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       Big “I” National News

P & C   T R E N D S
Customer Service, Anyone?
Surveys find industry not always offering service with a smile.

For an industry that considers itself customer-focused, insurance companies have a lot of ground to make up. According to two new surveys, the industry is sorely lacking in the customer service department.

The insurance industry makes a dismal showing in the Customer Respect Group’s "Second Quarter 2006 Online Customer Respect Study of Insurance Firms." In fact, of the 12 industries the Customer Service Group annually analyzes, insurance ranked dead last in overall results and in every subcategory.

In the study, insurance companies’ average overall score was 5.1, while the average score for all companies was 6.7. How did each segment of the industry fare? P-C companies’ average score was 5.3, l-h companies’ was 5.2 and health-care related companies’ was 4.8.

Some companies are getting the job done right. The study ranks the following as the 10-best insurance companies when it comes to online customer service:

1. Liberty Mutual Insurance Group
2. AIG
3. The Progressive Corporation
4. AFLAC
5. GEICO
6. Kaiser Permanente
7. Aetna
8. Farmers Insurance Group
9. Nationwide
10. The Principal Financial Group
11. The Allstate Corporation

One glaring way to boost online customer satisfaction is to respond promptly to online inquiries. According to the study, insurance companies completely ignored 27% of e-mail inquiries. That’s more than twice the average of all studied industries.

Backing up the Customer Respect Group’s findings is a new study from PricewaterhouseCoopers that finds all financial service companies are lacking in customer service. Companies say that customer service is important, but few put their money where their mouths are.

According to "Winning the Battle for Growth: Building the Customer-Centric Financial Institution," financial services companies need to readjust their priorities to better understand clients’ needs. Companies need to improve technology, effectively use client information and invest in top-notch staff members who interact with clients.

"Although the majority of respondents said that the quality of customer service and staff is more important to revenue growth than product performance, less than a quarter rated their customer-facing staff highly," the report says. "Nearly half (48%) said they invest most in products and services training to improve staff performance---more than three times the number who cited behavioral programs to improve customer service."

Jennifer Sikorski (jennifer.sikorski@iiaba.net) is IA’s associate editor.

O N   T H E   H I L L
Big “I” Supports Surplus-Lines Regulation Bill
New legislation considered important first step toward comprehensive reform.

The Big "I" is coming out in strong support of a bipartisan surplus lines and reinsurance regulatory reform bill introduced Monday by Rep. Ginny Brown-Waite (R-Fla.) and Rep. Dennis Moore (D-Kan.) and supported by Insurance Subcommittee Chairman Richard Baker (R-La.)

The legislation, the Nonadmitted and Reinsurance Reform Act, will create a uniform system of premium tax allocation and collection for surplus lines; provide for regulatory deference to the policyholder’s home state for the nonadmitted market; adopt the National Association of Insurance Commissioners (NAIC) nonadmitted insurance model act on a national basis; create streamlined access to the non-admitted/surplus market for sophisticated commercial purchasers; and rely on the home state for reinsurance solvency oversight while prohibiting extra-territorial application of state law.

"This legislation will improve surplus-lines tax remittance and surplus lines broker licensing, both issues of concern to many of our members," says Thomas Minkler, chairman of the Big "I" Government Affairs Committee and president of the Clark-Mortenson Agency in Keene, N.H. "Independent insurance agents and brokers in every state are truly pleased that headway is being made on these important reforms. Surplus-lines regulatory reform is a good initial step towards comprehensive reform of the state-based regulatory system, and we will definitely come out strong to support this legislation."

"The introduction of this legislation is a tremendous first step," says Big "I" CEO Robert A. Rusbuldt. "It will help modernize and improve state-based insurance regulation and facilitate needed reforms that will be good for independent agents and brokers, and consumers as well."

The bill has an impressive number of cosponsors from both parties, and the Big "I" hopes it will only be the first step toward comprehensive, state-based regulatory reform.

"We will continue to strongly advocate for other improvements to the state regulatory system, such as agent licensing reform, and we look forward to working with members of the House Financial Services Committee as they continue work on state-based reforms," says Charles E. Symington Jr., Big "I" senior vice president for government affairs and federal relations.

Cliston Brown (cliston.brown@iiaba.net) is Big "I" director of public affairs/government relations.

O N   T H E   H I L L
Insurance Antitrust Exemption Still Important to Policyholders
In Senate Judiciary Committee testimony, Big “I” cites “little reason” for wholesale changes.

The Big "I" submitted testimony Tuesday before the Senate Judiciary Committee in support of retaining the McCarran-Ferguson antitrust exemption for the business of insurance, arguing that repeal of the exemption could have negative implications for insurance purchasers.

"We are very concerned that repeal could reduce competition, thereby increasing the cost of insurance for consumers," says Big "I" CEO Robert A. Rusbuldt. "Such a move also could make certain high-risk coverages less available to policyholders because the possibility of antitrust litigation could make insurers less willing to cooperate on efficiency-enhancing activities."

In its testimony, the Big "I" argued that the financial condition and state of competition and consumer choice in today’s insurance marketplace are quite high, and that direct insurance supervision and law enforcement, in conjunction with the qualified application of federal antitrust law, has served both the industry and consumers well. It urged the committee, at a minimum, to await the report of the Antitrust Modernization Commission, established by Congress less than two years ago to study a variety of antitrust issues, including the multiplicity of exemptions and privileges currently existing.

"There is little reason or evidence that wholesale changes to the existing antitrust system are necessary or desirable," says Charles E. Symington Jr., Big "I" senior vice president for government affairs and federal relations. "We would urge the Senate Judiciary Committee to think very hard and deliberately before taking any action, and at the very least to wait for the report of the Antitrust Modernization Commission. We truly appreciate the committee’s consideration of our viewpoint on this issue."

Cliston Brown (cliston.brown@iiaba.net) is Big "I" director of public affairs/government relations.

L H   T R E N D S
Procrastination-Free Retirement Planning

A recent study from the Center for Retirement Research indicates that in 2004, 43% of working households were in danger of having too little income to fund their retirement. While this large number of Americans who are unprepared for a financially secure retirement is troubling, there could be even bigger problems ahead. Kathy Chu of USA Today comments that the study, "… probably understates the proportion of retirees at risk. Its projections assume that people retire at age 65, cash in on their home equity through a ‘reverse mortgage’ and exchange their assets for a stream of income by buying an immediate annuity."

At this point, media outlets have reported so much on the looming retirement crisis that the public may become tone deaf. What are the implications for independent agents? The answer: There is a reason why basic training involves a drill instructor. The difference between merely recognizing a problem and doing something about it is discipline. Most people are disciplined in some aspects of their lives but need assistance in others.

Independent agents cannot and should not make decisions for their customers. However, by listening to a customer’s objectives, devising a solution and then periodically meeting with the customer to reinforce and adjust the plan, agents provide an invaluable service. For example, helping a customer implement a retirement plan for his business also helps him lower his current income tax burden, build assets outside the business and retain key employees.

Has a customer ever said, "I’m glad that we finally did that, but why didn’t I do it five years ago?" It is not just the customer that can be the procrastinator. Have you ever put off discussing a new product idea that might be a good fit for a customer? Perhaps you wanted to broach the idea but felt you needed time to learn more about the product’s features. Or, maybe the uncompleted paperwork for an appointment with the carrier is still sitting on the corner of your desk.

Take a moment to talk to customers about their needs and how a new product---long-term care insurance, an inflation-indexed immediate annuity, joint and survivor life insurance, etc.---can help accomplish their objectives. Agents are implementers. Having to write a check is not the reason that most people don’t buy. The real culprit is procrastination; it is easy to postpone a discussion, avoid completing the paperwork or put off providing a blood test. Sometimes it takes a serious illness, accident or premature death of a close friend or relative to jolt us into the reality that we are not immortal.

When it comes to retirement planning, time is of the utmost importance. It may not be easy to convince clients to tone down their purchase of a new car or an exotic vacation in favor of putting more into their 401(k) plans or a deferred annuity may not be easy, but there is no better feeling than doing the right thing and having the discipline to stay the course. Agents can be the extra reinforcement that people need.

Dave Evans (dave.evans@iiaba.net) is a certified financial planner and    IA l-h contributing editor.

A G E N C Y   M A N A G E M E N T
14 Tips for Calming Upset Customers

Upset customers can be unnerving. But with the right attitude and techniques, you can turn many of them into satisfied, loyal customers. It's not always easy, but it’s worth it.

What’s the best way to handle stressful customer encounters? Here are 14 tips that you can help soothe upset customers:

1. Don't take upset customers’ rantings and ravings personally. Don’t get emotionally hooked. When you let them push your buttons, you lose. When you react emotionally with anger, sarcasm or tears, you can’t respond rationally. An upset customer wants to upset you because he thinks you'll give him what he wants just to get rid of him.

2. Make it a game or challenge to see how many upset customers you can turn around. See if you can get them to be reasonable.

3. Look for the "gifts" upset customers offer you. These gifts are what they can teach you about dealing with ugly human behavior. The better you deal with them, the fewer upset people you’ll have in your life. They’ll see through your body language and composure that you are confident you can find a solution without getting rattled.

4. Understand that obnoxious customers are often embarrassed because they made a mistake and want to blame it on you.

5. Respond by being reasonable, firm, pleasant, mature and professional to show that you’re going to do what you think is right no matter how obnoxious they become. They think that being rude is the only way to get action.

6. Don’t give away the store to shut someone up. That rewards bad behavior and teaches the customer---and others---that acting belligerently is the way to get what you want.

7. Remind yourself that this abusive person must really have problems if this is how he treats others. He doesn’t respect himself, so he doesn't show respect for others. Unlike you, he doesn’t know how to get people to do what you want---happily.

8. Listen fully---don't interrupt. If you do, it will escalate her anger. Take notes, looking up often to maintain eye contact. Assume body language that shows you’re interested and concerned.

9. Have a respectful tone, even though you don’t respect his behavior. Have a calm but concerned tone of voice. Don’t get distracted.

10. Remove the upset customer from the main customer area, if possible. She rants and raves to get attention, knowing that many people will give in to shut her up quickly.

11. Let him cool off when on the phone by saying that you need to research the situation and possible solutions, and ask if you may call him back. Then do so at the appointed time. He probably will have calmed down by the time you call him back.

12. Talk about what you can do, not what you can’t do. Put it positively. Don’t talk about "policy" because that will anger her more.

13. Use the broken record technique: firmly, yet politely, repeat what you can do for him.

14. Ignore her impoliteness and cursing. She’s lashing out at your organization, even though she may say "You’re incompetent" with various phrasings. If you allow the cursing to offend you, you’ve lost your objectivity and control, and she’s won. Edit her comments in your head so you can make sense of her words without getting upset. For example, a customer may say: "You're a fool. Why did you do this wrong? Who would ever hire an incompetent worker like you?" Translate that into: "She’s really upset. Something is wrong. What can I do to help set it right?"

Remember, you can’t please all people. Do the best you can, but there are some customers your agency can do better without. It is management’s responsibility to determine if it should encourage the customer to utilize someone else’s services. Upset customers can be unnerving, but with the right attitude and technique, you can turn their attitude around.

For more information, click here.

Rebecca Morgan (rebecca@RebeccaMorgan.com) is a Virtual University faculty member, speaker and author.