ifyou write professional liability and/orD&O. Because no two policies are thesame, an issue as subtle as anexclusion on one policy that was noton the other (the expiring) has resultedin a claim being denied, subsequentlytriggering an E&O claim – all becausethe customer alleged they wereunaware of the difference.

Perform the “mirror test.”Communicating this analysis andcomparison of the differences to thecustomer and getting a sign-off arevital if your agency wants to trulyminimize its potential for an E&O claim.

CoverageC O R N E R

[ 8 ]

JERRY M. MILTON, CIC

Jerry M. Milton, CIC teaches

and consults on industry

issues. The legal profession

recognizes him as an

expert on insurance

coverages. He is also the

education consultant for

IA&B, working with CISR,

CIC and continuing

education programs.

Primary Agent | May 2012

There are thousands andthousands of claims andlawsuits being filed andmoving through the courtsinvolving Chinese drywall.These claims are being madeunder the homeowners’policies insuring the affectedhouses and against thedistributors who sold thedrywall plus the contractorswho did the work.

It has been determined thatChinese drywall releasessulfuric gases which causecorrosion of electric wiring,plumbing, HVAC coils,appliances, electronics andother household items. Inmany cases the only solutionis to “gut” the entire interiorof the house and reinstall allwiring, plumbing, etc.

On March 22, 2010 a trialcourt sitting in the CivilDistrict Court for OrleansParish, La. issued the firstdecision regarding coveragefor Chinese drywall under aproperty policy. In Finger v.Audubon Insurance Co., the

court granted the Fingers’motion to strike Audubon’sdefenses based on the policyexclusions for pollutants,inherent vice, latent defect or corrosion. The courtsimply stipulated that theaforementioned exclusionswere not applicable to thedamage caused by Chinesedrywall. Therefore, the court decided in favor of the Fingers and againstAudubon.

However, since this initialcase, court decisions havetended to go in the opposite direction.

In 2006, C. AdamsConstruction & Design, LLCrenovated a house located inMetairie, La. In January 2007,Terrence and Rhonda Rosspurchased the house from C. Adams Construction.Approximately two yearslater the Rosses discoveredthe presence of Chinesedrywall in the house. OnJune 29, 2009, the Rossessent a formal demand to

C. Adams Construction givingthem an opportunity torepair or correct the defects.However, they failed to doso, and the Rosses made thenecessary repairs at theirown expense.

Right now it appears that thehomeowners’

insurers are winning the argument that

their homeowners’policies don’t coverlosses caused byChinese drywall.

On July 30, 2009, the Rossesfile suit against C. AdamsConstruction and its insurer,State Farm InsuranceCompany, and against theirown homeowners’ insurer,Louisiana Citizens PropertyInsurance Company.

CHINESE DRYWALL: IS IT COVERED?

[ 9 ]

On Jan. 25, 2010, the Rosses filed amotion for partial summary judgmentclaiming the Louisiana Citizenshomeowners’ policy providedcoverage. On March 19, 2010,Louisiana Citizens filed a cross motionfor summary judgment asserting thatcoverage for the claimed losses wasbarred by four different exclusions inthe homeowners’ policy — faultymaterials, latent defect, corrosion and pollutants.

On April 14, 2010, the trial courtissued a judgment denying theRosses’ motion for partial summaryjudgment and granting LouisianaCitizens cross motion for summaryjudgment. The trial court also issued an order on May 20, 2010,clarifying the ruling was a finaljudgment and dismissing the Rosses’claim against Louisiana Citizens. TheRosses appealed the trial court’sruling, and on June 14, 2011, the Court of Appeals for the Fifth Circuitof Louisiana upheld and affirmed the trial court’s decision.

This decision only addresses thesummary judgment motionconcerning the homeowners’ policy. It does not deal with the suit by theRosses against C. Adams Constructionand State Farm. Does C. AdamsConstruction have coverage for thisclaim under its general liability policy?Maybe, maybe not. I would think thatState Farm is going to deny coveragebased on the pollution exclusion.

About the same time as Ross v.Louisiana Citizens Property InsuranceCompany was working its waythrough the Louisiana courts, a similarcase was being heard in Virginia. OnJune 3, 2010, in TRAVCO InsuranceCompany v. Ward, the U.S. DistrictCourt for the Eastern District ofVirginia denied the Wards’ Chinesedrywall claims. The court agreed withTRAVCO that the pollution, faulty

materials, corrosion and latent defectexclusions applied to the loss andtherefore barred coverage.

Nothing is certain in this world. Butright now it appears that thehomeowners’ insurers are winningthe argument that their homeowners’policies don’t cover losses caused by

Chinese drywall. The affectedhomeowners will have to hope for the best in their suits against the distributors and the contractors. I wonder how many of thosecontractors have pollution liability coverage.

Y’all take care!

800-334-5579www.gotapco.com

1,000 Strong More than 1,000 classes of P&C businesswritten under binding authority.

The TAPCO Service Pledge

* Available coverages and markets may varydependent upon risk characteristics.

Call. Quote. Bind.

Lessor’s Risk coverage in a five-minute phone call.

Tools Y O U C A N U S E

[ 10 ]

SBA.gov

Seeking an appointment? Don’t be surprised if the carrier seeks your business plan. Beforecompany reps invest in you and your agency, they want to know your business structure andyour marketing and sales strategies.

The U.S. Small Business Administration offers the step-by-step Essential Elements of a GoodBusiness Plan at SBA.gov.

To access the Essential Elements of a Good Business Plan, visit SBA.gov, then select Writing a Business Plan fromthe Starting & Managing a Business drop-down menu. You’ll also find an outline of business plan elements and aresource on developing a niche, as well as related podcasts (instructional audio and/or video files that can bedownloaded to your iPod, iPhone, computer, etc.). Access to all resources is provided free of charge.

How to conduct amarket analysis What to include in a

company description

How to outline your organizational

structure

How to devisemarketing and sales strategies

Why your agency makes a solid appointee

Date Topic Location

1 CPIA Seminar (Day 1) Pittsburgh, Pa.

William T. Hold Seminar Wilkes-Barre, Pa.

2 CPIA Seminar (Day 2) Pittsburgh, Pa.

CISR—Commercial Property Course Allentown, Pa.

3 CPIA Seminar (Day 3) Pittsburgh, Pa.

8-10 L&H Licensing Study Course Mechanicsburg, Pa.

15 CISR—Commercial Property Course Scranton, Pa.

Mistakes That Lead to E&O Claims Seminar Mechanicsburg, Pa.

16 CISR—Commercial Property Course Lancaster, Pa.

16-17 James K. Ruble Graduate Seminar Philadelphia, Pa.

16-19 CIC—Commercial Property Institute Timonium, Md.

17 William T. Hold Seminar Baltimore, Md.

22 CISR—Commercial Property Course Pittsburgh, Pa.

22-24 P&C Licensing Study Course Philadelphia, Pa.

23 CISR—Commercial Property Course Hagerstown, Md.

24 Dynamics of Service Seminar Mechanicsburg, Pa.

Glance at EventsM A Y C A L E N D A R

[ 11 ]

Jerry Milton Seminar Series returns this summerCovered Property—Direct Damage & Consequential Loss

Mark your calendar for the return of coverages expert Jerry Milton, CIC, for another in his series of informative and engaging seminars. New thissummer, Jerry shares his vast experience in a full-day program on the nuances of Covered Property.

Dates/Locations

Read more at iabgroup.com/Milton

July 10 Baltimore, Md.July 11 Newark, Del.August 1 Allentown, Pa.

August 2 Mechanicsburg, Pa.August 15 Philadelphia, Pa.August 21 Pittsburgh, Pa.

MARKETS

As the marketslowly turnsHow to prepare for the hardening market

The soft market haslingered for so long that

many agents don’tremember (or neverwitnessed) what ahardening marketwill mean for theirbusiness. On thefollowing pages,Chris Burandoffers an in-depthlook at the

complexities andchallenges to come —

and the opportunities for savvy agents.

[ 13 ]

Primary Agent | May 2012

Top agents deliver market news to their clients witheach renewal. Whether market expectations arehard, soft or neutral, they are always educating theirclients on what pricing to expect.

In a market like the one we have today, these agents have aconundrum. In the last 60 to 90 days*, I’ve heard agentscategorically state commercial renewal pricing is consistentlydown 10-15 percent or consistently up 10-15 percent orconsistently somewhere in between. Many companies havebeen reporting the market was turning for the past twoyears, but I have yet to witness this on a broad or consistent basis.

So what message do agents deliver today? I think it is safe to say rates are more likely to increase than decrease overthe next year. In 2013, rates will probably be even a littlehigher. However, the unbridled excitement of a hard market expressed by some company executives and someagents is misplaced. The economy is not going to boom any time soon, which will suppress the need and the abilityto increase rates. Certain sectors will experience muchharder rates, and certain sectors will be adequatelyprosperous to accept larger rate increases. Most of theeconomy will not have the ability to pay more withoutprotest. These locations and industries will search for ways to minimize their increases.

For example, let’s say rates go up 10 percent. The actualincrease for agents though may be only 4 percent. Actualpremiums will not increase as much as rates becauseagencies’ clients will purchase less insurance, they will shopharder, and they will make smarter buying decisions. Tenpercent versus 4 percent is a huge difference, and this hassignificant strategic and operating implications for agents.

Agents will have to work harder for their commission.More time will be required to identify methods for savingtheir clients’ money. Agents will have to shop marketsharder. While this may just be a repeat of what happens inall hard markets, the difference is that the net result in thelast hard market was a 10-20 percent increase in agencycommissions. Agencies will not be so fortunate this time,and they’ll have to work even harder for whatever rateincrease they get.

Thoroughly document coverage reductions becausecoverage reductions lead to more E&O claims. Somereductions will be strategic, such as choosing a higherdeductible but buying extra coverage. Some reductions willbe just bad choices. Regardless, when clients reduce their

T

Agencies will not be

so fortunate this time,

and they’ll have to

work even harderfor whatever rate

increase they get.

coverage, always advise them ofthe risks, always document thatit is a client’s choice to reducecoverages and always havethem sign-off on the reductions.

Rate increases may not coverlosses. In past hard markets,agents could sit back withoutwriting any new accounts andstill grow because rate increaseswere so strong. Agents couldeven lose accounts and stillgrow. Rates were increasingenough to cover the lostaccounts. The same likely willnot hold true during this hardmarket. Worse, losses will likelybe higher because agencies’clients may still be going out of

business at a faster pace andothers will be acquired by largercompanies purchasing theirinsurance elsewhere.

________________________________

Since some companiesagreed to appoint everyagency with a license over the last five years and some picky ones only appointed every other agency with a

license, they will now use many methods for

thinning ranks.________________________________

Prepare for changes incarriers’ appetites. Manycarriers quit caring about lossratios over the last five years (I know that is not their officialposition, but these companies’actions clearly spoke louderthan their words), and manycarriers seemed to believe largevolumes were the solution to all their ills. At the same time,some agencies felt the need toobtain as many carriers aspossible to make sure theyalways had the lowest of low rates. As a result, manyagencies today have too many companies, and manycompanies have far too many agencies.

Some carriers are beginning torecognize that a lot of volumewith bad loss ratios means a lotof losses, and we’re alreadyseeing companies thinning their ranks. Since somecompanies agreed to appointevery agency with a license overthe last five years and somepicky ones only appointed everyother agency with a license,they will now use manymethods for thinning ranks.

Most likely, first and foremostwill be loss ratios. Agents thatjoined clusters thinking theywould be protected by volumeprobably bet wrong unless thecluster/aggregator managesloss ratios really well. A secondcriterion will be growth. This iswhy carriers want businessplans. Companies will also belooking for more professionallymanaged agencies. This is

MARKETS

[ 14 ]

At Harford Mutual, we’re committed to being here for our independentagents and policyholders. Accessible. Experienced. Accountable. Responsive. That’s Harford Mutual. That’s what mutual success is all about. Learn more about opportunities for mutual success with Harford Mutualat harfordmutual.com.

another reason they wantbusiness plans.

Next, carriers will look atvolume. $250,000 is likelyinadequate for all but smallregionals. The cost ofmanaging small books is toomuch. But $50,000,000 with ahigh loss ratio is not thesolution either, which is whyvolume in and of itself is notthe first criteria. A fear seemsto exist within some agenciesthat they need more volumethan the companies reallyrequire. Carriers are not likelyto tell agencies that $1 millionpremium growing moderatelywith good loss ratios isadequate. They are alwayshungry for more. But such abook should be adequate forevery rational carrier. I hate to see good agencies chasingthe wrong goals, and I do not believe those agents are the ones companies will eliminate.

Some of the smartest carrierslooking for truly professionallymanaged agencies will addanother criterion. Thesecarriers will look at agencies’ balance sheets. A professionally run agencyhas a quality balance sheet.People that run their agenciesas hobbies for all intents andpurposes are more likely tohave poor balance sheets,especially larger agencies runas hobbies. A serious businessalways takes care of thebalance sheet, and ifcompanies truly want

professionally run agencies,they’ll eliminate agencies andbrokers with bad balancesheets. Those firms can’t growresponsibly, and they may nothave the wherewithal tomanage loss ratios becausethey’ll be cutting too manycorners to stay afloat.

Be cautious of weakcarriers. Generally when theP&C market begins turninghard, more carriers aredowngraded. This was thecase in 2011 as A.M. Bestdowngraded 1.8 carriers forevery carrier it upgraded. Thiswas the first time in manyyears they downgraded morecarriers than they upgraded.

Every time rates increasematerially, which should meanhigher profits, more insurancecompanies’ financial stabilityfalters. Literally billions ofdollars are being bet on higherprofits in a hard market.Investors and companies arewaiting for the right momentto add capacity in anticipationof getting more rate for thesame risk. So if hard marketsbring better profits, why domore companies havefinancial problems?

These weak companies’problems began long beforethe market started turning. Myresearch strongly suggeststheir profitability problems areevident for years before muchdowngrading action is taken.The profitability problems arenot isolated to thesecompanies either. Many

[ 15 ]

the “A” way — Attitude, Assistance, Adaptability

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companies that are notdowngraded are havingproblems too, but they have astronger balance sheet enablingthem to last longer. Lastinglonger is a key strength in this industry.

Historically, weaker companieshave often practiced aggressivereserve reductions to makethemselves appear moreprofitable. This buys time. Someobservers, including WarrenBuffett, have declared these

practices to be accountingshenanigans (to put it nicely).Stronger companies aregenerally less aggressive in theirreserve releases and accounting.

I also am seeing some businessmodels that are often quitesimilar to those used byinsurance companies that havehistorically gone insolvent. Oneexample is the unrated carriermodel. Founders of someunrated carriers do not seem tohave any plans to ever build atruly sustainable company. Thegoal seems to be to build acompany that can be sold beforeit crashes (i.e., the Internetbubble model). Another model isto create a vertically integratedorganization whereby someparts are highly profitable andinsolvency liabilities are limitedso that any losses are containedwithin the insurance companyitself. This leaves the founderswith their profits and theindustry, policyholders, stateguaranty funds and possiblyunsuspecting shareholders withtheir losses. I am not suggestingthe founders are building thesecompanies with malice in mind. I am only looking at theprobabilities.

Both models employ means bywhich someone other than thekey insurance companyexecutives pay the price. Theirmost critical goal is to buildenough mass fast enough thatany problems become someoneelse’s problem. The traditionalmethod of achieving fast mass isto under price or under reserve

MARKETS

[ 16 ]

From the friendly voices of our customer service staff to the personal visits by our territory managers and underwriters to the promptness of our claims adjusters, we are told time and again …

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[ 17 ]

Primary Agent | May 2012

Carrier downgrades:

LEGAL AND E&OCONS ID ER AT IONS

While no statute specifically addresses a producer’s duty tonotify clients of a carrier downgrade, E&O carriers usuallyrecommend it, and clients often expect it. Plus, a clientcontract, producer’s advertisement or agency’s standardprocedures could trigger a duty to alert clients.

IA&B offers resources to help determine when an agent shouldnotify clients, as well as sample letters to do so.

Delaware:www.iabgroup.com/de/ratings#considerations

Maryland:www.iabgroup.com/md/ratings#considerations

Pennsylvania:www.iabgroup.com/pa/ratings#considerations

according to A.M. Best. Of course,a buyer should do their duediligence, and if they don’t, theydeserve the fallout. Of course too,regulators should regulate suchcompanies tightly, but regulatorshave their hands full and oftenwork under conflicting agendas.This makes it easier for thesecompanies to get away with risky models.

Do these companies have anunfair advantage since they are not trying to build a sustainablemodel? Absolutely. If agents try toexplain to insureds that CompanyA with an A+ rating is worth 25percent more than Company Bwith no rating, the agency will losemore often than not, especially ina tough economy. This is especiallythe case if Company B is admitted.

Agents are therefore forced to dobusiness with weak carriers.Writing with weak carriers carriesa price, and agents that recognizethe price can minimize risk andcosts. Again, in a firming market,downgrades will increase, and it isno fun being caught on the wrongside. Here are some stepsproactive agents are taking:

1. Always disclose thecarrier’s rating.

Always disclose whether it isadmitted or nonadmitted. Explainthe importance of both. Explain theguaranteed fund’s limitations ifnecessary. I find that manyproducers do not adequatelyunderstand their state’s fundlimitations. Too many believe thatguaranty funds pay regardless ofthe situation, but that is absolutelynot the case.

Furthermore, some funds arenot known for being quick pays.So while an insured may decideto save 25 percent by buying apolicy from a weak carrier andthink that, worse-case scenario,any claims will be paid by theguaranty fund, that insured maynot be adequately consideringthat the claim may not be paidfor many years.

2. Always read your ownE&O policy.

Some agent E&O policies areclear regarding whether theagency has coverage for writingwith carriers that are do nothave an adequate rating. Someare explicit that the only ratingthey accept is A.M. Best ratings.Some are explicit the companymust also be of adequate size.

3. Know which companiesare weak.

By this, I mean learn whichcompanies are not adequatelyprofitable years before they getdowngraded. Learn whichcompanies have models that aresimilar to insolvent ones thatwent before them. The

information necessary is allpublic. However, this is notsomething many agency ownershave the time to do on theirown. We have a service that hasbeen extremely valuable tomany agencies for years.

4. Have a plan. An agency caught unaware willspend a fortune rolling business,explaining the situation toclients, and possibly incurringE&O claims. They will lose ayear of selling time moving thebook. So minimize the amountof business you place with thesecarriers. Their pricing may betoo low to avoid using them, butthe potential explosion can beminimized. Include in your planwhat the agency will do in theevent the company goes underor severely restricts theirwriting. To which company willyou roll the book? What dealcan you negotiate upfront (if it isgoing to hurt, at least see if youcan make the best of thesituation)? What will you tellyour clients? A little preplanninggoes a long way in thesesituations.

5. Educate your clients nowregarding the changingmarket place, what toexpect in rates andcompany underwritingappetites.

Build the right expectationsearly to minimize the effects of negative news you are likely going to deliver later aspricing and underwriting firmever more.

________________________________

The opportunity forprofessionally run agencies

is great. Keeping clientsinformed, even if the

message is mixed, setsreasonable expectations.Clients with reasonableexpectations are more

likely to remain clients.________________________________

The opportunity forprofessionally run agencies is great. Keeping clientsinformed, even if the message ismixed, sets reasonableexpectations. Clients withreasonable expectations aremore likely to remain clients. Itis not as easy for thecompetitionto drive a wedge.

Smart agencies also willmanage their costs better bysetting expectations because, allelse being equal, they will nothave to work as hard. The effortrequired to save an accountonce a wedge has been drivenis far more expensive thanbuilding a protective barrier

MARKETS

[ 18 ]

from the start. Similarly,working with clients moreclosely to manage their expenseis a great opportunity to proveyour value.

Possibly the greatest opportunitytoday is to take advantage ofyour competition’s weaknesses.Many agents are and will fail tokeep clients apprised of marketconditions. This is especiallytrue of agents losing contracts.These agents will just deliverrate increases with muchempathy and sorrow, hoping theclient just accepts the situationas reality. Use their failure to pryapart their relationship with the

client. Use your great loss ratiosas leverage with companies toobtain better treatment. Useyour professional managementto make the most professionalsubmissions to carriers so theyget first look. This market is theopportunity for professionallymanaged agencies to show theirclients, their companies andtheir prospects the value ofbeing professional. It is yourtime to shine. Make the most of it!

* The author penned this article in late February 2012.

________________________________

Chris Burand wrote this article forIA&B. He is president of Burand &Associates, LLC, an insuranceagency consulting firm. Readers may contact Chris at (719) 485-3868 or by e-mail atchris@burand-associates.com.

NOTE: None of the materials inthis article should be construed asoffering legal advice, and thespecific advice of legal counsel isrecommended before acting onany matter discussed in this article.Regulated individuals/entitiesshould also ensure that theycomply with all applicable laws,rules and regulations.

[ 19 ]

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Primary Agent | May 2012

AGENCY MANAGEMENT

Agency-carriertechnology agreementsWhat every agency principal needs to know

Those same technologicaladvances that streamlineagencies’ workflows cancomplicate them,sometimes limiting criticalaccess to policy data storedon carriers’ websites. Thefollowing pages chronicleone agency exec’sexperience – and her pleafor others to prioritize fairtechnology agreements.

[ 21 ]

Primary Agent | May 2012

We have learned from our own agency’sexperience that agency principals and managersshould be a lot more vigilant about the agency-carrier technology agreements that theiragencies are signing. Moreover, it is extremely

important for agency leaders to bring up these issues andpress for these improvements when they meet with carrierexecutives or participate in agency advisory councils.

Why shifting to the Web necessitates agreementsIt is important to set the stage as to why these agreementshave become a lot more significant to agencies. In today’sbusiness environment, one of the key factors influencing anindependent agency’s financial success – whether the agencyis large or small – is a constant focus on operationalefficiency. Effective use of the carrier’s Web-basedtechnology tools, especially when accessed in real timethrough the agency management system, is an importantway to improve efficiency and increase profitability.

Carriers also are encouraging agencies to rely more andmore on their Web-based tools, which include online ratingand policy issuance, online rating manuals and marketinginformation, billing and claims status inquiries, andelectronic copies of policies and other policy relateddocuments. In fact, more and more carriers are requiringagencies to use these tools because they are no longersending hard copies of policies, no longer providing phonesupport for billing inquiries, or allowing agencies to sendendorsement requests via mail or fax.

In short, both agencies and carriers agree that the use ofcarrier-provided electronic information, whether accessedthrough the agency management system or from the carrier’swebsite, can be very beneficial. And, many agencies havebecome more reliant on this carrier-supplied electronicinformation, pulling the latest information when needed fromthe carrier, rather than storing it in the agency’s system.

At the same time, many of the carriers have required theiragencies to sign an agency-carrier technology agreement, orclick on an electronic acceptance option, in order to haveaccess to the website. Agency principals and managers needto make sure only authorized personnel commit the agencyto such agreements and that the agency leadership has readthese documents closely.

W

Many carriers haverequired their

agencies to sign an agency-carrier technology

agreement, or click on an electronic

acceptance option.Agency principals

and managers need to make sure that agency

leadership has read these documents closely.

When agreement languageraises concernsOne of my greatest concernsis that only a few carriersexplicitly commit to give theagency continuing rights toaccess the electronicinformation upon which theagency is increasingly relying.Almost every agency-carriertechnology agreement I haveread to date, whether it befrom a national carrier orregional carrier, contains aclause that reads somethinglike: “We reserve the right tomodify, limit or eliminate youraccess to the Website/Networkor any Website/Networkfeatures at any time, for anyreason.”

Now you might say, my carrierwould never deny my agencyaccess to the website as longas we have a valid businesscontract in place. If that is thecase, then why does thetechnology contract containsuch a broad provision? And,what rights to continuingaccess will you have, if eitheryou or the carrier decides toterminate the relationship?Most agreements todayterminate the agency’s accessto the carrier website upontermination of the underlyingagency contract. If a carrierterminates your access, howdo you deal with the fact thatyou no longer have papercopies of the declarationspages and policy forms andno longer have access to thatinformation from the carrierelectronically?

You also need to ascertainyour continuing rights toaccess information in agent-of-record letter situations,where you are no longer theagent of record, but need toaccess information relating tothe time period when youwere the agent of record. Thepolicy of some carriers is tocut off continuing access tothe insured’s former agent,even though the agentcontinues to be in goodstanding with the carrier.

______________________________

Only a few carriers

explicitly committo give the agency

continuing rights to

access the electronic

information upon

which the agency is

increasingly relying.

______________________________

What provisions oneagency recommendsThe issues raised in theseagreements are extremelyimportant to our agency, aswe look to become as efficientas possible through the use oftechnology. When the AgentsCouncil for Technologypublished its report,Guidelines for Effective Agent-Carrier Technology

AGENCY MANAGEMENT

[ 22 ]

Guidelines forEffective Agent-Carrier TechnologyAgreements

Agents Council for Technology (ACT)found that too often technologyagreements – where they even exist –do not keep up with the newelectronic relationships being forgedbetween agencies and carriers. Inresponse, ACT crafted Guidelines forEffective Agent-Carrier TechnologyAgreements, which identifies the keyprinciples that should be included intechnology agreements.

Download the report fromwww.independentagent.com/act:Simply select Agency-CarrierTechnology Agreements from theQuick Links column.

Agreements see sidebar on page 22), we found thedocument to be a very usefultool in identifying the priorityissues for our agency to addresswith our carriers, particularly:

1. The agency-carriertechnology contract shouldin no way supersede theprimary agency-carriercontract, especially withrespect to theindemnification provisions.

2. Carriers need to provide theagency full website accessand electronic access topolicy information for atleast seven years, as long asthe primary agency-carriercontract is in force.

3. In the case where theagency-carrier contract isterminated, the agencyneeds to have limited accessto the website for thehistorical policy informationfor seven years.

4. While agencies should havethe obligation to maintainpassword security for theiremployees, carriers shouldhave a parallel obligation tocarry out theirresponsibilities with regardto agency password security.A good example would bethe carrier obligation to resetpasswords for or providenew passwords toauthorized agency staff only.Another would be toimmediately act on agencyrequests to turn off access toparticular employees and tocheck to make sure this

action has been takenpromptly. (This relates tosituations where suchchanges are made by thecarrier and not directly bythe agency administrator.)

All of these items would seem tobe very basic and are consistentwith the carriers’ desire to haveagencies rely on their websiteand electronic information, sothat they can “turn off the policypaper” to their agents….

We urge carriers to “grab theball” and address these agencyconcerns, as a few carriersalready have begun to do. Wealso need the help of everyagency — no matter how largeor small — in articulating theseconcerns to the carriers at everyopportunity. If enough agents doso, we will convince the carriersthat these agreements should beamended to further their largerbusiness objectives to encouragegreater agency usage of theirwebsites and electronictechnology tools.

________________________________

Cyndy Smith contributed thisarticle. She is vice president anddirector of technology at Haylor,Freyer and Coon, Inc., anindependent agency based inSyracuse, N.Y., with 250 employeesin 13 locations. Cyndy also has beeninvolved heavily in several industryinitiatives to improve technologiesand workflows for independentagents and brokers. Sheparticipates actively in ACT, AUGIE,ACORD and the AMS UsersGroup. Cyndy can be reached atcsmith@haylor.com.

Cyndy prepared this article for theAgents Council for Technology(ACT), which is part of theIndependent Insurance Agents &Brokers of America. For moreinformation about ACT, contact JeffYates, ACT’s Executive Director, atjeff.yates@iiaba.net. This articlereflects the views of the author andshould not be construed as anofficial statement by ACT.

[ 23 ]

Primary Agent | May 2012

More tech know

As Bob Dylan once sang, “The times, they are a’changin’.” Technology is advancingat lightening speed, and while the implications for an agency’s operationalefficiency are great, so are the chances that keeping tabs on the latest automationsand trendiest social networks will leave an agency principal with a splittingheadache.

Save the aspirin: IA&B members have access to an online repository of technologyresources. Topics cover everything from the E&O considerations to the marketingopportunities to the security threats of the latest advances.

Simply visit www.iabgroup.com, select Technology from the left-handmenu bar and then choose Other Resources.

Platinum ProfileInsurance Agents & Brokers proudly recognizes Selective Insurance

Company of America as one of its Platinum Partners. IA&B Platinum

Partners dedicate the highest level of sponsorship to our organization.

FEATURED PARTNERSelective Insurance

Company of America

CHIEF EXECUTIVE OFFICERGregory E. Murphy

Chairman, President and CEO

HOME OFFICE LOCATIONBranchville, New Jersey

A.M. BEST RATING A+ (Superior)

In 1926, Selective was started by asmall business owner committed toproviding prompt, fair settlements

and exceptional personal service.Today, Selective’s outstandingperformance continues, and can becredited to people at every level of theorganization who turn individualcreativity, skill, purpose and hard workinto the collective innovation,strategies and energy that characterizeexcellence. Their expertise atdelivering the distinctive combinationof high-touch through strongrelationships and high-tech throughease of seamless automation hascreated a powerful engine forprofitable growth.

The company’s value-added productsand services are offered throughapproximately 1,000 independentagents in 22 Eastern and Midwesternstates. Commercial insurance for smalland medium-sized businesses, lightindustry, and public entities representsabout 82 percent of the company’sinsurance operations.

Selective’s highly regarded field forceis dedicated to servicing andsupporting agents and customers.Living and working in their territoriesprovides Selective’s field-basedemployees with unlimitedopportunities to develop extraordinaryrelationships and to deliver a level ofservice unmatched by competitors.

The 50th largest property and casualtygroup in the U.S., Selective is acustomer-focused, super-regionalcompany providing a broad range ofinsurance and alternative riskmanagement products and services.The company has been rated “A+” (Superior) by A.M. Best for 50 consecutive years.

Selective’s financial stability in themarketplace, coupled with thenimbleness of a regional carrier,provides security for policyholders andthe capacity for profitable growth forthe company and its agents.

“Since our founding 85 yearsago, Selective has remainedcommitted to building strongrelationships with all of ourstakeholders. We value therelationships we have built witha select group of independentagents, and are dedicated tosupporting their successthrough the powerfulcombination of our ‘hightouch’business model and leading-edge technology.”

Gregory E. Murphy, Chairman, President and CEO

WHAT IS IA&BPARTNERS?The IA&B Partners

program gives company

and allied businesses

the opportunity to

demonstrate their

commitment of support

to independent agents

and receive maximum

market exposure. As an

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help you succeed in

the insurance industry.

DO YOU SEEYOUR NAME?To become an IA&B Partner,

choose the sponsorship

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commitment of support.

Contact the Member Sales

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to get started.

Listed below are those companies that strongly support the independent agencysystem and Insurance Agents & Brokers.

Thank you for your continued sponsorship.

PLATINUM LEVELACUITYBerkley Mid-Atlantic GroupDonegal Insurance GroupErie Insurance GroupHarleysville InsuranceHighmark Casualty Insurance CoInsurance Agents & BrokersService Group Inc

MMG Insurance CompanyMillers Mutual GroupMillville Mutual Insurance CoMutual Benefit GroupOhio CasualtyPenn National InsuranceSelective Swiss ReThe Main Street America GroupUtica National Insurance Group

GOLD LEVELProgressive

SILVER LEVELAccess Insurance Company Allied InsuranceAmerican Mining Insurance CoCumberland Insurance GroupFrederick Mutual Insurance CoJuniata Mutual Insurance CoPSBA Insurance TrustThe Philadelphia ContributionshipWestfield Insurance

BRONZE LEVELAegis Security Insurance Co

Agency Insurance Company

AmWINS Program Underwriters Inc

Auto-Owners Insurance Company

Briar Creek Mutual Insurance Company

Builders Insurance Group

Chubb Group of Insurance Companies

Countryway Insurance Company

Encompass Insurance

First General Services

Foremost Insurance Group

Goodville Mutual Casualty Company

Guard Insurance Group

Harford Mutual Insurance Co

Hanover Fire & Casualty Insurance Company

Insurance Alliance of Central PA Inc

Insurance House

Insurance Placement Facility of PA

Keystone Insurers Group Inc

Lebanon Valley Insurance Company

Mercer Insurance Group

Merchants Insurance Group

Mercury Casualty

Penn PRIME Municipal Insurance

Reamstown Mutual Insurance Company

Rockwood Casualty Insurance

State Auto Mutual Insurance Company

TAPCO Underwriters Inc

The Brethren Mutual Insurance Company

The Motorists Insurance Group

The Mutual Service Office Inc

Travelers

Tuscarora Wayne Insurance Company

Zenith Insurance

Primary Agent May 2012

ASSOCIATION AT WORK

Company SatisfactionIndex countdownHave your say in half the time … before time runs out

Time remains to complete the 2012 Company SatisfactionIndex (CSI) survey — in half of the time of years’ past.

[ 27 ]

Primary Agent | May 2012

It has never been easier, or quicker, to provide feedbackon your carriers’ performance. Speak now — via IA&B’sCompany Satisfaction Index (CSI) — or for two years holdyour peace.

IA&B sliced the time commitment in half by alternating thesurvey between personal lines and commercial lines. Firstup? Personal lines for 2012. So without commercial linescarriers to rate, you’ll need just half the time of years’ past toparticipate. The 2012 survey remains open until May 15 forall member-agency staff.

Easy as 1, 2, 3Participation is simple: Jump online. Rate your top personallines carrier. Then rate your second-most-used personal linescarrier. Finally, rate your third.

Gauge your carriers’ performance on a series of statementsusing a four-point scale, where 4 indicates satisfaction and 1 denotes dissatisfaction. Categories include products,pricing and underwriting; policy service and claims;agency/company relationship; and technology.

Worth your timeCompleting the CSI helps carriers to improve theirperformance. And there are tangible benefits to your work — the abilities to compare your carrier relationshipswith your peers’ and to benchmark companies beforeaccepting appointments. Plus, from a global perspective, the results are vital to IA&B’s dialogue with carriers.

IA&B members’ participation has grown substantially sincethe CSI’s 2004 launch. (At its height, over 500 memberagents rated 114 companies.) And for a non-scientific survey,the greater the participation, the more credible the results.

Along with credibility, increased participation also improvescarriers’ reception to the survey. CSI results are showing upin carriers’ marketing materials and agency-visit discussions,and company executives are touting their use forbenchmarking their agent relationships.

So block off a few minutes, grab a cup of coffee and shareyour experiences through the CSI. It’s (half of the) time well spent.

I CSI through amember agent’s eyesWhen Jim Curran’s staff meets with prospects, carrier talk typically ensues.

How does this company’s pricingcompare? How’s the claimsdepartment to deal with? What’s the company’s reputation?

That’s where IA&B’s CompanySatisfaction Index (CSI) comes intoplay. The Curran Financial Group staff explains its rationale and thentouts the survey results as proof.

The CSI is rapidly gaining acceptanceas a gauge of carrier performance.And agency staff, consumers and, ofcourse, companies are benefiting.

“It’s a vehicle to share experiencesthat will be seen by a larger audience and to get corrective action,” says Curran, “and it provides positive feedback to carrierson their programs’ effectiveness.”

TIP!The CSI survey is housed online: Start

now, save your progress and then return when it’s convenient.

Have yoursay by

May 15!

www.iabgroup.com/CSI

Primary Agent | May 2012 TechnologyU P D A T E

As an executive or leader inyour organization, you’remanaging many things: thecompany’s image,numerous projects and atalented group of people.But you’re also managingmany other importantthings, including the

perception others have ofyou and your department,how distracted you andyour team are on a dailybasis and many other thingsyou may not even be awareof. For many people, these“other” things are just partof the job, how things have

always been done and theexpected stressors ofbusiness. But do they haveto be that way?

Let’s start with perception.Why is managingperception important?Because perception is often

WHAT SHOULD TODAY’S MANAGERS REALLY BE MANAGING?

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[ 28 ]

more important than reality. And in fact, your reality will not be a happy one if you’re notmanaging perception.

You’ve likely seen many examples ofhow perception is more importantthan reality. For example, a stockmight be beaten up horribly becauseof the way people view the company,whether that view of the company saccurate or not. So the point is thatperception is something you have toconstantly manage. Whoseperception? Everyone’s – the C-levelexecutives, the employees, thecustomer’s customer and, mostimportantly, your own.

Therefore, ask yourself, “How do Iperceive myself?” Do you perceiveyourself as trying to keep up? Tryingto protect and defend? Trying tointegrate the new? How you perceiveyourself is going to reflect how othersperceive you. So you need to perceiveyourself and everyone in yourdepartment as a major competitiveadvantage and as a major strategicasset for the organization. As long as that’s how you perceive yourselfand your team, that’s how you’ll act, and that’s how others will see you as well.

Plug into your futureEqually important to managingperceptions is managing distractions(a.k.a. change). The fact is that intoday’s marketplace, change iscoming at us fast … and it’s onlygetting faster. That meansorganizations will be facing moreproblems than ever before. Onethings we know for sure is that mostdistractions or changes come from theoutside in – external factors impactthe organization. This causes people

to react, crisis manage and continuallyput out fires. But to be a strategicasset to your company, you can’tsimply be a crisis manager; you alsohave to become an opportunitymanager. The question is, how do youdo that? The answer is to become anopportunity manager and plug intothe future.

To be an opportunitymanager and strategic asset

for your organization,distraction is the

enemy. To provide majornew competitive advantageand to create new products,

markets and services,distraction is the enemy.

To be an opportunity manager andstrategic asset for your organization,distraction is the enemy. To providemajor new competitive advantage andto create new products, markets andservices, distraction is the enemy.Unfortunately, we have never beenmore distracted. Not only is everyonein your organization distracted, but sois everyone in your competitors’organizations. But in a way, this isactually good news, because it meansthere’s a huge competitive advantagein pulling out of that mess ofdistraction. To do so, though, takesleadership and discipline.

Realize that our distraction level hasgotten worse over the years ratherthan better. Why? It used to be thatwe had several different realities. Wehad our home reality with our spouse

and children, and we had our workreality with our co-workers. Often thespouse and kids didn’t know what wespecifically did at work, and all thepeople in our work really didn’t knowmuch detail about our home reality.We also had our leisure friends, orour personal reality. And we belongedto a club or a church group and hadthat reality. Finally, we had ourvacation time reality.

As we went through life, we would go from one reality to the other. Thiswas a good thing psychologicallybecause it allowed us to recharge.Then, when we went from one realityto the other, we were refreshed andmentally sharp. Today, technology has allowed all of those realities tobecome one reality. But before youblame technology for this merging ofrealities, realize it’s not technology’sfault. Technology is neither good nor evil. It’s all about how we use it.We have the choice whether to plug inor unplug. Therefore, to reduce thelevel of distraction in your own life,you need to understand the power ofunplugging on a regular basis.

Unfortunately, most people are afraidto unplug, even when they’re onvacation. They believe somethingmight happen, so they have to bealways connected to work. But thismeans they’re never really onvacation, and when they’re home,they’re not really home; they’realways working. But if your people arealways working, how well are theyfunctioning? The answer: not verywell. They’re certainly not as creativeand innovative as they need to be.And if you’re not unplugging on aregular basis, then you’re not ascreative and innovative as you need to be either.

[ 29 ]

Primary Agent | May 2012

Unplugging leads to better results in allareas of life. Realize that your mind isalways working on a subconscious levelto solve your business problems. Nomatter what you’re doing, yoursubconscious is at work. Have you evernoticed that your best business ideastend to come when you’re working onor doing something else, whetherwalking the dog, woodworking orplaying with your kids? Great ideasoften do not occur when you’re in themidst of trying to come up with one. It’swhen you’re in one of those otherrealities that many business issues getsolved. However, if you never unplug,you develop something called “blur,”when all the realities blend togetherand your mind never gets a chance to rest and recharge.

The good news is that you can be aresponsible employee or executive andstill have a life. But since there are noguidelines on how to do that, you haveto create them for yourself, for yourteam and for your organization.

While you may think thatworking all the time meansyou’re more productive, you have to ask yourself

if that’s really the case.

First, it’s time to stop thinking in termsof just productivity. While you maythink that working all the time meansyou’re more productive, you have toask yourself if that’s really the case.

Maybe you’re not able to be as creative and innovative as you need to be. Maybe you’re not tapping into the fresh perspective thatunplugging yields you.

Next, be disciplined and create strictguidelines for yourself. At a certain timein the evening, close the laptop andturn the phone off. Detail when you’reallowed to work and when you’re not.This may seem extreme at first, but evethough we’re adults, we often act likechildren and need the same rules andguidelines that kids do.

If your kids have an X-Box, aPlaystation, a computer with unlimitedInternet access, and a Facebook andMySpace account, and if they can use

[ 30 ]

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these things whenever they want, theytend to act like the little monkey thatkeeps pushing the button that gives himfood. That’s why parents set rules: “Doyour homework before you play.”“Only one hour of TV after school.”“Turn off the computer at 9 p.m.”Because you want well-rounded kids,you encourage certain behaviors andactivities. You send your kids to sportsand dance lessons, help them learn anew language or how to play aninstrument, and make sure they haveenough time for rest. You know thatyour child will not be well-rounded ifyou let them decide what to do, asthey’ll tend to focus on just a fewthings. Adults are no different. That’swhy you need to come up with your

own guidelines in terms of when toplug in and when to unplug.

So is there a time to be thinkingstrategically, a tie to be mapping outthat next project and a time to focus on innovation? Or are you going to getto those things “someday” becauseyou’re constantly checking emails ortroubleshooting?

Granted, you may not be able tochange everyone else and get them tounplug, but you can start by changingyourself and then grow it outward.Can’t change the world? Then don’t.Can’t change your company? That’s OK.Start with yourself and then bring it toyour team. They’ll bring it to their team,who will bring it to their customers,

who will bring it to another group. Verysoon, you and many others will startrealizing the real benefit of takingcontrol of your life, unplugging fromwork and harnessing the creativity andinnovation you never knew you had.

Your future awaitsAt the end of the day, being able tomanage perceptions and distractions isjust as important as being able tomanage people and projects. When youfocus on managing what’s important,you’ll open yourself up to a whole newworld of possibilities. So don’t wait foryour future to unfold randomly, only toend up in a place you don’t want to be.Instead, invest the time into yourselfand watch your success grow.

[ 31 ]

HANOVER FIRE & CASUALTY serves the working families of our region by offering the insurance they need. No games. No tricks. Just good, solid insurance available to those who really need it. We settle claims promptly and fairly, and we manage to hold our rates. And the fact is, for nearly 100 years, our customers return and renew with us; well, that just drives the point home, doesn’t it?

Would you like to be a Hanover agent? For more information call 800-919-FIRE or visit www.hanoverfire.com. Learn more about our portfolio of products, our easy-to-use agent portal, and our com-petitive commission structure. Call today!

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[ 32 ]

Hole-in-one insurance isn’t just for

contests anymore. Some golf

clubs and golfers — and even

some non-stateside insurers — are

taking the terminology literally.

It’s tradition for a golfer who hits a hole in one to

buy a round of drinks — often for everyone at the golf club’s

bar. So say hello to hole-in-one insurance for holes in one …

and their obligatory celebration.

At golf clubs across the country, hole-in-one “insurance”

is offered to cover the bar tab. Not actually insurance,

the U.S. practice typically involves club members paying

into a fund that pays out for drinks if they hit a hole in one

on the club’s grounds.

In Europe, however, some insurers offer golf insurance

policies that cover “theft or damage to equipment and

reimbursement of club fees you can’t pay due to sickness

or accident,” as well as $300 to $450 for hole-in-one-related

bar tab expenses.

Source: The New York Times

----------------------------------------------------------------———————-------The Last & Least column is dedicated to the industry’s oddities —from creative claims and kooky coverages, to (tasteful) jokes andstrange stories. Submit yours to iab@iabgroup.com, subject line: Last & Least. The editor will happily protect sources’ anonymity upon request.

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