T H U R S D A Y ,  O C T O B E R  2 9 ,  2 0 0 9 

                                                Big “I” Association News

L-H Trends
Survey Reveals Lack of Confidence about Retirement Prospects
Agents can address concerns by providing resources, discussing options.

Given the economic malaise of the past year, it is no surprise that Americans are more pessimistic about their prospects for retirement and have less confidence in their ability to maintain their desired standard of living into retirement.
 
Fewer than one in four people are confident that they will be able to sustain the lifestyle they seek in retirement, according to Sun Life Financial’s annual “Unretirement Index.” This finding is not surprising, considering 40% of workers also lack confidence they will receive their promised Social Security benefits when they retire.

Independent insurance agents should also take notice of the survey’s statistic indicating that 65% of American workers will delay their retirement by at least one year – an 11% increase since the end of 2008. In addition, the survey indicates 27% of Americans now believe they will need to work at least five years longer than previously expected because of the current economic environment. If these concerns turn out to mirror reality, businesses and individuals will need assistance in dealing with this demographic. For example, an aging worker population will impact the cost of employer health and worker compensation programs. While older employees can be very valuable to an organization, there are some industries that may experience decreased employee productivity as a result of employing an older population. 

One lesson employers should take from the survey is the importance of ensuring employees have meaningful retirement incomes. Unfortunately, most employees haven’t properly planned for retirement, and have no idea how to translate and project their retirement plan accounts to ascertain the necessary level of retirement funding needed to achieve their targeted standard of living. Employers can help with this process by providing adequate information regarding the company’s savings plan, the advantages to saving through regular payroll contributions and the benefit of compounding earnings. Independent agents can assist employers by identifying suitable retirement plan providers based on the size of the employer, workforce demographics and other factors. Many retirement plan providers have comprehensive services that include online software modeling, investment education and other retirement planning information.

Independent agents should share this information with their clients, so they can help their employees regain confidence about their retirement futures.
 
Dave Evans (dave.evans@iiaba.net) is a certified financial planner and IA l-h contributing editor.



Pulse on the P-C Markets
Contractors’ Liability Marketplace Adjusts to Challenging Environment
Qualified underwriters are needed to address possible coverage gaps.

The landscape of contractors’ general liability coverage continues to evolve as insureds adjust to the fallout from the economic downturn and as projects funded by the stimulus package get underway. Agents securing this coverage must work with a dependable underwriter who is able to address the complex, ever-changing needs of clients in the construction industry.

“With the economy, which has significantly impacted the contractor community, contractors are pressed for cash flow and there are not as many jobs,” says Bill Sullivan, vice president of The Hartford Construction Group. “Inherent with contractors anyway is the volatility in projecting payroll, so they need carriers to be sensitive in the way they’re paying the premium.”

Sullivan says some carriers, such as The Hartford, are willing to work out a premium payment plan that reflects when contractors have work and when they don’t. This involves a monthly payroll reporting system that adjusts premium payments to the amount of revenue contractors bring in during a given time period. Sullivan adds that this type of plan is usually geared toward large general contractors, but some large artisan contractors may be eligible as well because larger contractors tend to experience the most fluctuation in revenue.

In some ways, however, smaller artisan contractors have been hit hardest by the economic downturn, as Rich Kretzmer, a broker at Premier Agency, Inc. DBA Placer Insurance DBA Cal-Pro Insurance in Roseville, Calif., can attest. His agency caters to smaller contractors who he says have continued to struggle because they have not been able to partake in large projects funded by the stimulus plan. Kretzmer also tries to work with his clients to address the fact that “every dollar and every fee” counts for them and their businesses.

“In past, (coverage was) sold on optimism,” says Kretzmer. “Now, the sales approach is, ‘let’s be conservative and get you started, and if it happens that you get busy and some dynamics change, we can work with the underwriter to make sure everyone is covered for the risk.’ It’s about understanding what’s real and what’s affecting (contractors) right now.”

Joe Mathieu, The Hartford Construction Group’s director of underwriting, says agents’ No. 1 concern should be finding a specialized underwriter who knows the contractors’ liability market inside and out. Finding the right carrier relationship can sometimes be a challenge, however, a recent survey conducted by The Hartford shows the top markets sought by Hartford agents are large contractors and artisan contractors’ liability.

The need for a qualified underwriter is especially significant in the contractors’ liability marketplace because of the complexity of the contracts. Many carriers offer wrap-up coverages designed to cover all contractors on a project; however, underwriters have to ensure that there is no gap in coverage if a contractor joins a wrap-up policy and drops a previous policy. There are often special coverage forms available to address such a situation.

In addition, Mathieu sees an increased demand for specialized coverages relative to a particular construction risk; examples include per-project aggregate, automatic additional insured status and limited professional liability coverage. The ability to properly address a third-party claim in an insurance contract is also important to construction clients, especially when multiple contractors are involved in a project.

“Coupled with the economy and compressed margins, contractors need really strong contract management to ensure their clients have the right contract in place to attend to third party claim," says Mathieu. “It’s very critical that they have the right wording in place.”

Veronica DeVore (veronica.devore@iiaba.net) is Big “I” writer/editor.

Editor’s note: This article is the fourth in a series exploring trends in specific coverage areas. Click here for a detailed product listing of contractors’ general liability markets. 



P-C Trends
Progressive Releases National Television Ad Featuring Independent Agent
TV spot designed to inform customers of many ways to purchase coverage. 

Progressive Insurance’s advertisements starring Flo the saleswoman are well-known to many television viewers, and now the company’s insurance darling has a new co-star---an independent agent.

Last week, Progressive launched a new ad highlighting the many ways customers can purchase Progressive coverage, including through local independent agents.

Independent Agent magazine talked to Karen Barone, national agency distribution leader at Progressive, and James Crolley, Progressive’s advertising director, to learn about the inspiration behind the ad and how it affects independent agents and their customers.

IA: What prompted the decision to include an independent agent in this series of commercials?

Progressive: We really did want to highlight all the ways you can buy through Progressive and show that regardless of how consumers want to buy and regardless of their need, Progressive makes it really easy. A big chunk of our commercial spots have highlighted independent agents, but this is the first time we’re featuring an agent in our superstore (with Flo).

IA: How does the decision to include an agent reflect Progressive’s relationship with its independent agents and the company’s goals for the future?

Progressive: We recognize that more consumers today choose to do business with us through their local independent agent–they make up about 65% of our business. The TV spot is one example of our view that agents are critical to our success. This ad, together with our recent partnerships through Web.com, makes Web developing services available to agents at a discount. It’s one piece of our overall effort to help agents grow their business and connect with the Progressive brand.

IA: What was the planning process like for the commercial? Did you work with independent agents to develop the ad?

Progressive: We’ve received feedback in the past about how agents can be included in the superstore campaign. We’re educating consumers about the fact that they have lots of options for purchasing insurance and that it’s easy to buy and easy to own – we wanted to communicate that in the spot. The idea (for the ad) came more from the Progressive side and was tested with consumers. The other message, in addition to the fact that insurance is “easy to buy,” is the choices consumers have in how they want to shop, buy, and service the policy.

Agents have communicated that they have seen the theme of the superstore evolve (in other commercials) and pointed out how the agent message could be incorporated. That gave us a lot of inspiration for developing the ad.  The agent in the commercial is an actor, but he is familiar with the independent agency model and his family owns an independent agency.

IA: How can Progressive agents use the ad to bring in more business? Have any agent-specific marketing materials been developed in conjunction with the ad?

Progressive: We have a couple ways for agents to take advantage. We will have a tag-able agent spot that partner agents can use, and we are also in the process of developing print materials that will complement and augment the TV spot. Agents also have the ability to utilize a number of marketing materials that complement the superstore theme – it’s found in the brand express section of the agent-only Web site. We also have more than 200 sales representatives across the country who can provide support and help to agents to develop marketing plans to grow their business. They will help agents leverage the media to put together marketing plans.

Click here to view the new Progressive commercial, entitled “Jinx,” that features an independent agent.

Veronica DeVore (veronica.devore@iiaba.net) is Big “I” writer/editor.


Agency Management
Improving Commercial Lines Account Marketing: Getting Started
Organizing agency operations is the first step to staying on top of renewals.

In the commercial lines arena, many agencies rush to send incomplete renewal applications to numerous carriers to block the competition from quoting. Thus begins the time-consuming process of attempting to piece together a viable submission to get an accurate quote. Analyzing the causes of renewal problems and creating a dedicated timeline can help agencies avoid this stressful and inefficient process.

The following are some underlying reasons behind most of the problems surrounding the marketing of renewals: Lack of ownership of the renewal process; absence of a strict renewal timeline; inconsistencies in how accounts are handled and who handles them; limited accountability; poor data integrity, where the staff does not trust the data on the agency management system; client underwriting information is stored in numerous places; multiple carrier submissions sent with the prospect of only receiving a minimal number of quotes; proposals not adequately pre-filled from the database; and paper processing backlog continuing to increase.

Staff members tend to blame the carriers for delays but in truth, the agency can be in total control of every piece of the renewal process except the time frame for receiving quotes from the carriers and receiving the actual renewal policy. 

The account managers need to own the renewal process and must control, complete and/or delegate each task to ensure specific timeframes are met. Having one individual assume responsibility for making sure everything comes together when it’s supposed to assigns accountability and eliminates overlapping of roles among producers, marketers, account managers and account assistants. The account manager (or delegated individual) should:

• Send submissions to only the carriers that can be responsive to the clients’ coverage needs.
• Re-market only those accounts where the premiums and/or coverages can truly be improved.
• Evaluate the true need for spending significant time quoting multiple markets.
• Work on building a stronger client relationship in order to minimize the time spent remarketing with numerous carriers over and over again.

Agencies should also consider developing a stewardship program for larger accounts. This will enable the agency to stay in contact with the client more consistently throughout the year and will make the renewal process less of a burden. It also places an emphasis on the client relationship and redirects the focus away from renewal dates and anticipated price increases.

Agencies can also create a renewal timeline that identifies specific tasks, responsibilities and roles. Organize the best use of the staff’s time throughout the year to maximize productivity and growth opportunities. The appropriate renewal timeline for an agency should be created by looking at the renewal process in reverse order. Decide when to receive renewal policies from the carriers and work backwards to determine when to bind coverage, put a proposal together, have quotes from carriers and when the submission must be sent. In addition, determine when to collect updated renewal information from the client, when to hold a renewal strategy meeting and when to run the expiration list so everything falls within the set timeline.

As information is received, the account manager should update the agency management system immediately to make the submission process an easier task. The underwriters will look forward to receiving timely, complete and accurate submissions, and eventually the agency will begin to receive quotes sooner.

Kel Plasket (kplasket@hughes.net) is principal of Operations Management Consulting, LLC and a consultant specializing in insurance agency operations management.

Editor’s note: This article is first in a series examining how to improve commercial lines account marketing.


Agency Management
Sales Mistakes May Derail Agency Success
Addressing the most common mistakes can improve retention and revenue.

Sales mistakes can have a host of negative effects on an agency, from lost clients to stagnant sales growth. There are several mistakes commonly made in various sales situations, and being aware of and addressing them can quickly put an agency back on the path to success.

The following are the most prominent types of sales mistakes, as observed by industry sales experts:

1. Salespeople talk instead of listen. Too many salespeople monopolize the time they have in front of prospective clients, only allowing the prospect to listen. For every hour in front of a prospect, they spend five minutes selling their services and fifty-five minutes buying them back. As a rule, the prospect should do approximately 70% of the talking.

2. Salespeople presume instead of asking questions, and some seem to have all the solutions.  In fact, many companies no longer offer services but are in the business of "providing solutions." The disadvantage of this strategy is that too many salespeople are trying to sell solutions without recognizing the prospect's needs. They should ask questions upfront to set the ground rules and ensure complete understanding of the prospect's perspective.

3. Salespeople answer unasked questions. For example, if a client makes a statement such as, "your prices are too high," most salespeople retreat to a defensive mode. They often begin a rehearsed speech on the quality, value, or experience of their product or service. Most often, they ultimately respond with a price concession or a fee reduction. If a client can get a discount by merely making a statement, then he or she may not buy before trying to get an even greater price reduction. "Your prices are too high" is not a question, so it does not require an answer. Instead, salespeople can ask the prospective client why they think some companies charge higher prices than others in order to remind them of the value of what they are purchasing.

4. Salespeople fail to get the prospective client to reveal budgets up front. Knowing whether there is money planned for a project will help the salesperson to distinguish between the client who is ready to solve a problem and the one who is not as committed with regard to a budget. At this juncture, the salesperson should evaluate whether price will be the only consideration in making the sale. As a rule, if a salesperson gets the business on price, he or she will also lose the business on price.

5. Salespeople make too many follow-up calls when the engagement is actually dead. This could result from a stubborn resolve to turn every prospect into a customer or from ignorance of the fact that the process is truly dead. Far too much time is expended chasing prospects who just don't qualify.

6. Salespeople fail to get a commitment to buy before doing a proposal; they are often very willing to jump at the opportunity to do proposals and often end up wasting their most precious commodity---time. They miss their true goal in acquiring a client and become an unwitting unpaid consultant, merely teaching their prospects enough to help them buy a policy for less elsewhere. An agency should consider how many dead bids and proposals it has sent out over the last twelve months and how much it has cost the business.

Click here to read additional common sales mistakes.

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