T H U R S D A Y ,   D E C E M B E R   8 ,   2 0 0 5

House Approves Terrorism Backstop Bill |  Safeco Names New CEO |  Zurich Looks to Unify Companies with New Brand Campaign |  St. Paul Travelers Disclosure Moves to the Web  | Catastrophe Insurance Discussion Dominates NAIC Meeting |  Industry, Top Leaders Mourn Carroll Campbell | No Two Snowflakes are Alike: Build on Your Clients’ Unique Traits |  25 Tips to Improve Your Telephone Cold Calls | Big "I" National News

O N   T H E   H I L L
House Approves Terrorism Backstop Bill
Conference with Senate coming next.

With Wednesday’s approval of a terrorism backstop extension by the House, the Big "I" is now pushing for a speedy House-Senate conference to produce and pass unified legislation before existing terrorism insurance legislation expires.

A new backstop is needed to help insure against catastrophic terrorism losses in place of the Terrorism Risk Insurance Act (TRIA), which ends Dec. 31. The House bill, the Terrorism Risk Insurance Revision Act, is sponsored by Capital Markets, Insurance and Government Sponsored Enterprises Subcommittee Chairman Richard Baker (R-La.). Its passage is the product of cooperation between Baker, House Financial Services Committee Chairman Mike Oxley (R-Ohio) and House Judiciary Committee Chairman James Sensenbrenner (R-Wis.).

"The Big "I" has consistently supported the continuation of the current terrorism insurance backstop or a modified one, and it has noted in testimony before Congress that action is needed before the Terrorism Risk Insurance Act (TRIA) expires," says Big "I" CEO Robert Rusbuldt. "This legislation is crucial for the business customers of independent agents and brokers, for continued economic growth in America, and for our nation’s economic security."

In addition to extending the federal backstop in the short term, the House bill addresses the long-term need for coverage. It will encourage risk-sharing mechanisms and authorize capital-reserve accounts that will help increase market capacity and eventually phase out federal involvement. The bill proposes a public-private, nine-member commission and several studies, including a Big "I"-supported natural-disaster study.

The Senate bill sets the floor for "triggering events" at $50 million in 2006 and $100 million in 2007. It also requires that insurers make coverage available to policyholders in all lines covered by the program, and sets individual insurer retention levels at 17.5% of premiums collected in TRIA-covered lines in 2006 and 20% of such premiums in 2007. The House bill sets various premiums for differing types of coverage.

"We are very confident that an extension can make it through conference and to the President’s desk before the end of the year, and we will do everything we can to help accomplish this goal," says Charles E. Symington Jr., Big "I" senior vice president for government affairs and federal relations. "We thank Chairmen Baker, Oxley and Sensenbrenner, as well as Ranking Members Barney Frank (D-Mass.) and Paul Kanjorski (D-Pa.), for working together to get this done in the House in a timely manner."

The Big "I" views terrorism coverage as a national issue, and it notes that the availability and affordability of terrorism insurance is a business customer problem throughout the nation. In fact, take-up rates under TRIA have continued to grow across the country, and IIABA members have seen terrorism coverage purchased by a variety of interests, from small towns in Mississippi to New York City.

"Both the House and Senate bills address deductibles and triggering events, and these parameters will help avert devastating consequences on smaller businesses and our members. This is good for the economic health of Main Street America," says Brendan Reilly, Big "I" director of federal government affairs.

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

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C A R R I E R   N E W S
Safeco Names New CEO

Late Wednesday, Safeco announced that Paula Rosput Reynolds has been named the company's new president and chief executive officer effective Jan. 1, 2006. Reynolds also was appointed to Safeco's board of directors. In an exclusive interview today, IN&V talked to Reynolds about her new position and Safeco’s relationship with independent agents.

Reynolds, 49, currently is chairman, president and CEO of AGL Resources, an Atlanta-based energy holding company that includes six natural gas utility companies, wholesale services and energy investments. Her 27 years in the energy business included executive positions in Houston and San Francisco. During her five-year tenure as CEO, AGL Resources expanded from a regional gas utility to a multi-state, integrated energy company. In addition, the company doubled its share price and market capitalization, and increased its dividend by 37%. Active in business and community organizations, Reynolds currently serves on the boards of Coca-Cola Enterprises, where she chairs the Audit Committee; Delta Air Lines; and the United Way of Metropolitan Atlanta.

Reynolds feels her involvement in AGL’s turnaround gives her unique insight into Safeco’s situation. "The parallels between the company I’ve led and the company history at Safeco are remarkable," she said, "I feel like I understand the nature of the opportunity… Mike McGavick and I over roughly the same period of time had parallel experiences [in leading our companies.] I’m very eager to take his story and keep writing it while some other CEO will take the story I started at AGL."

One thing that Reynolds said attracted her to the industry was the fact that insurance is one of the oldest industries in the world, and yet had a lot of new opportunities within it. "The opportunity to be in an industry that is on the one hand well established but on the other hand has a lot of growth potential in it is really exciting—and that is definitely different than energy," she says. "The opportunity to cross over into another industry versus staying in the energy space is the kind of thing that makes you excited to get up and come to work every day. The fact that it isn’t going to be easy is exactly what I like about it."

Reynolds is already starting a dialogue with agents to better understand their needs and immerse herself in the marketplace. She held an agent conference call today, and also said she also plans to make some personal calls to agents as well. "I want agents to know that I value them, that I’m very open to their input and that I’m really counting on them," she says. "This company is nothing without its agents. The fact is it’s very important for me to begin to learn from them and for them to understand that I have an absolute commitment to them."

Although her first official day on the job is January 1, Reynolds said she will meet with independent agents in the Atlanta area over the next month before her first day as Safeco’s CEO.

"I hope that is representative of my dedication to them and their input," she says. "I’m going to have to be very disciplined with my time, but you will see me out in the marketplace."

Reynolds also noted that she is accessible via e-mail—and she has already begun to hear from agents. "That’s the kind of CEO I am," she says. "Why would you have invented email if you didn’t want to democratize business? Agents have my e-mail—and I’ll be there. You have to be outwardly focused to grow a company."

Mike McGavick, who has announced his candidacy for the United States Senate representing the state of Washington, will step down as CEO and chairman of the board on Dec. 31, 2005. He will provide transition services for two months as a Safeco employee.

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

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C A R R I E R   N E W S
Zurich Looks to Unify Companies with New Brand Campaign

Zurich Financial Services is launching a new global branding campaign designed to unify its brand in all markets and build company awareness. The brand campaign, which is built around the phrase "because change happenz," marks the next step in Zurich’s goal of raising its profile with customers. E. Randall Clouser, Zurich’s group chief marketing officer and head of global communications, discussed the new initiative with IN&V:

IN&V: What will we see in the United States from the new brand campaign?

The brand campaign is a dynamic process, not an event for us. Our brand campaign includes a marketing mix of sponsorships, events, advertising and customer relationship management. All of these marketing initiatives are designed to build awareness for the Zurich brand.

In the U.S., you will see print and TV advertising. Print ads began November 30 and TV ads began on December 6. They’re accessible to all our agents on our Web site if they’d like to take a look at them. I would also like to point out that last year we became the title sponsor of the PGA event in New Orleans, the Zurich Classic. The 2006 Zurich Classic will be a special event as we are working with the PGA TOUR, the ForeKids Foundation and business leaders to bring business back to New Orleans.

It’s a global campaign, launched in all our key markets around the world.

IN&V: How did the brand campaign come about?

Clouser: A little over three years ago, our new CEO, James Schiro, began a transformation to re-align our businesses, centralize core functions and establish a Zurich Way of operating. We had been essentially operating as a multi-local company. Every country operated an independent business; they had their own processes, their own systems and their own brand. Over the past three years, we began driving the organization to be a more global company.

Through the Zurich Way process, we’ve begun to create a much more integrated global company that shares best practices and operates as one disciplined company. We’re now at the point where we’ve made those operational transformations from multi-local to an integrated global company, and we’re now beginning to look externally and say, "Now we need to migrate our many different brands to create a few major brands." We need to begin building brand awareness for the Zurich brand.

IN&V: What’s the overall goal of the new campaign?

Clouser: The overall goal is to build the leading global insurance brand. That means migrating many of our non-Zurich branded companies to the Zurich brand. Farmers will be one brand that will not be a part of the Zurich brand. For the most part, we will be migrating most of our brands. And we will be investing in the Zurich brand. We really have not invested in global brand building, and as a result, our market awareness is very, very low. We will improve our market awareness and become front of mind amongst our target audience.

IN&V: What impact will the campaign have on independent insurance agents?

Clouser: The first phase of the campaign is to build awareness for the Zurich brand. As we move the next phase, we will begin focusing the advertising message to increasing familiarity about our capabilities in very specific segments. Increasing awareness and familiarity will help our independent agents better position the Zurich offering with their customers. We’re building a pull demand in our target markets that compliments our work with agents and brokers. In the end, a strong Zurich brand will support sales growth for our agents and brokers.

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

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L E G A L   A D V O C A C Y
St. Paul Travelers Disclosure Moves Online

St. Paul Travelers has implemented an approach to producer compensation disclosure for commercial, specialty commercial and personal lines policyholders that directs insureds online. The company Web site no contains information about how St. Paul Travelers compensates independent agents and brokers in lieu of describing its compensation practices on insurance policy forms. IIABA commends St. Paul Travelers for taking this step, as well as for making several changes to the disclosure that align it with IIABA’s Board Policy Regarding Insurance Company Disclosure of Producer Compensation.

"We appreciate that St. Paul Travelers adopted suggestions we made to post the disclosure online and to include in it an acknowledgment that it considers the distribution of insurance products and services through independent agents and brokers to be ‘the preferred way’ of distributing its products, " says Debra Perkins, IIABA executive vice president and general counsel. "This enhancement to the disclosure reinforces for consumers the added value independent agents and brokers bring to insurance transactions and demonstrates the commitment of St. Paul Travelers to the independent agent channel."

IIABA has worked behind the scenes with dozens of carriers and monitored their approaches to producer compensation disclosure during the last year. Its efforts targeted avoiding the imposition of producer compensation disclosure mandates by different carriers for their producers that go beyond applicable laws or regulations. Disparate and conflicting company requirements would disrupt the efficient work flows and business operations of insurance agencies and brokerage firms.

IIABA recognizes that industry participants, including insurance companies, will take all steps they determine to be necessary to comply with their own legal obligations, and that some insurers believe they have a legal need to disclose to consumers information about how their sales force is compensated for distributing their products. When that is the case, IIABA’s Board Policy Regarding Insurance Company Disclosure of Producer Compensation (adopted on Sept. 9, 2005) urges insurers to consult with IIABA, its state associations and independent agents selling their products before implementing any such disclosure and to make the basic disclosure on their own. The policy also states that any such disclosure that an insurer chooses to make should notify the insurance purchaser that: 1) the insurance policy was placed by an independent insurance agent or broker, not an employee of the company; 2) the company believes it is efficient and effective to distribute its policies through independent insurance agents and brokers; 3) the agent or broker placing the policy with the company may receive commission for that placement; 4) if applicable, the agent or broker may be eligible to receive additional incentives; and 5) any questions about the nature of the compensation should be directed to the agent or broker.

A copy of IIABA’s Board Policy Regarding Insurance Company Disclosure of Producer Compensation and other information about producer compensation disclosure is available at www.independentagent.com 
in the member-only Legal Advocacy section under " IIABA/Industry Information & News". For more information, contact Debra Perkins (debra.perkins@iiaba.net).

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I N   T H E   S T A T E S
Catastrophe Insurance Discussion
Dominates NAIC Meeting

The National Association of Insurance Commissioners (NAIC) met for the first time in six months earlier this week, and the gathering saw the regulators select a leadership team for 2006 and offered a preview of policy discussions that will continue in the coming year.

The nation’s insurance commissioners normally meet on a quarterly basis, but the fall meeting scheduled to take place in New Orleans in September was cancelled in the wake of Hurricane Katrina’s devastation. Given the effect of Hurricanes Katrina, Rita, Wilma, and other storms on the insurance industry and the nation, it is not surprising that the regulators and industry attendees turned their focus to America’s preparedness for future and potentially more powerful natural disasters.

The NAIC’s Catastrophe Insurance Working Group released the first draft of a new national catastrophe risk plan days before the NAIC winter meeting, and the proposal was the subject of a quickly scheduled hearing on December 3. The plan grew out of an invitation-only "catastrophe summit" that was hosted by the commissioners from California, Florida, Illinois, and New York and attended by IIABA. The NAIC draft proposal, which has so far received a mixed and divided reaction from the industry, calls for three layers of risk-bearing capacity:

· The first layer focuses on policyholder actions and on the insurance contract itself. The plan would attempt to promote personal responsibility by encouraging mitigation, and it calls for premium discounts and federal tax credits for homeowners who take mitigation measures. The proposal would also mandate an all-perils policy, with no exclusions, that would require a separate deductible for catastrophe-related losses.

· The second layer would consist of state catastrophe funds, and the plan would mandate that every jurisdiction create a cat fund or participate in a regional, multi-state fund. These funds would be responsible for providing capacity between their state-specific attachment points and the expected costs caused by a 1 in 50 year catastrophic event.

· The third level would consist of a federal mechanism that would provide reinsurance to each state fund and address events between the 1 in 50 year level and the 1 in 500 year level. The plan also envisions the creation of an 11-member commission that would annually establish the rates to charge each state.

During Saturday’s hearing, Working Group Chairman Kevin McCarty (FL) noted that the proposal is only in draft form and is likely to be revised as additional comments and input are provided by other regulators and the industry. He did express optimism, however, that a final proposal would be approved by the entire NAIC before the end of February and then presented to Congress. To read the complete plan,  click here.

While the catastrophe insurance discussion dominated the meetings on Saturday, the NAIC’s election of four new officers was the centerpiece of Sunday’s session.

· Maine Superintendent Alessandro Iuppa is the new President of the NAIC and replaces Pennsylvania Commissioner Diane Koken. Iuppa previously served as the NAIC’s President-Elect and is a long-serving and well-respected insurance regulator with extensive experience and expertise in international insurance matters.

· The new President-Elect is Alabama Commissioner Walter Bell, who defeated Nebraska’s Tim Wagner in a close election that reportedly resulted in a tie vote on the first ballot. Bell, who is new to the NAIC’s leadership ranks, has served as insurance commissioner for nearly three years and has extensive private sector experience in the insurance and financial services industries.

· Kansas Commissioner Sandy Praeger moves from Secretary-Treasurer to Vice President. She was elected insurance commissioner in November 2002 and previously served three terms in the Kansas Senate.

· The final member of the NAIC leadership team is New Mexico Superintendent Eric Serna, who takes over as Secretary-Treasurer. Mr. Serna has worked in government for nearly 25 years, including the last five as insurance superintendent.

Wesley Bissett (wes.bissett@iiaba.net) is the Big "I" senior vice president of government relations and state government affairs.

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I N   T H E   S T A T E S
Industry, Top Leaders Mourn Carroll Campbell
Former ACLI leader, congressman, governor dies at 65.

The insurance industry and public officials across the nation are mourning the loss of Carroll Campbell, former president and CEO of the American Council of Life Insurers, and a former Republican congressman and governor from South Carolina. Campbell passed away Wednesday of a heart attack, after a lengthy bout with Alzheimer’s. He was 65.

In a statement issued by the White House, President George W. Bush hailed Campbell for his leadership and service.

"Laura and I are deeply saddened by the loss of Governor Carroll Campbell," President Bush said. "Carroll Campbell was a strong leader, a committed public servant, and a good friend. For more than two decades, he represented the people of South Carolina as a state legislator, member of Congress, and Governor. He was a tireless advocate for the state he loved and was known for his integrity and character. We join South Carolinians and Americans around the nation in mourning the passing of Carroll Campbell, and we send our thoughts and prayers to Iris and the entire Campbell family."

IIABA CEO Robert A. Rusbuldt, a top aide to Campbell during his tenure in the U.S. House of Representatives, remembered Campbell as a mentor, friend, national leader and strong supporter of the insurance industry. Among other accomplishments, Campbell brought about auto insurance reform in South Carolina.

"Former Governor, Congressman and insurance association executive Carroll Campbell will sorely be missed by all who knew him. On behalf of the Independent Insurance Agents & Brokers of America and my family, we have extended our deepest sympathies to the Campbell family. Carroll was a giant on the national political scene and in South Carolina. He was a man with great vision, energy and unlimited ideas. He helped change the course of the nation, South Carolina, and the insurance industry, and history will view him as the great leader we have known for many years. Our thoughts and prayers are with Iris and the Campbell family at this time," Rusbuldt said.

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

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L & H   T R E N D S
No Two Snowflakes are Alike:
Build on Your Clients’ Unique Traits

As a child, you learn that no two snowflakes are alike. It’s been said that people are like snowflakes because everyone has a unique quality. So how do you learn each person’s distinct qualities and opinions? Unless you have an exceptional rapport with your clients, it is difficult to discover their core needs. Childhood experiences shape many peoples’ traits, and enduring the premature death or disability of a loved one can create deep-seated feelings about financial planning.

When discussing retirement planning with a middle-aged male whose father died at a relatively young age, he may have a live-for-the-moment mentality because he believes that he won’t be around to enjoy retirement. Conversely, a well-off individual may have overly conservative spending habits because his parents outlived their financial resources and didn’t want to be a burden to their children. Clients might not share these deep-seated anxieties without their agent’s gentle prodding.

How do you get clients to open up? The best way is to ask probing questions about core values—not finances. For example, instead of asking about their "risk tolerance" for investing, start by asking what they want to accomplish, i.e. being successful in their chosen field, being a good parent or an active community volunteer, running a marathon in under four hours, etc. As you learn about their objectives, their values start to become apparent. From there, ask clients to prioritize their goals and needs. Then discuss their current financial resources and whether they can accomplish their goals.

While on the subject of estate planning, discuss how Social Security benefits work, particularly as they relate to survivors’ benefits. Many people mistakenly assume that Social Security benefits are similar to medical insurance, where students are covered until they graduate from college (or at age 22), which is not the case. They cease at age 18. So if a client’s goal is to ensure that there is enough money to pay for college and other expenses, their life insurance benefit will have to be large enough to provide adequate income. Sometimes creating a scenario that will disturb your client is necessary to get them to take action (complete the application and write the check). For instance, if you know that your client would really like his kids to be successful in sports (or music or art lessons), ask how much he spends on traveling expenses for tournaments and camps in the summer. Then ask him what would happen if the family lost his income because, based on his current life insurance, the family would have to make difficult decisions regarding household expenses and extra activities. Then mention that for an additional $50 a month, he will have enough life insurance to meet these additional objectives. Not only will you make the sale, but he will thank you for helping him execute on the game plan.

It’s easy to get caught up in policy illustrations and assumptions. Invest the time in learning about clients’ core desires. Insurance isn’t bought to pay off the mortgage—it’s purchased to maintain the lifestyle of loved ones. Remember, many people also have goals that reach beyond their families, including religious charities, victims of natural disasters, medical research, etc. Learn their true objectives and then set the game plan. And you don’t need to apologize for being direct (in a respectful way). That is the difference between an agent and an order taker.

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

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A G E N C Y   M A N A G E M E N T
25 Tips to Improve Your Telephone Cold Calls

Do you hate to make cold calls on the phone? Would you rather do anything, anything, than dial that stranger? Do you find yourself reading the newspaper, taking an early lunch, cleaning your desk, even filling out paperwork, rather than making those calls? Do you tell yourself you’d make those calls more easily if you only had some guidelines to help you know what to say?

OK, then here are 25 things you can do to improve your comfort level with telephone cold calls...and perhaps improve the results:

1. Have a clear objective before calling.

2. Strategize before calling.

3. Call the president’s secretary if you don’t know who is in charge of the area you’re trying to reach.

4. Start with, "Good morning/afternoon."

5. Give the receptionist your full name and the full name of the person you’re calling.

6. Only give your firm’s name to the receptionist if it’s well known.

7. Tell her something nebulous if she asks what it’s regarding, but don’t be too evasive.

8. Eliminate, "How are you today?"

9. Avoid, "You don't know me."

10. Say, "Are you in the middle of something urgent or pressing?"

11. Start with either a reference name or, "The reason for my call is..."

12. Offer to share an idea with the prospect if you want to set an appointment.

13. Get the prospect’s permission before asking questions to fact find and qualify.

14. Ask questions. Don’t talk at the prospect. Get him involved.

15. Be very polite and courteous...it’s rare.

16. Deepen your voice.

17. Sound businesslike, but not stiff.

18. Be friendly and enthusiastic.

19. Use the prospect’s name occasionally.

20. Show you’re listening.

21. Avoid saying, "I’d like to drop by."

22. Plan the timing of your calls.

23. Always return phone calls.

24. Always leave your name.

25. Make it a game.

Telephone cold calling is never easy; don’t believe anyone who tells you it is. But by following these guidelines
it can at least be bearable. Try some of them and you may be pleasantly surprised at the results.

For more information on these 25 tips, click here.

Rebecca Morgan, CSP, CMC (rebecca@RebeccaMorgan.com), is a Virtual University faculty member.

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