RLI Personal Umbrella Rate Change Approved in Most States

Effective April 1 for new business and June 1 for renewal business, RLI has received approval for a modest rate increase in most states, including Texas.

RLI will also introduce additional rating changes at this time, including:

  • A 5% increase on excess uninsured and underinsured rates, including states rated on a per driver basis. For example, a household paying $150 per driver will now pay $158 per driver.
  • An increase in the incident surcharge for drivers under 22 years old and over 80 years old from $100 per incident to $200 per incident. In addition, Question 14 on the new business application will be split into 14a and 14b in RLI’s portal but will remain as a combined question on the paper application.
  • For new business, removal of the $100 surcharge for households with a driver who has been licensed less than one year, has a permit or has an international license (Question 13). A response greater than zero will still place the risk in the personal umbrella policy special tier and restrict coverage to $1 million.
  • A surcharge increase for households with a youthful or inexperienced operator, as well as drivers over 80 years old, in New York, Pennsylvania, and Georgia.

The updated rates will be available when quoting within the RLI portal or the online Quick Quoter, and will be in compliance with state-approved filings.​

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Big ‘I’ Member Resources Available on Pass-Through Tax Regulations

In January, the Internal Revenue Service issued final regulations concerning a new tax deduction for “qualified business income” under Section 199A of the tax code. The Big “I” lobbied aggressively on this regulation as it is critically important for owners and shareholders of insurance agencies and brokerages organized as pass-through entities, such as partnerships and S-corporations.

The rule confirms that agency and brokerage owners and shareholders are eligible for a tax deduction of up to 20% on qualified business income—regardless of taxable income level. The new deduction reduces the top effective tax rate on pass-through income to approximately 29% from 37%. For those in the 24% bracket, it can reduce the rate to as low as 19.2%.

In response to the regulation, the Big “I” has posted multiple new resources for members on the Big “I” website. Big “I” members must log in to view the materials, which include:

  • recording of the 30-minute webinar the Big “I” hosted last week, for any members who were not able to attend
  • PowerPoint presentation that provides a comprehensive explanation of how the new tax deduction benefits pass-through owners and shareholders, including discussion of the specific sections of the over 200-page regulation relevant to insurance agencies and brokerages
  • one-page overview of the new tax rate for C-corporations and the new tax deduction available to some pass-through businesses
  • four-page FAQ document that outlines the must-know facts about the new 199A deduction

While a major victory Big “I” members, the regulations are complex. The Big “I” encourages members—especially those who derive income from non-traditional activities—to consult a tax professional to determine how the new deduction specifically impacts their businesses.

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Register for the 2019 Big ‘I’ Legislative Conference

Online registration is now open for the 2019 Big ‘I’ Legislative Conference. Agents don’t want to miss this opportunity to speak to their federal legislators with a unified voice. Early-bird registration pricing ends Friday, March 8. Hotel accommodations always sell out fast, so don’t delay in making guest room reservations.

Keep an eye on the State News e-newsletter in the coming months for more programming details.

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Apply for ACT’s Comparative Rating Pilot

The Agents Council for Technology (ACT) has a unique and exciting opportunity for IIAT members!

The ACT Small Commercial Rating Work Group is working with a handful of comparative rating vendors to offer a free 60- to 90-day pilot to select Big “I” member agents that write commercial lines. These members will have the opportunity to access a participating vendor’s rating platform to quote small commercial lines such as business owners policies, commercial auto and workers compensation.

ACT is looking for a mix of tech-savvy agencies, those that have implemented comparative rating in some form and struggled with the workflow and those who have never used it—all are welcome to apply. By obtaining feedback from a mix of agencies, ACT will receive a range of insights to help move our industry forward.

If your agency is interested in being considered for this opportunity, please complete the online questionnaire by Friday, Feb. 15. If your agency is chosen to participate, you will be provided with additional details on the process and participant expectations, as well as training and support.

A total of 15-20 agencies for each comparative rating vendor will be selected. All submissions will be reviewed, and every applicant will receive a response about whether they have been selected to participate.

ACT focuses on bringing independent agents, carriers, vendors and other key industry stakeholders together to improve technology workflows, enhance productivity and increase profitability. Here’s how the pilot will benefit key distribution channel stakeholders:

  • Agents: Increase awareness and utilization of existing solutions; allow for feedback on improvement; and increase the number of carriers participating.
  • Carriers: Provide real-world stats and insights to create internal ROI.
  • Vendors: Deliver input on areas for streamlining quoting workflow.

Direct questions to Ron Berg, ACT executive director.​

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High Rollers: Serving the High Net Worth Insurance Customer

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Dealing with high net worth customers is not the same as dealing with your other customers. If your agency is fortunate enough to have such a client, you will have to pay special attention to them.

While it may seem counterintuitive, affluent customers are often frugal when purchasing insurance. Often these insureds will have high auto limits coupled with umbrella coverage to protect their substantial assets from claimants anxious to share in that wealth; but because it costs extra, they won’t necessarily want the umbrella coverage to include UM/UIM coverage … until they are badly injured in an accident, at which time they will argue that they would have gladly paid the premium had it been offered to them.

Some high net worth customers are asset rich through inheritance, but cash poor. When you have such a customer, insist on appraisals and document that the customer refuses to insure to value. Consider the case of an affluent client who owns a family mansion built in the 1850s, or more recent construction with “high end finishes.” The customer directs his obliging agent to insure the home based on what it would cost to build a new, ‘generic’ 10,000 square foot home. During a thunderstorm a large tree is blown over onto the home, damaging the roof, 3rd story framing and causing water damage through all three floors. The carrier will pay the loss, but will not replace the roof with the original hand-hewn slates. Nor will the 150 year-old hard wood floors or 12 inch crown moldings be restored to their original condition. Your client’s inevitable response? Unacceptable!

The problem is, simply putting the square footage of an old or otherwise unique structure into a calculator will not give you an adequate assessment of coverage needed. Go on record explaining why an appraisal is required to put an accurate value on the coverage needed not just to ‘replace,’ but to restore the home to its former glory.

Affluent customers can also be very hard to reach. An agent will usually be dealing witheo-180x150-tx-agent-1 an assistant, and will sometimes be told to sign the customer’s name on applications for him. Cutting corners due to the customer’s inaccessibility may seem like a practical necessity during the application process, but what if there is a loss? It will insulate the client, setting you up for an E&O claim. For that reason, be sure to deal directly with your client or, at the very least, obtain documentation from the client expressly authorizing a third person to make these decisions. And whether he is rich, poor or somewhere in between, never sign an application for your customer.

As part of their mobile lifestyle, a great many affluent clients own multiple homes. They can only be in one place at a time, so their various residences often sit empty for weeks or months. Regular homeowner policies exclude coverage for certain exposures, e.g., water, freezing or mold damage, if the home sits vacant for a specified period of time, which is something the customer needs to understand. If you are placing multiple homeowner’s policies for a high net worth client there are carriers who have policies well-suited to these well-to-do insureds.

Finally, moneyed clients often have extravagant toys and exotic pets. Insist on visiting the home and any other properties they own. Look for things like a commercial water slide at the residence, pet tigers, yachts and planes. We have seen claims on all of these items, which were overlooked by the agent when placing coverage for his wealthy insured.

To avoid these problems with affluent clients you should review their coverages annually, because they have the ability to make major changes to their insurance needs – purchases, sales and renovations — more often than other customers. You are also likely to place coverage for a well-off customer that you have never placed before. Be prepared to consult with an expert or enlist the help of a broker when you first place the coverage to make sure you get it right.

Wealthy customers can be a terrific source of business, but you need to pay special attention to them for their sake and yours. Their losses are going to be outsized, so your E&O exposure will be, too. It’s even more important than usual to document everything you offer to your high net worth client because, in the event of an un- or under-insured loss, they can afford the best lawyers money can buy. To make matters worse, knowing that they can afford to lose, affluent litigants are more likely to ignore the cost of litigation and roll the dice simply to make a point.

For such unconventional clients, you would do well to heed unconventional wisdom: the bigger they are, the harder you fall.

About the author
Jim Redeker is vice president and claims manager at Swiss Re Corporate Solutions and works out of the office in Kansas City, Missouri. Insurance products underwritten by Westport Insurance Corporation, Kansas City, Missouri, a member of Swiss Re Corporate Solutions.

This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. 

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Big ‘I’ Diversity Council Releases White Paper

The Big “I” Diversity Council is pleased to release “Workforce Diversity in the Independent Agency System: 3 Steps to Change,” a white paper based on findings from the 2018 Future One Agency Universe Study.

Here’s a sneak peek of what’s inside:

Motivating change has proven difficult, and it won’t occur overnight. There has been some progress, albeit slow. Our challenge is complicated by the fact that we are competing for the same talent pool as many other business segments. As the National Federation of Independent Business reported in October 2018, there are more U.S. job openings than there are qualified candidates: 38% of small businesses reported job openings they could not fill, and 88% of those trying to hire could find no or few qualified applicants. Small business owners reported the difficulty of finding qualified workers as their leading problem.

Many agencies continue to struggle to convince an already limited talent pool that insurance is a promising career option. In fact, the 2018 Future One Agency University Study revealed that the No. 1 challenge identified by respondents was “finding and screening job candidates with strong potential,” with 44% of agencies saying this is an issue for them.

Can pushing for diversity work? We believe so. After all, as a simplistic explanation, people tend to want to work with and buy from individuals they feel understand their lifestyle and realities. It’s simply human nature.​

Founded in 2002, the Big “I” Diversity Council brings together leading insurance carriers and underrepresented agents to help drive a more sustainable and diverse independent agency network by partnering with our state associations and various multicultural industry groups.

Interested in connecting with the Big “I” Diversity Council or learning more about current initiatives? Visit Big “I” Diversity online or reach out to Whitnee Dillard, Big “I” programs director.

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Ask Regina

Q. We have an agent in our office who has a General Lines Life & Health license. If he reginarefers one of his accounts to another agent in our office who has a General Lines P&C license to write the customers homeowners and auto, can he receive a commission split on that business?

A. No, you can only share commissions with an agent who holds the same type of license.

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Trusted Choice® Opens 2019 Marketing Reimbursement Program

Trusted Choice® continues to ease the financial burden for independent insurancemrp_2019-300x250 agents by providing marketing tools and offsetting the costs through the Marketing Reimbursement Program (MRP).

New members and first-time MRP users can receive up to $1,250 by co-branding their advertising and marketing efforts using the Trusted Choice logo and branding materials.

The 2019 MRP follows a two-tier structure:

  • Tier 1: Members can receive up to $750 for using the Trusted Choice logo on any consumer-focused items, including but not limited to Freedom Campaign ad materials, promotional items, original advertising (non-Freedom Campaign ads), and collateral items like business cards or stationery. Available for new and first-time MRP users only.
  • Tier 2: Members can receive up to $500 for a digital upgrade using Trusted Choice partner web.com or, until the templates are ready, any other web developer or vendor, including updates to an agency website, social media or mobile app. The digital upgrade must include the Trusted Choice logo.

For information about the MRP application or guidelines, email Jo Buckley, Trusted Choice member advocate.

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Joe Vincent Seminar Preview: Three Essentials and Four Cornerstones for Insurance Sales and Marketing in Today’s Changing World

The Center for Media Research recently reported on a study from Forrester Research that included this fascinating point: “Customers now control the buying process far more than today’s vendors control the selling process.”

That’s certainly the case in the insurance industry, isn’t it?  When my mother worked for an independent agency, the only way someone in our small town could obtain coverage was through the agent she worked for – or from one of his competitors.

We know the world has changed in a dramatic manner since that time – and this recent study illuminates an aspect in which many agents and their agencies are having difficulty.

The Forrester Research report reveals that — given the easy access to information from the Internet and our customer’s ability to use smartphones and tablets to acquire a wide range of knowledge — companies and their marketing teams in every industry are struggling just to keep up.

The study offers three essentials for growing sales in today’s economy:

  1. A customer-obsessed approach to defining the business and marketing strategy;
  2. An in-depth understanding of customers’ behaviors and needs;
  3. A customer engagement strategy that is calibrated to those behaviors and needs.

What this study is saying is, in essence, what I advocated when I initially wrote the first of my “Distinction” books over a decade ago — and emphasize in my latest book, “Iconic.” There are “Four Cornerstones of Distinction”:

  1. Clarity— you have to have a clear strategy and approach that differentiates your products and services
  2. Creativity— create a single, unique point of distinction that provides competitive space for you in the marketplace
  3. Communication— craft a compelling story that — from the customer’s perspective — develops engagement and emotional connectivity
  4. Customer Experience Focus— be obsessed about what it feels like to be your customer so your agency can deliver an “Ultimate Customer Experience ®”

Every agent and agency can begin now to execute on each of these four cornerstones.

A challenge that we all face, however, is our tendency is to keep doing what we have always done – to the point that we may be working harder on the wrong plan. As my friend, author and speaker Joe Calloway, often says, “Success means you know what used to work.”

This “changing buyer dynamic” alters in fundamental ways how you should consider marketing your agency and your approach to selling insurance from the way you’ve done it in the past.

Another critical point from the study:

  • Marketing now owns a bigger chunk of the “selling process.”Guiding a prospect through the early stages of the buying process (traditionally the role of sales) requires an outside-in approach, calibrated to the buyer’s wants and needs. This shifts the focus of insurance selling from content (that details the features and benefits of specific policies and coverage) to engagement that informs, persuades, and convinces.

Here are two critically important questions for every agent and agency:

  1. Has your marketing and the intensity of your customer engagement evolved to the level that you can sell and serve today’s customer effectively?
  2. Do you create an “Ultimate Customer Experience ®” for them that provides a compelling reason why they should choose you instead of the other alternatives available in the insurance world today?

There is no reason for any client to be loyal to your agency unless they’re clear about why they should. If you have not provided enough reasons for your customers to buy with you and stay with your agency, why should they?

Review those Four Cornerstones of Distinction – and ask yourself how you can apply and improve at each one.  It’s your first step to delivering the essentials required for success in today’s insurance industry.

About the Authormckain-scott-hr-photo

Scott McKain has designed and delivered high impact keynotes for the world’s most dynamic brands and has helped companies enhance profitability and loyalty by teaching how to sell uniquely and serve remarkably.

See Scott McKain at the Joe Vincent Management Seminar for his keynote presentation: “Create Distinction: What To Do When “Great” Isn’t Good Enough To Grow Your Business.”
Get more details and register.

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Why You Should Consider Hiring “Pretirees”

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What’s age have to do with it?

Apparently, far too much. Today’s companies, looking to fill an ever-growing list of open positions (31 million by 2020, according to Georgetown University), are turning to millennials. Attracting the younger workers has become the focus of companies as they try tapping into the energy and enthusiasm of the generation they’re trying to sell to in many cases.

While having young, eager employees may be good in the short term, it also poses some unexpected issues. As more and more Baby Boomers head for retirement (the Bureau of Labor Statistics estimates 10,000 turning 65 each day), companies are losing a key component to their success – knowledge. Many retiring professionals have amassed a career’s worth of knowledge that younger generations simply don’t have yet.

In a perfect world, keeping the knowledge within the company while grooming a new generation to take their places would be ideal.

Luckily, that ideal just became a little easier to achieve.

IIAT Advantage business partner WAHVE (Work at Home Vintage Experts) started their entire business on the idea that combining the knowledge and skills of the retiring and retired workers with the fresh perspectives of the younger generation is a winning combination. And that’s proven: statistics show that companies that employ an age-diverse workforce have higher productivity, a wealth of new ideas, and a wide knowledge base.

Finding the veteran workers is easier than one might think. The BLS says that the number of workers aged 65 and older who are still on the job grew 117% between 1994-2014. As people live longer, they want to remain engaged and on the job. And even more of them are willing to do so in a remote work arrangement.

Here are some of the advantages of employing retiring workers to complement a workforce that includes millennial workers:

Better work habits. Older workers are reliable – Max Planck Institute for Social Law and Social Policy data show that older workers are more focused, less distracted, and can concentrate better on the job they’re performing. Also, a Shift: The Commission on Work, Workers, and Technology report found that older workers value doing what they enjoy. Companies hiring older workers get a high level of commitment because older workers are choosing jobs they want.

Lower turnover. Older workers stay on the job. They’ve amassed the skills and have built areas of expertise within their positions. When workers are employed in a work-at-home position, they stay on the job longer, miss fewer days, and deliver a higher level of productivity than in-house staff.

Mentoring potential. Veteran workers have plenty to share with their colleagues. Companies that hire veteran workers, even in remote working arrangements, are benefitting from the knowledge that is passed from older worker to younger staff. In the same way, younger employees can teach their older colleagues plenty. They can share their deeper knowledge of technology, programs, and methods, and can bring new perspective to brainstorming and team efforts.

Hiring retiring (we call them “pretirees”) or retired workers is now even easier. WAHVE is an innovative contract talent platform that matches these veteran workers with a company’s needs. Companies get the right skills and experience, and workers get a work-from-home extension of their careers. And with access to a national pool of talent, the benefits get even better.

Is today the day you take that step to boost your team’s performance and knowledge? Contact WAHVE today at 646.807.4372. Be sure to let them know you’re a member of IIAT.

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