RiskProNet News

 

How to Achieve Personal Lines Revenue Goals

Step-by-step processes for determining how many new clients are needed to maintain or increase revenue were shared by members of the Personal Lines Practice Group at this month’s teleconference.

Practice Group Chair George Pester of JKJ outlined questions to consider:

Step 1. What was last year’s revenue?

  • Determine last year’s revenue. Then apply your historical retention rate with any adjustments based on current conditions either positive or negative.
  • Make an assumption on rate and exposure base increases.
  • Determine your revenue goals.
  • Calculate the difference between the anticipated revenue and revenue goals.

Step 2. Set your monthly goals

  • Determine the total written premium and average commission needed to close the gap in your revenue goal.
  • Divide the goal by the average account premium to determine the number of new accounts needed.
  • Determine that number by 12 to find the number of new accounts needed each month.

Define Ideal Client

It’s helpful to sit down with the team to determine the ideal client, Pester said. His ideal client meets the following description:

  • Client Goals: Wants appropriate coverage at a fair premium. Wants a collaborative, consultative relationship. Not a transactional purchaser of products and services. Values a personal relationship with insurance representatives at all times.
  • Personal Challenges/Concerns: Protecting wealth accumulated over a lifetime. Valuing good service even if due to a bad claims experience because she was with the wrong insurance company. Coverage meets exposures. Risk management services. Competitive premium.
  • Demographic:
    • Established in job and career.
    • Average or above income.
    • Understands the need and value of insurance.
    • Habitation: Home, condo, co-op owner. Possibly has vacation home and “toys” such as sports cars or boats.
    • Location: Stable or growing community.
    • Story: Married with children. Active board member or involvement with community. Volunteering and giving back to her local community is important.

Talking to carriers about achieving mutual goals for the coming year also is important. Some carriers, however, expect a minimum amount of premium and no longer offer bonuses for exceeding goals. “Some expect growth rates from us that they aren’t even achieving themselves.”

Another agency looks at the attrition rate in three-year cycles, as well as each producer’s projected new business. “We plan for achieving 75 percent of the goal to be cautious.”

Identify At-Risk Accounts

One agency asks producers to identify the 20 accounts that are most likely to be in jeopardy, and discuss how to preserve them. A typical issue is clients who are moving into assisted living. “We make every effort to explain that we can continue serving them almost anywhere in the country.”

Direct Writers

If competition with direct writers is an issue, be sure to review coverage for uninsured and under-insured motorists. This is an area where large claims occur, and direct writers are usually not competitive or as good as assessing the needs.

Agency Structure

It helps to have a person dedicated to new business. Some agencies have found it is easier to train a college recruit with no knowledge than to train someone with limited insurance knowledge and who may find it hard to overcome outdated habits.

 

RPN Technology Group Looks at Proactive Data Protection

Dual-factor authentication using personal cell phones is an increasingly popular and effective data security system, Duo Security’s Nick Padula told the IT Practice Group at its teleconference this month.

Padula was introduced by Practice Group Chair Keith Oufnac of Eustis Insurance & Benefits.

If security systems are complicated, too many people fail to use them, both Padula and Oufnac agreed. Duo’s system is easy, Oufnac said, and he and Padula described how the dual-factor process works.

Dual-factor authentication consists of “something you know and something you have.”

A bankcard is the simplest example. You have the bankcard in your possession and you know your personal identification number.

People used to be asked to carry key fobs or other physical items, in addition to remembering passwords, to access corporate data. It is easy to forget a key fob, but people usually remember to bring cell phones with them. With Duo’s system, a person logs into a program, receives a message on a cell phone and can press any key on the phone to confirm his identity.

The Duo system not only verifies users but also checks the security or “hygiene” of the devices from which they are accessing data, Padula said. Services also include checking devices in use by a client.

This is important, he said, citing the results of a recent Verizon study of security breaches. Verizon found that 95 percent of security breaches involved compromised end user credentials, and 75 percent involved compromised devices.

Duo Security was founded in 2009 and is a privately held company backed by Google Ventures and True Ventures. Its customers include global Fortune 500 enterprises like Bechtel, Thomson-Reuters and Toyota, as well as small and mid-sized companies.

Additional information: InfoWorld: “Annual Verizon security report says sloppiness causes most data breaches”

 

 

This is a Test: Tell Him I’ll Be Late

“Send an email to Mr. Major Client and tell him I’m going to be 15 minutes late. Then follow it up with a phone call, please.”

Assess this assignment in light of these questions: Does the email make sense? Is the spelling and grammar correct? Is it friendly?

The task could be an appropriate test for a receptionist, although not for a janitor. This and other legalities of pre-employment tests were among the topics discussed at the recent joint teleconference of the Human Resources and Commercial Lines Practice Groups.

Other comments included the following:

  • “We use Omnia personality profiles. We have submitted all our job descriptions to Omnia, and they have built tests assessing specific personality traits for each job.”
  • “Our second interview is technical, and managers use specific templates. We ask applicants, for example, if they have handled a construction book and then ask what they did in a specific situation. We also take a deliverable from a particular job and scrub it is so there is no client-specific information. We ask applicants to review the situation and tell us what they would do. Every finalist gets the exact same test.”
  • “Tests are legal as long as they are specifically job-related and in line with the minimum qualifications.”
  • “To be sure tests are valid, we have the incumbents take them and give us feedback. Sometimes they tell us the questions don’t make sense or they involve work that they don’t do on a daily basis.”
  • “We want people who can follow a career path to future promotions, but we also have to balance it with reality. We can tell applicants that if they have career expectations, these are the additional skills they will need to succeed.”
  • “Tests should be a data point, not pass-fail.”

An earlier blog post from the teleconference discusses considerations in setting salaries.

 

Talk About Salary Expectations Early

Talk about salary expectations early in conversations with prospective employees. If the gap is too, it’s a waste of time to pursue discussions. If expectations are close, then it’s time to balance recruiting new employees with being fair to existing long-term employees.

Exactly how to do this, of course, is the challenge. Following are comments from the recent joint teleconference of the Commercial Lines and Human Resources Practice Groups. Accurate pre-employment tests also were a focus, and we’ll discuss them in a future article.

  • “We basically look at our wage band for a position. If someone is coming in from outside, we look at how many years of experience they have and whether they have special skills that would qualify for extra payment.”
  • “Consider a special market analysis if you need to hire someone in the middle of the year.”
  • “We brought in a consultant to go through every single job and write a description. We also look at the percentile for each person in terms of wages, taking into consideration education, experience and any special designations.”
  • “Salaries in our geographic area are much higher than when we were recruiting five years ago, and it’s becoming a problem. If we pay new employees more than we pay our loyal long-term employees, we become vulnerable to having them stolen by our competitors.”
  • “We focus on total compensation, and always look at benefits.”
  • “We stress that we want people who are looking for a career with us, not bouncing from job to job to increase salaries every few years.”
  • “Start conversations about salary early. We don’t want to find out that someone is making double what we are willing to pay. If we’re close, we focus on what is great about our agency. Some of our competitors expect employees to travel 80 percent of the time and/or work nights and weekends. We try to have the right-size staff so our employees don’t have to sacrifice every single weekend. We want people who are satisfied without getting the ‘best’ salary as long as our salaries are competitive and they don’t have to travel or work weekends frequently.”
  • “Build bridges with applicants. We’ve hired some people who were not the right fit for the initial position for which they applied. We work to build relationships and we’ve hired some of them down the road. People appreciate honesty. We’ve had a couple of people choose us even though the compensation was less but we were honest and talked about career paths.”

Surveys with valid information applicable to local markets can be difficult to find. It’s “frustrating” that the “Big I” is no longer doing a survey, one practice group member said. Another RPNI member does its own salary survey, drawing on both local and national market information.

RiskProNet members have used the following sources for salary information:

Determining Internal Raises

  • “Our internal raises are merit-based. We also look at the size of the book and its complexity. If you have the smallest book in the agency, don’t expect to be at the top of the salary range. We are working with department heads to formalize this process.”
  • “When it come to annual increases, our board of directors sets a percentage, usually between 0 and 5 percent of the overall budget. Supervisors and managers grade their staff members to determine what kind of salary increase they will get, based on their individual performances.”
  • “As we interview people, we keep a spreadsheet of the salaries of those we don’t hire. This helps determine what our competitors are paying locally.”
  • “Our annual reviews tell employees whether they are below target, on target or above target. If they are below target, they are not eligible for a salary increase and go on a performance-improvement plan. They get a 2-3 percent increase if they are on target and a bit more if they are above target.”

A future post from the teleconference will focus on pre-employment tests.

 

Innovative Ideas for Generating Personal Lines Referrals

Suppose you could send a personalized mailing to prospective clients, using the name of a neighbor as a reference! Johnson Kendall Johnson is doing exactly that, and this was among many innovative approaches to referral marketing discussed at this month’s Personal Lines teleconference.

JKJ asks clients’ permission to use their names as references. The agency then uses reverse directories to obtain lists of neighbors.

Asking clients for referrals is most effective when you can identify the types of prospects you want, Johnson Kendall Johnson’s George Pester told the group. Collectors are particularly good prospects for example.

If a client has a valuable collection of anything from jewelry to automobiles, it’s effective to ask if they know other collectors who may be interested in comparable insurance products.

“When we get referrals, we have prospects who have the same mindset as we do,” one person said. “Our value proposition is to focus on providing protection rather than price. We spend far more time on risk assessment than in writing proposals and quotes.” 

Referrals from Commercial Lines Department

One RPNI member agency requires that a personal lines representative go to 60 percent of the commercial lines meetings with clients. “Even if you’re not part of the meeting, you get to know the person. Usually they have a question for you before the meeting is over.”

One agency gives 25 percent of the first-year commission to commercial lines account representatives who generate personal lines referrals. “Everyone know someone with a home or a car.”

Be sure commercial lines producers are aware of the quality service offered by the personal lines teams. “Some producers are reluctant to refer clients to us in case something goes wrong. When they do, we get the account nine times out of ten, and our prices are usually more competitive.”

Aftermath of natural disasters

When clients thank you for exceptional service, this is a great time to ask for a referral. In areas recently devastated by hurricanes and fires, consider asking for referrals from clients who have had good claims experiences. One teleconference member said she just received the “nicest email I have ever had” after helping a client get the most favorable claim settlement.

These were among the other suggestions at the teleconference:

More Ideas

  • Outings and seminars, especially on topics other than insurance, are a chance to network with people and “develop the kind of synergy and friendship where referrals flow.” Partnering with a referral source, such as an investment manager, can be an ideal way to develop networks.
  • Be sure social media has a link where people can refer a friend.
  • Send handwritten notes rather than emails as thank-yous.
  • Consider seminars for associations. For example, a seminar in an area with historic homes can focus on the special needs of owners of historic buildings.
  • Beware of gift cards and rebates. Is this the right image for your agency?
  • Have special training sessions for customer service staff on how to ask for referrals.
  • Develop relationships with wealth management firms. Some RPNI members have found this to be effective, while others find that investment managers are overrun with requests from brokers.
  • Presentations can be turned into online webinars. Even if In-person attendance is low, the recorded webinar that follows have been successful in attracting attention on the web.
  • The “sharing trend,” focusing on insurance issues for sharing homes, cars and ownership of recreation vehicles, is a good topic for today’s economy.

“We have the highest closing rate from referrals, no matter where they come from,” Pester said. “The referral is trusted and comes with the good wishes of the person who referred you. We all need to be sure we follow a systematic approach to getting referrals.”

 

Workforce Management a Key Function of HR

Human resource managers discussed the importance of workforce analysis as part of the management process and the results can be an eye opener. Most agencies had not conducted an analysis, but all RiskProNet members on a Human Resources Practice Group teleconference this year agreed that the aging workforce is a major concern.

Here are some of the comments:

“I once thought that replacement planning was only for leadership, but I’ve realized that we need to recruit and develop employees for all roles through the agency.”

“We have incentives for retiring producers to train junior producers to take over their books. Producers get a reduced commission for five years after they leave, and their replacements have established books of business.”

“The tight job market means we need to be more flexible about requirements. If we used to require five years of experience, we now may consider a strong candidate with three to four years.”

“In terms of recruiting new employees, I used to pass over people who moved every year or two. Now I asked them questions about why they moved and what would it take to persuade them to say in a job longer. We are transparent about career progression and future opportunities and salary.”

“When we recruit in colleges, we look not only at insurance majors but also at sales, marketing and finance degrees.”

“It takes three to six years to train employees for the next step on the career ladder. We identify the needed skills and provide training.”

“The Invest program is a way to reach out to high school students to interest them in insurance at an early age.”

 

 

Insurance’s Biggest Disruptor: Blockchain Technology

Blockchain digital record-keeping technology may be today’s biggest disruptor in the insurance arena, David Princeton, P&C claim lead at M3 Insurance told this month’s Construction Practice Group teleconference.

Blockchain technology — adopted by organizations ranging from Nasdaq to Walmart – allows for the exchange of items of value and is essentially designed to cut out the middleman, he said. It can be used, for example, on claims for loss of business income. The new technology can review past financial statements, and make calculations that cannot be edited.

Blockchain technology is among the factors that will make people look at service rather than price when they select carrier partners. RPNI members will face the challenge of providing service even when delivering a difficult message, he added.

With blockchain data and various forms of artificial intelligence providing answers to many questions (See earlier blog), brokers will be expected to answer more complex questions, he continued. “I get an email almost every minute asking for strategic guidance on a complex situation. If I don’t get back to the client until the next day, I’ve already failed him.”

Artificial intelligence can be helpful here, Princeton said, by reading incoming email and prioritizing it according to parameters assigned by the agency.

Third party claims administrators

Third party claims administrators are most effective in the workers comp arena, as it is difficult for smaller carriers to have the expertise and staff needed to provide good service in all states, Princeton said in answer to a question.

In other areas of insurance, third party vendors are less than ideal. “We want to control the claims and differentiate ourselves,” he said. “When you use third-party vendors, you lose ownership of your brand.”

Additional reading

Inc. Magazine: Blockchain Technology Is Set to Disrupt Every Industry

Business Insider: IBM wants to use the technology that underlies bitcoin to help prevent major foodborne outbreaks like salmonella

 

‘Drones & Camera Phones Replacing Adjustors’

Camera phones and drones may replace human insurance adjustors over the next decade — and 3D modeling may reduce the need for expert witnesses. These were among the predictions from David Princeton, P&C claim lead at M3 Insurance at this month’s Construction Practice Group teleconference.

One carrier, he told the group, is piloting Facebook messenger as a way to handle personal lines claims quickly. Callers receive a push notification through Facebook messenger that gives them access to a camera. They scan the camera over damaged property, and artificial intelligence compiles an estimate in the background. Carriers can fund the claim instantly through PayPal or Apple Pay.

“Clients get instant gratification,” Princeton said, “but the broker is losing an opportunity to create customer satisfaction.

“This kind of technology is here to stay,” he added. “I know one claims rep for a large national carrier who was told to expect claims to be completely automated within 15 years. He himself already has a pilot’s license to operate a drone to survey damaged property.”

Claims professionals also are turning to 3-D printing and modeling. Princeton discussed one case where 3D modeling showed that a person who suffered a spinal injury previously had a degenerative condition. The initial $2.5 million claim was settled for $75,000. “There was no need to rely on blurred images and a witness on a stand,” Princeton said.

“These changes mean that we need to reorganize our value proposition now,” he told the group. “Technology like this will be commonplace in the next few years. We will need more advocacy professionals rather than administrative professionals.”

For a RiskProNet white paper on drones, contact Executive Director Gary Normington.

Next blog: Learn how blockchain technology is disrupting industries.

 

As Marijuana Shops Outnumber Coffee Houses, What Should Company Policies Be?

Businesses are so concerned about marijuana that the San Francisco Business Times has assigned a reporter to the “cannabis” beat.

Consider the above, plus other facts, as your clients develop regulations about the use of marijuana by employees:

  • In Denver, where marijuana is legal, there are more medical marijuana shops than there are Starbucks.
  • Use of marijuana is growing more rapidly among people over 50 than among younger age groups.
  • Twenty-nine states have medical marijuana laws, and eight states plus the District of Columbia allow recreational use. More are expected to follow suit.

Moody Insurance Agency, based in Colorado where medical and recreational marijuana is legal, presented an excellent seminar on the topic earlier this year. Here are some considerations:

Conflicts between local and federal law

  • Marijuana is still illegal under federal law, and federal law does not require employers to accommodate medical marijuana use. State laws and privacy issues, however, can be considerations.
  • Federal law requires organizations with federal contracts of more than $100,000 and all agencies with federal grants of any value to provide a drug-free workplace.
  • U. S. Department of Transportation regulations state that marijuana use is unacceptable for safety-sensitive positions, including pilots, bus and truck drivers, and armed security personnel.
  • OSHA gives employer a “general duty” to maintain safe working conditions.
  • At the same time, OSHA’s “anti-retaliation standard” prohibits blanket drug and alcohol testing.
  • Some state and local governments forbid workplace testing unless it is required by state and federal regulations.
  • In states where marijuana is legal, prohibiting use when an employee is off-duty is problematical. Litigation is pending. In Colorado, state law prohibits employers from firing employees for use of marijuana.

If a company uses drug-testing

  • A urine test can be used only to determine whether someone has used marijuana in the past – as opposed to whether the person is currently impaired. Urine tests can give positive results as long as two weeks after marijuana use.
  • A blood test is the only reliable test for whether someone may be impaired by marijuana. The typical standard is 5 nanograms per milliliter of blood; however, there is some disagreement on the appropriate limit. Each test costs about $300.
  • It is illegal to test people for marijuana before making a job offer. It is, however, legal to make an offer contingent on passing a drug test, including use of marijuana.
  • Blanket policies requiring employees to submit to a drug and alcohol test if they are involved in a work-related accident are illegal.
  • Random drug testing is legal if it is truly random. The Supreme Court ruled in favor of company that dismissed a worker for using medical marijuana because he had been advised there would be random drug testing.
  • Testing also is allowed if there is a specific reason to believe that an employee is impaired by the use of marijuana or other drugs. In order to require a test, three people trained in substance abuse recognition must agree in advance that there is probable cause for the test.
  • A clear policy on when marijuana use is allowed and how to evaluate for impairment must be widely distributed and carefully explained to all workers. It is insufficient to ask a worker to sign a statement that he has read the employee handbook.

 

Phone Calls Out, Text Messages and Postcards In

Postcards are effective. Texts are popular. Email continues to be an excellent way to communicate with clients. But when it comes to phone calls, 84 percent of clients would prefer their insurance agents choose another method.

Phone calls are intrusive, and calls usually go to voicemail. People want information, but on their own time – which is often weekends and after business hours for personal lines clients.

These are the statistics compiled by Agency Revolution, and the consulting firm’s David Morton shared them at this month’s Personal Lines teleconference. Morton himself is the son of an independent broker. Agency Revolution founder Michael Jans worked in the insurance business for a number of years.

“Studies show that 86 percent of consumers are dissatisfied with communication from their insurance providers,” Morton said. “This is a daunting statistic, but it presents an opportunity.”

People want to hear from their agents, but want personalized communications rather than generic information.

Almost every agency says it differentiates itself from others because of personal service, Morton noted. Yet most clients never hear from an agency unless they initiate the contact.

“If you actually reach out to people at renewal time, you’re setting yourself apart from the competition,” Morton said.

Communications should focus on three key messages:

  1. We are looking at your policy.
  2. We care about your situation.
  3. You have choices.

A Facebook survey, he noted, showed that the most common reason for changing insurance providers was a rate increase without an explanation.

Morton, as well as RiskProNet members on the teleconference, suggested setting up individual communications plans as each new client is onboarded. High-net worth clients often have a personal risk management contact who should receive some or all of the communications.

“Find out what the frustrations were that led them to switch to your agency,” one member suggested.

Among the other suggestions and comments were these:

  • Text messages are a good way to communicate specific information requested by clients. Ninety-nine percent of text messages are opened, compared to 50 percent of emails.
  • As an incentive for referrals, a donation to charity may be more effective than gift cards.
  • Postcards are coming back into style, particularly as direct mail often goes unopened.
  • Contact by mail may be important for E&O reasons.

Additional information about marketing campaigns is available from Morton. He can be reached at dmorton@agencyrevolution.com.