T H U R S D A Y ,  J U L Y   3 1 ,  2 0 0 8 

Big “I” National News

Tech Updates
The Allure of Technology
Attracting a new generation of workers to the industry means upping the technology ante. 

As more and more baby boomers near retirement, many small business owners are scrambling to find capable, competent replacements to take the reins of their companies. Independent insurance agency owners are no different. Agency perpetuation is a common issue for owners throughout the country, one that doesn’t always have an easy solution --- but there may be hope on the horizon as a new generation enters the workforce.

It’s estimated that 80 million people nationwide were born between 1981 and 2000. Known as the millennial generation, these newly christened members of the workforce may be the saving grace of the industry, but they will come with a price --- technology.

According to the “Millennials in Insurance Survey 2008” from Insurity and Microsoft Corp., millennials use a variety of technology tools in their personal lives and want these incorporated into their workplace. The survey found that of those queried 71% use instant messaging, 77% use social networking sites, such as www.myspace.com or www.linkedin.com, and 59% use wikis on a daily basis.

“Millenials have been marinated in digital technology almost since birth,” says Rob Salkowitz, workplace expert and author of Generation Blend. “When they come to work, their expectations are shaped by their experiences as students and consumers, and access to social computing technology is a big part of that. Employers should factor in those expectations when trying to recruit, retain and motivate young workers.”

Millennials have high expectations of employers when it comes to providing the most up-to-date technologies. A majority of those surveyed (76%) expect to be provided with a PC, 48% expect a company-issued mobile or smart phone and 62% think a company intranet or portal is a necessity to the workplace. And nearly all of those surveyed (91%) said being able to work with new technology would make them more likely to consider a job opportunity.

“This is an industry still struggling with ‘green screens’ on desks, legacy mainframes in the back office and an employee population rapidly approaching retirement age,” says Bill Hartnett, director of U.S. Insurance Industry Solutions. “Insurance companies face serious challenges in attracting millennials into their work forces and interacting with them as consumers. We believe technology can play a constructive role in addressing these issues.”

Yet even those agencies ready and willing to shell out money for sleek, new technologies might still have problems attracting new talent due to the stigma surrounding the industry. A larger percentage (58%) of those surveyed believe the industry is comprised of “older workers,” 68% say it’s not “innovative” and 53% view it as having a “poor” public image.

“Insurers already face a shortage of qualified staff and the gap that retiring baby boomers will create will be crippling,” says Karen Pauli, a senior analyst covering the insurance industry for TowerGroup. “As part of a comprehensive strategy to leverage technology for competitive advantage, carriers and agents need to adopt collaboration and business intelligence technologies today that will multiply the impact that their existing staff can have.”

*Editor’s note: This is part one in a two-part series on the millennial generation. Next week’s edition of IN&V will feature an article on millennials as insurance customers.

Michelle Payne (michelle.payne@iiaba.net) is IA’s managing editor.




Tech Updates
The Courtship and Commitment of Technology
Saying “I do” to a new tech vendor requires time, patience and research.

So you’ve made the commitment to make your agency more tech savvy, but what happens next? Which software is the best and how do you know what vendors are reputable? 

There’s a lot of sexy software out there and it’s easy for insurance agents and brokers to become enamored with --- products that automate everything from data management to customer service to policyholder communications. Entering a relationship with a technology vendor indeed has many parallels to marriage. Such partnerships can be fruitful and enduring and getting out of a bad one can be downright ugly.

Most agents and brokers were never trained to evaluate software purchases with a critical eye and often jump in for reactionary reasons. So how can they forge a successful relationship that will lead to happier customers and higher profits?

Dave Homan, director of marketing and corporate communications for the Ohio-based brokerage firm McGohan Brabender, knows a thing or two about technology partnerships. He concedes that most insurance pros are not technically savvy by nature. Cool technology alone doesn’t cut it; they need a partner who will back up their solution with customer service and flexibility. “We think of technology vendors as an extension of our organization and won’t risk jeopardizing our clients’ perception of us,” he says.

The courtship is a time to be careful of the promises of salespeople and probe into the stability of a partner before signing the contract. Homan advises performing extensive Google searches, requesting a client list and calling referrals as well as lost customers. Experience and size of the firm are important.

“For us, a start-up can be a non-starter,” he says. Look for signs of inflexibility of the software and problems with system reliability and scalability. Be keenly aware of the firm’s responsiveness during the sales process. Homan prefers to have one point of contact but wants to meet the team, too. Transparency is another sign of a good vendor, as hidden costs and processes can create buyer’s remorse.

When the cheery salesperson fades from contact and the honeymoon ends, the real commitment begins. The best formula is to define expectations and processes up front.

“Responsiveness from the vendor is our No. 1 demand, even if that means saying ‘We’ll get back to you’,” says Homan. The amount of customer contact made in the first three months is a clear indicator of the vendor’s commitment to your agency’s success. Comprehensive training should be available in a variety of formats, including prerecorded and live webcast sessions, regular product updates and best practices ideas through newsletters, and a knowledgeable customer hotline staffed at hours that coincide with your work day. A good vendor will also help an agency effectively market their technologies to its clients.

Success is not all on the shoulders of the vendor. In fact, most failures are due to poor user adoption. Before buying a software application, make sure your producers are product champions who can “state the product’s value proposition in 20 seconds.” Firms also have to recognize that busy people won’t adopt new work habits easily. Many have shaken their phobia of adding overhead expenses and hired coordinators whose main job is to manage applications.

Like a healthy marriage, open communication during the courtship and beyond are essential to a long-lasting relationship with your technology partners. Don’t be afraid to ask tough questions.

Andrew Ceccon (www.adam.com) is a vice president at A.D.A.M., Inc., a provider of healthcare content and benefits tools for brokers, employers, health plans and healthcare organizations.




On the Hill
Big “I” Emphasizes Support for a Modernized State Regulatory System
Association testifies on need to maintain consumer protections, reform agent licensing.

The Independent Insurance Agents & Brokers of America testified on Tuesday before a hearing of the Senate Committee on Banking, Housing and Urban Affairs on insurance regulation.

Tom Minkler, an independent agent from New Hampshire, chairman of the IIABA government affairs committee and a recently elected member of IIABA’s executive committee, testified on the importance of maintaining the consumer protection strengths of the state-based insurance regulatory system while making needed improvements, specifically in the area of agent licensing.

Minkler testified that unlike some federal regulators of other financial industries, state regulators have done an excellent job in the area of financial and solvency regulation, which ensures that companies meet their obligations to consumers. However, he noted that some inefficiencies do exist in the state-based system and it has become clear that specific areas in the current insurance regulatory system should be reformed and modernized.

“Unlike other financial services markets, there is no ‘crisis’ in the insurance market that necessitates a risky, massive overhaul of the current regulatory system,” Minkler said. “Yet despite our longstanding support of state regulation, we believe that Congress has a vital role to play in helping to modernize the state regulatory system and overcome the obstacles to reform that currently exist.”

Minkler emphasized the Big “I”’s support of legislation to establish complete nonresident licensing reciprocity. Such legislation would be deferential to states’ rights as day-to-day state insurance statutes and regulations, such as laws regarding consumer protection, would not be preempted. The NARAB Reform Act incorporates these principles as it addresses marketplace entry and leaves regulatory authority and marketplace oversight in the hands of state officials. Minkler said the NARAB II bill “ensures that any agent or broker who elects to become a member of NARAB will enjoy the benefits of true licensing reciprocity.”

Minkler also reiterated the Big “I”’s opposition to optional federal charter (OFC) proposals, noting that an OFC would be at odds with consumer protection.

“The recent crisis in certain sectors of the financial services industry also has shown us that federal regulation is not a panacea for market ills,” he said.

Katie Butler (katie.butler@iiaba.net) is IA’s editor-in-chief.




L&H Trends
What to Leave the Kids
Independent agents are crucial to customers navigating their financial future.

There has always been a debate about what parents should leave to their children. In a broader context, it relates to estate taxes and capitalism and the ability to leave what some one has accumulated during their life time to whomever they choose --- without confiscation by the state. Yet, such icons of capitalism including Bill Gates and Warren Buffett have publicly supported a significant estate tax for wealthy individuals. Andrew Carnegie, the great steel magnate of the 20th century spent his remaining years giving away his money to charities because he believed a person should not die with a vast fortune. Economists have pointed out that estate taxes can result in businesses being sold which has a ripple effect on employment, particularly for employees in closely held industries.

There is another way to look at this question and agents who sell financial products should take note of a quote from Arvon Glaser --- one of a number of people interviewed on the subject by USA Today. The 64-year-old divorced father of two was asked, “What should retirees plan for their kids?” His answer, “To me, the best gift I can give my sons is the knowledge they’ll never have to worry about taking care of me in my final years.  My worst financial nightmare is winding up on my son’s doorstep, hungry and in need of a warm place to sleep.”

Glaser’s concern is one shared by millions of baby boomers --- he doesn’t want to be a burden on his family if he runs out of money and/or needs medical care. This is why it’s important for independent agents to discuss their customers’ philosophy and retirement objectives. While many customers may share desire not to be a burden in retirement, it takes careful planning to achieve it. For example, a recent study released by the Government Accounting Office (GAO) on long-term care expenses and the outlook on government expenditures found less than 10% of the $189 billion spent on long-term care was paid by private insurance. Given the vast numbers of baby boomers that will be retiring and the ever escalating cost, the current equation of government funding through Medicaid, pay-as-you-go and long-term care insurance is out of balance. This is especially true when agents consider that most people will need to accumulate $500,000 to $1,000,000 to supplement Social Security, and that Medicaid is a program for people with minimal assets.

Another important aspect of the GAO report deals with the premium rate history of the long-term care insurance companies – particularly those in the original four states of the “Partnership Plan” (designed to coordinate with Medicaid and allow the retiree not to spend down their assets if they LTCi).  The study noted that there has been a wide disparity in the level of rate increases.  Over a period stretching over two decades, the increases have ranged from no increase to 70%.  This is a reminder to agents that the financial strength and experience in the long-term care insurance marketplace is important to carrier selection (as well as their reputation for paying claims) as rates are not guaranteed and retirees in particular dislike price increases.

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




Agency Management
How Credible is Your Web Site?
Enhancing your agency’s Web site can lead to better business.

What gives a first-time visitor to your Web site the impression that they can trust you enough to return again and, hopefully, give you their business? The answer, in a word, is credibility. So how do you make your Web site credible in the eyes of consumers?

Stanford University recently completed a study on what causes people to believe–or not believe–what they read on a Web site. What the study demonstrated is that consumers paid far more attention to the superficial aspects of a Web site than to its content. This doesn’t mean the content is not valuable, nor does it mean the content doesn’t have an effect on repeat visits. What it does mean is that a visitor’s trust in the accuracy of the information or the reliability of the service is dependent largely on how professional the Web site looks.

How can you boost your Web site’s credibility? Here are Stanford’s 10 guidelines for building Web site credibility:

1.  Make it easy to verify the accuracy of the information on your site.  Be sure to include citations, references and sources for any content on your Web site. And only link to reputable Web sites.

2.  Show there’s a real organization behind your site. Be sure to include, on every page, the physical address of your agency and consider including a photo of your office. List any important affiliations such as membership in the chamber of commerce or the Better Business Bureau. If your agency has been around for many years, highlight that fact. Include testimonials from satisfied customers, particularly those who are well known and respected in the community.

3.  Highlight your organization’s expertise in the content and services your provide. If you have staff members who are recognized experts or authorities, make that clear, particularly for your target markets. Let people know if you are affiliated with respected organizations. For example, if you are targeting contractors, include any affiliations with homebuilders or similar organizations.

4.  Show that honest and trustworthy people stand behind your site. If your staff agrees, include photos and bios of your employees. You might also include photos of employees involved in charitable or civic events.

5.  Make it easy to contact your agency. Include complete contact information on every page of your Web site including the address, phone, fax and general e-mail address. Also include a staff contact listing.

6. Make your site design professional and appropriate for your purpose. Consider using a professional designer (not a web developer) to design a consistent, professional look and feel for your site.

7.  Make your site easy to use–and useful. Beyond the look and feel of your Web site, it’s still critical to focus on usability. You should have ample content that is valuable and relevant to your visitors and that content should be easy to find. Forget the hype and hyperbole and concentrate on what your clients or prospects would want from your Web site. Forget about dazzling people with web technology like Flash animation --- you don’t need it to have a professional, credible Web site.

8.  Update your site content often or at least show that it’s been reviewed recently. Keep your content fresh and growing. Consider including a “What’s New” section on your home page to demonstrate that your Web site is an ongoing, viable part of your operations.

9.  Use restraint with any promotional content (e.g., ads, offers). Avoid advertisements if at all possible. In any event, never use pop up ads.

10.  Avoid errors of all types, no matter how small they seem. Typographical errors, poor grammar and bad links can ruin your credibility. Triple check every word on your Web site so it does not create an image that your organization is inaccurate or unreliable.

To read the entire article, click here.

Bill Wilson (bill.wilson@iiaba.net) is director of the Big “I” Virtual University.