Meet Your IIAK Leadership

January/February 2014 kentucky ia

Tools that Enhance Claims Information & Efficiency for Independent Agents & Brokers – p.26 KESA_KIAad_2013.pdf 1 10/1/13 7:26 AM

STRENGTH IN NUMBERS C

CM Our 'Strength in Numbers' comes from our dedicated and highly-skilled employees

MY along with over 33 years of our strong commitment to be a scally responsible fund.

CMY Everyday at KESA, we come to work with one goal in mind - to be the best. We want

K to provide the best service, underwrite accounts with precision, care for injured

employees with clear and accurate communication, answer every question quickly

and knowledgeably, and be the unequivocal rst choice for workers' comp in Kentucky.

Contact us about our SAFETY W.O.R.K.S program at www.kesa.org. 200 Executive Park, Louisville, KY 40207 502.894.8484 | 800.367.5372 | www.kesa.org Page 11 Page 22 Page 26

In the Spotlight In Every Issue 6 Meet Your IIAK Leadership 4 From The Chair 8 2014 Associate Members Trusted Choice: Trusted Choice Marketing 15 Reimbursement Program is Back! 10 Big “I” PAC Surpasses $1 Million in 2013 16 Industry Partners 11 Hit the Ground Running in 2014 21 People In The News Kentucky General Assembly 2014 Session 22 Benefits Spotlight: Want to Add LIFE to Your 25 Agency? 26 Tools that Enhance Claims Information & Efficiency for Independent Agents & Brokers 28 Classified Ads 29 Agency Financial Management 28 Education & Events Calendar

THE KENTUCKY INDEPENDENT AGENT is the official magazine of Independent Insurance Agents of Kentucky, and is published bi-monthly. Editorial offices are located at 13265 O’Bannon Station Way, Louisville, Kentucky 40223, telephone (502) 245-5432; E-mail [email protected]; FAX (502) 245-5750. Officers Directors Staff John Funkhouser, CIC, CWCA Chip Atkins Peggy P. Porter Chair; Danville Louisville, (502) 585-3600 President/CEO (859) 236-5922 Jason D. Billington, CIC Arlene Adonis-Hawkins Michelle L. Love Murray, (270) 753-4751 Director of Communications Chair-Elect; Owensboro Allen J. Crawford, CIC (270) 926-2806 Somerset; (606) 679-6311 Crystal Brown David M. Houk Diana G. Hunt, CIC Administrative Assistant Vice Chair; Horse Cave Barbourville, (606) 546-4132 Katie Freshley (270) 286-2724 Michael G. Johnson, CIC Education & Events Director James D. England, AAI Lexington, (859) 233-1461 Tara Purvis Treasurer; Pikeville Aaron LaRue Marketing Director (606) 437-7361 Bardstown, (502) 348-0050 Stephen R. Kinkade, CPCU, AAI Skip McGaw Kristie Weyer National Director; Leitchfield Madisonville, (270) 821-3122 Insurance Services Manager (270) 259-5465 Mark “Ross” Richey William S. Latta, Bowling Green; (270) 754-4881 Immediate Past Chair; Henderson Ray A. Robertson, CIC (270) 827-3543 Mt. Sterling; (859) 498-3410

The Kentucky Independent Agent welcomes all advertising and editorial submissions. Inquiries for advertising, news releases and editorial contributions can be directed to: Arlene Adonis-Hawkins, 13265 O‘Bannon Station Way, Louisville, Kentucky 40223, Ph: (502) 245-5432, Fax: (502) 245-5750, Email: [email protected] Mission Statement The mission of the Independent Insurance Agents of Kentucky, working in the public’s best interest, is to be the preeminent advocate for Kentucky Independent Insurance Agents and support their business and professional development needs.

www.iiak.org Kentucky IA | January/February 2014 | 3 From the

e the preeminent advocate for the Independent InsuranceChair Agent “Band support their business and professional development needs.” This is the mission statement for IIAK. This may take a time or two, but before my year is out, I want to make sure that our members know what we are about.

We have a responsibility as members of IIAK to help in the advocacy de- partment. On February 4th, members had the opportunity to do just that with Agents Legislative Day in Frankfort. At the event, agents from our organization, as well as the Kentucky Association of Health Underwrit- ers (KYAHU) and the National Association of Insurance and Financial Advisors (NAIFA) came together as a united agent force. Unfortunately, weather did not permit us to visit the Capitol, however, we were able to hear from our own IIAK Board member, Chip Atkins and Navigator/ Agent subcommittee chairman of the Kentucky Health Benefit Exchange Advisory Board, Marcus Woodward who provided us with an update on the Affordable Care Act in Kentucky. In addition, we heard from Rep- resentative Jeff Greer who talked about how important it is for agents to visit with their representatives.

We may not have been able to visit with individual representatives during Agents Legislative Day, however I greatly encourage you, to meet John Funkhouser with them whenever you have the chance. Not only does it help them understand the issues we face as agents, but also show them that we have 2013 - 2014 IIAK Chair a voice. The power of our grass roots system is tremendous. Yes, we have April 2-5 we will host the CRM: Principles of Risk Management. What our paid staff, but the one that makes the most impact is YOU. a powerful course if you are looking for an update, maybe finishing up a designation and want to switch out a class or just interested in gaining Our lobbying efforts could not be done without money. Please consider some useful information. giving to KAPAC. These contributions do not “BUY” votes, they help to get us a seat at the table so that our voices and concerns are heard. There I have stated previously, our clients and prospects are expecting so much will be some interesting races coming up shortly and monies are needed. more out of us. The “Quote and Hope” game is about as antiquated as “Dial-up”. Let the CRM program help you stand out in the pack. Obtain- Secondly, we have an opportunity in April to go to DC for our National ing necessary CE hours is great, but the knowledge and useful tools that Legislative Day. This will be my third year to attend this event. What an you will acquire is priceless. awesome opportunity to go to our nation’s capital and meet with our leaders. I realize in the previous paragraph I mentioned giving to our state Membership in IIAK is not an expense; it is an “Investment”. Like any PAC. Here I go again and will plug making a contribution to InsurPac as investment, you must be an active participant to get the most out of it. well.

Respectfully, The second part of our mission statement refers to our Professional Development needs. IIAK is giving you that opportunity in April. On John A Funkhouser

4 | January/February 2014 | Kentucky IA www.iiak.org Our Members Say It Best

The KRF-SIF’s loss prevention and safety training has meant the world to our company. Prior to becoming members of the Fund, we spent quite a bit on annual safety training. Since the Fund provides this type of training at no charge to its members, we have been able to significantly decrease our training expenses. Jennifer Shaw, HR Manager, Kentucky Lake Oil Company

…the main reason we went with the KRF-SIF workers’ comp program is because of their reputation for handling claims management in a manner that is fair not only to the individual, but also to the company holding the policy. The Fund has proven to be able to reduce the cost per claim and overall claims costs. My advice is that if claims management counts, you can count on KRF-SIF. If not, you can go anywhere. Bruce Pieratt, President/CEO, Pieratt’s

Want to have a voice in your workers’ comp? For more information, contact your independent agent or: Mary Carney, KRF-SIF Program Manager /RXLVYLOOHDUHD )D[ e-mail: [email protected] www.krfsif.org Administered by CCMSI

www.iiak.org Kentucky IA | January/February 2014 | 5

9/30/08 6:22:13 AM cover story Meet Your IIAK Leadership

ach year the Kentucky Independent Agent produces a profile of IIAK’s • The IIAK Young Agents Committee is represented on the Board by its Ecurrent Board of Directors, along with some facts about how the Board Chair, who is also a voting member. works. This serves as a great resource for IIAK members to become famil- • When there is a new agency or associate member applicant, votes are iar with the leadership body of the association and offers an exchange of taken from the entire Board of Directors to determine membership information and communication between board members and members. of that agency or company/vendor. There is a majority vote rule for • In 2010, the association changed its by-laws to reflect continuity that potential member to have membership into the association. between state and national officer titles. As a result it now uses the • Any association agent member in good standing may serve on the titles Chair, Chair-Elect, and Vice Chair, whereas previously these Board of Directors. There is always an attempt to get representatives officer titles were President, President-Elect and Vice President. from all regions of Kentucky and from varying size agencies. In addition to this, the position formerly known as Executive Vice President is now President/CEO. • The Chair serves a one-year term and the directors, who are appointed by the Chair, serve a three-year term unless that individual • The Board usually meets four times in a fiscal year. This includes a is going through the chairs or serving an unexpired portion of a term. weekend board meeting that is held at the Chair’s hometown or place The positions of Treasurer and National Director are elected by the of choice. This meeting includes some social functions with invited Board of Directors, while the positions of Chair, Chair-Elect and Vice guests and spouses. In cases where an urgent matter is needed to be Chair are elected by the membership. discussed, the Chair will call for a special meeting.

Executive Committee

Chair Chair-Elect John Funkhouser, CIC Michelle L. Love Johnson-Pohlmann Insurance – E.M Ford & Company – Danville Owensboro [email protected] [email protected]

Vice Chair National Director David Houk Stephen R. Kinkade, CPCU, AAI Houk Insurance Agency – Kinkade-Cornell Insurance Agency, Horse Cave Inc. – Leitchfield [email protected] [email protected]

Treasurer Immediate Past Chair James D. England, AAI William D. Latta Peoples Insurance Agency – Latta Insurance Services – Pikeville Henderson [email protected] [email protected]

6 | January/February 2014 | Kentucky IA www.iiak.org cover story Meet Your IIAK Leadership

Board of Directors

Chip Atkins Diana G. Hunt, CIC R. H. Clarkson Insurance Mountain Valley Insurance Agency, LLC. – Louisville – Barbourville [email protected] [email protected]

Jason D. Billington, CIC The Murray Insurance Agency – Murray [email protected]

Barret H. “Skip” McGaw, II, Michael G. Johnson, CIC CIC Al Torstrick Insurance Riddle Insurance – Agency – Lexington Madisonville [email protected] [email protected]

Aaron LaRue LaRue Insurance, Inc. – Bardstown [email protected]

Allen J. Crawford, CIC Mark “Ross” Richey Reed Brothers Insurance Lawton Insurance Agency Services – Somerset – Bowling Green [email protected] [email protected]

Ray A. Robertson, CIC Limestone Agency, LLC – Mt. Sterling [email protected]

www.iiak.org Kentucky IA | January/February 2014 | 7 membership 2014 Associate Members

AAA Auto Club P&C Insurance – Louisville, KY CCMSI/KRF-SIF – Louisville, KY Contact: Robert L. Jones Contact: Mary Carney Ph: (616) 556-6699 Ph: (502) 426-7474 Email: [email protected] Email: [email protected] American Mining insurance Company – Lexington, KY Columbia Insurance Group – Johns Creek, GA Contact: Michael Prickett Contact: Mamie Madden Ph: (859) 971-1955 Ph: (770) 410-3720 Email: [email protected] Email: [email protected] American Mining Insurance Company – Birmingham, AL Cumberland Surety, Inc. – Lexington, KY Contact: Bryant Brown Contact: Don Charlet Ph: (205) 870-3535 Ph: (859) 254-8622 Email: [email protected] Email: [email protected] American Resources Insurance Co. – Mobile, AL FCCI Insurance Group – Indianapolis, IN Contact: Lamar Lee Contact: Craig Evans Ph: (251) 509-0860 Ph: (317) 571-3031 Email: [email protected] Email: [email protected] Amerisafe, Inc. – DeRidder, LA Guard Insurance Group – Wilkes-Barre, PA Contact: Becky Fejarang Contact: Shawn Roguskie Ph: (337) 460-3380 Ph: (570) 825-9900 Email: [email protected] Email: [email protected] Anthem Blue Cross & Blue Shield – Louisville, KY Hamilton Mutual Insurance Company – Blue Ash, OH Contact: Karen Hall Contact: Kent A. Kochheiser Ph: (502) 889-2405 Ph: (513) 221-6010 Email: [email protected] Insurance Institute of Kentucky – Lexington, KY Arlington/Roe & Company – Indianapolis, IN Contact: Mark Treesh Contact: Bobbi Simmons Email: [email protected] Ph: (317) 554-8550 Email: [email protected] J.M. Wilson – Portage, MI Contact: Cathy Baldwin Arlington/Roe & Company – Louisville, KY Ph: (269) 321-4713 Contact: Toni Beard Email: [email protected] Ph: 5029698058 Email: [email protected] KEMI – Lexington, KY Contact: Roger Fries Auto-Owners Insurance Company – Lexington, KY Ph: (859) 425-7800 Contact: Lee Rademacher Email: [email protected] Ph: (859) 278-6181 Email: [email protected] Kentucky Agents Finance, Co. – Indianapolis, IN Contact: Carol Dulle Berkley Mid-Atlantic Group – Harrisburg, PA Ph: (317) 824-3780 Contact: Marianne Morosko Ph: (800) 283-1153 Kentucky Growers Insurance Company – Lexington, KY Email: [email protected] Contact: Charlie Busby Ph: (859) 252-3439 Bituminous Insurance Companies – Nashville, TN Email: [email protected] Contact: Jo Tally Osburn Ph: (615) 871-9042 Kentucky League of Cities – Lexington, KY Email: [email protected] Contact: Joseph R. O’Nan Ph: (859) 977-3700 Bolton & Company – Louisville, KY Email: [email protected] Contact: Greg Allgeier Ph: (502) 583-8361 Kentucky National Insurance Co. – Lexington, KY Email: [email protected] Contact: David McMullen Ph: (859) 367-5200 Email: [email protected]

8 | January/February 2014 | Kentucky IA www.iiak.org membership 2014 Associate Members (cont.)

Kentucky Retail Federation Insurance – Frankfort, KY Safeco Insurance – Fairfield, OH Contact: Tod A. Griffin Contact: Matt Warye Ph: (502) 875-1444 Ph: (513) 965-4326 Email: [email protected] Email: [email protected] KESA – Louisville, KY Secura Insurance Company – Appleton, WI Contact: Melinda Ellingsworth Contact: Wedny Kraus Ph: (502) 894-8484 Ph: (920) 830-4363 Email: [email protected] Email: [email protected] Keystone Insurers Group – Northumberland, PA Secura Insurance Company – Louisville, KY Contact: Nancy Tehan Contact: Darlene Rufra Ph: (570) 473-1352 Ph: (502) 429-3829 Email: [email protected] Email: [email protected] Liberty Mutual Insurance – Lexington, KY Seneca Insurance Company – Louisville, KY Contact: Robert D. Fehrenbach Contact: Michael Kotte Ph: (859) 219-3910 Ph: (502) 495-2627 Email: [email protected] Email: [email protected] Lloyd’s of Kentucky, Inc. – Frankfort, KY State Auto Insurance Company – Columbus, OH Contact: Patrick Talley Contact: Elise Spriggs Ph: (502) 875-5940 Ph: (614) 917-4787 Email: [email protected] Strategic Comp – Metairie, LA Market Finders Insurance Corp. – Louisville, KY Contact: Catherine Senac Contact: Joe Miller Ph: (504) 840-4998 Ph: (502) 339-5958 Email: [email protected] Email: [email protected] Summit Consulting – Corydon, IN McIntyre, Gilligan & Mundt, Inc. – Louisville, KY Contact: Rusty Wells Contact: Michael P. Gilligan Ph: (812) 972-1433 Ph: (502) 582-3744 Email: [email protected] Email: [email protected] The Hartford – Franklin, TN NAI Kentucky, Inc. – Hendersonville, TN Contact. Carolyn S. Nalley Contact: William E. Hall Ph: (502) 259-8694 Ph: (615) 264-8714 Email: [email protected] Email: [email protected] The Kentucky Fair Plan – Louisville, KY Premium Assignment Corporation – Franklin, TN Contact: David Asher Contact: Laura Gaunt Ph: (502) 327-8909 Ph: (615) 419-1797 Email: [email protected] Email: [email protected] The Motorists Insurance Group – Columbus, OH Prime Insurance Company – Chicago, IL Contact: Megan Rettig Contact: Barbara Malkowski Ph: (614) 225-8226 Ph: (800) 456-4576 Email: [email protected] Email: [email protected] Travelers – Cincinnati, OH Progressive – Austin, TX Contact: Gary Rogers Contact: Linda Rider Ph: (800) 842-0067 Ph: (615) 391-7431 Email: [email protected] Email: [email protected] West Bend Mutual Insurance Company – Middleton, WI Risk Placement Services, Inc. – Lexington, KY Contact: Drew Light Contact: Ron Smedley Ph: (608) 410-3245 Ph: (859) 245-2500 Email: [email protected] Email: ron_smedley Westfield Insurance – Westfield Center, OH Contact: Kevin Wermer Ph: (330) 887-0580 Email: [email protected] www.iiak.org Kentucky IA | January/February 2014 | 9 national government affairs Big ‘I’ PAC Surpasses $1 Million in 2013 by Nathan Reidel I nsurPac closes 2013 books as top P&C political action committee. North Carolina, North Dakota and South Carolina. When the dust settled and all the numbers were crunched, InsurPac, the In the 2012 election cycle, InsurPac distributed more than $1.8 million Big “I” political action committee (PAC), raised a total of $1,007,668 dur- to senators, representatives and other candidates for federal office. Also ing the 2013 calendar year. in 2012, 84% of InsurPac-supported candidates won with 237 victories of the 282 races it supported. Surpassing the $1-million mark in one year is an important accomplish- ment for InsurPac. The Big “I” membership prides itself on political The power of InsurPac is credited with the association’s continuing posi- engagement and involvement, and the continued growth of InsurPac is tion as one of the most well-respected business associations in Washing- further evidence of this commitment. ton, D.C.

Nearly 4,000 agents, brokers and company representatives came together In disbursing contributions, InsurPac does not consider party affiliation, to voluntarily support InsurPac in 2013, with contributions ranging from but rather supports representatives, senators and candidates for federal one dollar to the maximum allowed $5,000. Forty-three states achieved office who have been supportive of the independent agency system. their InsurPac goal, and six states achieved Eagle status for averaging in excess of $100 donated per agency: Louisiana, Montana, New Hampshire, Nathan Riedel is Big “I” vice president of political affairs.

10 | January/February 2014 | Kentucky IA www.iiak.org sales & marketing Hit the Ground Running in 2014 By John Chapin

s this finally going to be the year? Will 2014 be the year that you finally once you’re way out ahead of the pack and feeling great, don’t fall into your Is tep up, stand out and live up to what you know you can do, to what comfort zone and take your foot off the accelerator. If you do, you’ll lose you’ve been telling yourself for years that you’ll show the world one day? momentum, slip back and next thing you know you’ll be back to 90% of Do you remember when you used to think about how old you’d be and quota at the end of March. Don’t back off, keep going. Pedal to the metal. what you’d be doing in the year 2000? That was 14 years ago. Enough of the “next year,” it’s time to make this year “next year” and in order to do Tip 2: Double your activity that, you’ll have to hit the beginning of 2014 like a freight train. Here’s how. If you usually make 50 prospecting calls in a day, make 100, if you usually make five presentations, make ten. If you double your prospecting calls and presentations, you should double your sales. Is that potentially going to take more time and resources? Yes, do it anyway. Follow tip 4 below and manage your time better, get those non-produc- tive activities off your plate or table other things for off-hours or even the weekends. Look, what activities pay you the most? You need to find creative ways to find more time to spend on those.

Tip 3: Go to extremes

Doubling your activity and using end- of-year and other tactics may sound extreme, but what I’m talking about here is really pushing yourself. I’m talking about a marathon prospecting day in which you make four to five times the number of Five Ideas for Exploding Out of the Gate in 2014 calls you’d usually make, or a day in which you make four or five times as Tip 1: Use end-of-month, end-of year sales tactics now. many presentation calls. These may be days when you dedicate the whole Are there certain things you do to get business when you need it? If so, day to one sales activity and you start your day earlier and end it later. use those now. You can offer special discounts, have sales, you can also Another form of extreme activity is to make a BIG call every day. This call your best customers and ask them to invest now. Whatever it is that refers to finally making that call you’ve been thinking about forever and you do to scare up business when you need it, this is the time to use those you just can’t get yourself to make it. Another form of this idea is to call techniques now. The overall idea here is to develop a sense of urgency at least one elephant, or person that intimidates you, every day. to get as much business in as fast as possible so that you can build some powerful momentum and get way out ahead. Ideally you’re looking for Tip 4: Get better at selling and time management the equivalent of three months of business in January. Another key here is This one is pretty self-explanatory. Obviously the better you are at sell- www.iiak.org Kentucky IA | January/February 2014 | 11 sales & marketing

ing, the better qualified your prospects will be and the better and more carrot and stick here. Can you post-date a check for $1,000 or $10,000 or effective you’ll be at all aspects of the sales process. This also means that more and if you don’t do what you say you’re going to do, someone gets to less time will be required to make the same amount of sales. That said, cash it, or it otherwise disappears forever? Can you make your dream va- you still need to get better at focusing on your key activities which are: cation to Hawaii a reality if you make it happen? Maybe you can do both. prospecting, presenting, closing and client relationship building. Read, The point is, if there is enough on the line, if you have a strong enough take courses and study sales and time management. Also find people that reason(s) to make it happen, you’ll make it happen. It simply comes are great at time management and sales, these may not be the same people down to knowing what your hot buttons are and then pushing enough of by the way, and find out what they do. Do the same things the same way them so that you’re crazed with enthusiasm and drive to make it happen. and get the same results. John Chapin is a professional sales speaker and trainer. John has over 26 Tip 5: Up the ante years of sales experience as a number one sales rep and is the author of the What can you do to really put some pressure on yourself to make it hap- 2010 sales book of the year: Sales Encyclopedia. You can find out more at pen? On the other side of the coin, what can you do to make the reward www.completeselling.com. so great that you simply have to get the year off to a great start? Think

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12 | January/February 2014 | Kentucky IA www.iiak.org Relax... You’ve offered each of your clients a personal umbrella policy.

Right? It might not be quite as relaxing as a day at the beach, but knowing you’ve done everything in your power to protect the customers who trust you to help them will go a long way towards easing your mind.

Offering each and every client an umbrella not only protects those who choose to purchase the coverage. It protects your agency from liability. And it protects your book of business, since studies show that customers who have multiple policies are less likely to move their business elsewhere.

As a Big “I” member, you have access to a stand alone personal umbrella program from A+ rated carrier RLI, featuring:

Limits up to $5 million available Competitive, low premiums for increased limits of liability Excess UM/UIM available in all states Simple, self-underwriting application that lets you know You can keep your current homeowner/auto insurer immediately if the insured is accepted New drivers accepted - no age limit on drivers E-signature and credit card payment options Up to one DWI/DUI per household allowed Immediate coverage available in all 50 states plus D.C. Auto limits as low as 100/300/50 in certain cases

So cover your clients... protect your agency... and profit from umbrella sales! Contact Jennifer Hopper, your RLI Administrator at: Email: [email protected] Tollf Free: (800) 878-9891, ext. 8639 Local Fax: (317) 554-8551 Toll Free Fax: (888) 552-9891 Calling all Risk Managers! We invite you to attend the certified Risk Manager’s Program (CRM) - Principles of Risk Management Course. A CRM designation is visible confirmation of professionalism. It demonstrates knowledge in areas of managing risks, exposures, perils, and hazards—tangible evidence of a commitment to continuing excellence.

Benefits of the CRM Program:  Practical new ideas, cutting-edge information, and skills that can be used immediately  Advanced earning and career potential—participants become more valuable to their organizations when they learn to protect against risks that can interrupt the flow of earnings  Strengthened job security in a competitive market  Real-life examples and experiences, shared by risk management experts who are active in various industries  Ability to add value and increase an organization’s profitability and reputation  Active involvement in a network of risk management professionals  When taken annually, CRM courses meet or exceed the state CE requirement in all states and jurisdictions.

Principles of Risk Management—Topics Covered  Risk Management Concepts and Their Effect on the Organization  Risk Identification: Methods  Risk Identification: Logical Classifications  Ethics and the Risk Management Process  Financial Concepts for Risk Management  Loss Data Analysis  Risk-Taking Appetite and Ability

Did You Know  Individuals who currently hold the CIC designation can satisfy their annual update requirement by taking the CRM.  Participants in the CIC program can customize their education while earning the CIC designation by substituting one CRM course for one CIC institute.

Event Details: Principles of Risk Management April 2-5, 2014 Hyatt Regency Louisville

For additional information and/or to register please go to: www.iiak.org. trusted choice® Trusted Choice® Marketing Reimbursement Program is Back! Brand to help agents deliver the Trusted Choice® brand experience to consumers and maximize advertising and marketing budgets.

s your agency makes its marketing and advertising plans for 2014, of wholesale digital media on websites focused on “in-market” con- Adon’t forget to take advantage of the Trusted Choice® Marketing Reim- sumers. Any member agency wishing to purchase units of this media bursement Program (MRP), which is back for another year. may do so at a cost of $2,250. Each unit is valued at $3,000 and will deliver approximately 600,000 consumer impressions. The MRP will Under the 2014 Trusted Choice® MRP, member agencies can be reim- provide a subsidy of $750 to lower your cost to $2,250. The banner bursed for a portion of expenses, up to $1,600, incurred in 2014. These ads will be provided by Trusted Choice® and customized with your expenses include co-branded materials for items such as advertising, agency’s information and will be targeted to your specific market. business cards, letterhead, envelopes, agency signage and logo-wear; and The Trusted Choice® will manage all tagging, placement and tracking in creating or updating a digital presence to include the Trusted Choice® on your behalf. The digital ads will link to either your website or logo, link to the Trusted Choice® website and Pledge of Performance. your agency profile on TrustedChoice.com. For more information on This is not meant to replace your agency’s brand, but to complement it by this tier please contact [email protected]. including the Trusted Choice® logo on these materials. An agency taking full advantage of all three tiers can be reimbursed to All reimbursements will be made based on which tier your co-branded a maximum of $1,600 per calendar year. However, any agency may pur- material(s) falls under. The three tiers include: chase 2 or more Tier 3 units of advertising at the full cost of $3,000. The • Tier 1: The MRP will reimburse 50% of your total spent on allowable wholesale digital media subsidy is provided on a “first-come, first-serve” co-branded marketing and advertising expenses, to a maximum of basis and may be discontinued if the budgeted funds are depleted. $500. • Tier 2: In addition to the $500 as part of Tier, you are eligible for an To download the full guidelines of the 2014 Trusted Choice® MRP, visit additional $350 reimbursement if your agency uses the advertising the new Trusted Choice® Agent Resource site at TrustedChoice.com/ materials provided by Trusted Choice®. agents. You can also contact Kiesha Cherry by phone at (703) 706-5443 or • Tier 3: Throughout 2014, Trusted Choice® will purchase large blocks email [email protected].

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Cincinnati Branch: 800.732.5595 | Home Office: Des Moines, IA www.emcins.com © Copyright Employers Mutual Casualty Company 2013 All rights reserved www.iiak.org Kentucky IA | January/February 2014 | 15 industry partners Calling All Companies, Wholesalers and Vendors – Support Independent Agents Today! The Independent Insurance Agents of Kentucky invites your company to become an Industry Partner.

he Industry Partners program allows insurance companies, “IIAK Partners receive year- Twholesalers and vendors, to support IIAK on an on-going round exposure to members of the basis. IIAK Partners receive year-round exposure to members of the Independent Insurance Agents of Kentucky through a wide Independent Insurance Agents of range of benefits and signifies you as a supporter of the Indepen- Kentucky through a wide range dent Agency System. Your backing makes it possible for IIAK to of benefits and signifies you as a develop affordable, quality programs that enhance the profession- supporter of the Independent alism of Kentucky’s independent insurance agents. Agency System.”

The value you receive as a Partner for the year far exceeds the cost and the benefits you receive are exclusive only to Partners. There are seven levels of participation available: Premier, Diamond, Plat- inum, Gold, Silver, Bronze and Sterling. Each level has a sponsor- ship value, with benefits allocated to it.

(as of 1/14/2014) Benefit to you: Year-round exposure and access to member agents Gold Level of the Independent Insurance Agents of Kentucky.

Savings: Bolton & Company The value you receive from the benefits of your participation as a Partner, far exceeds the cost. KEMI Exclusive: Many of the benefits you receive as a Partner are not available to other companies, wholesalers and Silver Level vendors—at any cost!

Convenient: Amerisafe, Inc. This is an annual, one-time solicitation. No hassle. Keystone Insurers Group Questions? Contact IIAK by phone at (502) 245-5432 or email [email protected] Bronze Level Auto-Owners Insurance KESA

16 | January/February 2014 | Kentucky IA www.iiak.org You’re an independent agent.

Got your life jacket on?

The Big “I” Professional Liability Program Prevent. Protect. Prosper. Our risk management Our superior coverage and When you know you have resources keep your agency expert claims teams are in your the best E&O protection, you from making common corner in the event of a claim. can focus on growing your preventable mistakes. most important asset–your business. The Big “I” and Swiss Re are jointly committed to providing IIABA members with leading edge agency E&O products and services. The IIABA and its federation of 51 state associations endorse Swiss Re’s comprehensive professional liability program. www.independentagent.com/EO

Insurancewww.iiak.org products underwritten by Westport Insurance Corporation, Overland Park, Kansas. Westport is a member of the Swiss Re group of companies and is licensed in all 50 states and the District of Columbia.Kentucky ©2008 Swiss IA | Re January/February 2014 | 17 People who run a not-for-profit organization know. The most valuable things are also the hardest to get.

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Louisville Board Installs New Officers The Louisville Board of Independent Insurance Agents installed new He is the 21st recipient of the Robinson Award which is the highest officers to its board of directors, at its Annual Meeting on January 23rd in honor presented by the Louisville Board. It is named after Arthur Harley Louisville. Robinson, who was the first member of the Louisville Board to serve as The event marked the groups 159th Annual Meeting. Installed to its President of the Independent Insurance Agents & Brokers of America. board of directors were: • Michael L. Schmidt, CIC as President. Schmidt is a producer with Schmidt Insurance Agency, Inc. • Michael Rademaker, CIC as Vice President. Rademaker is a Vice President with Thoroughbred Associates, Inc. • Jimmy Blount as Treasurer. Blount is a producer with Garrett-Stotz Company • Brian Smith, CPCU, ARM, CIC as Secretary. Smith is Branch Man- ager with Arthur J. Gallagher Risk Management Services, Inc.

Each officer will serve a one-year term in their respective positions.

Don Mucci (left) receiving the Robnson Award from Louisville Board President Mike Schmidt (right).

Brown Joins IIAK Team Crystal Brown has joined the IIAK team as Administrative As- sistant. In her role, Brown will be the first voice members hear The new officers of the Louisville Board (l to r): Jimmy Blount, when calling IIAK, as well as providing support to the different Brian Smith, Mike Rademaker and Mike Schmidt. IIAK departments.

Brown has over 12 years of experience working in a variety of areas including accounting, customer relations, insurance and general office operations. Prior to joining IIAK, Brown worked Mucci Receives Esteemed Robinson Award as a receptions at an accounting firm and as an executive assistant at a Don Mucci, Vice President of Garrett-Stotz Company in Louisville, was TPA insurance company. presented with the Robinson Award by the Louisville Board of Indepen- dent Insurance Agents on January 23rd at the group’s Annual Meeting in Born and raised in the Louisville. Louisville area, she currently resides in Oldham County. Mucci began his career as a claims adjuster with Allstate while he was in Brown and husband, Chris, college. Following graduation from Bellarmine University in 1981, where have a 2 and a half year old he graduated with a Bachelor of Arts in Business Administration, Mucci son Jeremiah and has two became an independent agent. He specializes in employee benefits and stepchildren, son Ian and business insurance. daughter Shelby who are 15 year old twins. An active member of the industry, Mucci has served with a number of organizations including, the Kentucky Association of Health Underwriters A graduate of Strayer Uni- as past Legislative Co-Chair and is a two time President of the Louisville versity with a BS in Business Board of Independent Insurance Agents, just to name a few. Administration, Brown’s interests include cooking, Crystal Brown IIAK Administrative Assistant Mucci is also active in his community serving on the board of the St. cross-stitching and spend- Meinrad School of Theology’s Board of Overseers and is a past member ing time with family and of Bellarmine University’s Board of Trustees, Board of Overseers and friends. Alumni Board. www.iiak.org Kentucky IA | January/February 2014 | 21 state government affairs Kentucky General Assembly

his year, the Kentucky General Assembly’s 2014 session began on Janu- 2014 House Standing Committee on Banking & Insurance Tary 7th and is expected to adjourn on April 15th. It is expected to last Rep. Jeff Greer (D-Brandenburg) – Chair 60 working days, which is the maximum allowed by the state constitution Rep. Will Coursey (D-Symsonia) – Vice Chair in even-numbered years. Rep. Ron Crimm (R-Louisville) – Vice Chair Rep. Mike Denham (D-Maysville) – Vice Chair Legislators will not be meeting on January 20 in observance of Martin Rep. David Osborne (R-Prospect) – Vice Chair Luther King, Jr. Day and February 17th in observance of President’s Day. Rep. Steve Riggs (D-Louisville) – Vice Chair The veto recess – the period of time in which lawmakers return to their Rep. Bart Rowland (R-Tompkinsville) – Vice Chair home districts to await possible gubernatorial vetoes of legislation, will Rep. Kevin Sinnette (D-Ashland) – Vice Chair last from April 1 to 11. Lawmakers will return to the Capitol on April Rep. Johnny Bell (D-Glasgow) 14th and 15th for the final two days of the session. Rep. Dwight D. Butler (R-Harned) Rep. Robert R. Damron (D-Nicholasville) The 2014 session calendar can be viewed online at: http://www.lrc.ky.gov/ Rep. Joseph M. Fischer (R-Ft. Thomas) sch_vist/14RS_calendar.pdf. Rep. Jim Gooch, Jr. (D-Providence) Rep. Mike Harmon (R-Danville) Kentucky Legislature Contact Information: Rep. Dennis Horlander (D-Lousville) Legislative Message Line 1-800-372-7181 Rep. Dennis Keene (D-Wilder) Bill Status Line 1-866-840-2835 Rep. Thomas Kerr (R-Taylor Mill) Calendar (Meetings) Line 1-800-633-9650 Rep. Adam Koenig (R-Erlanger) TTY Message Line 1-800-896-0305 Rep. David Meade (R-Stanford) En Español 1-866-840-6574 Rep. Michael Meredith (R-Brownsville) Website: www.lrc.ky.gov/ Rep. Brad Montell (R-Shelbyville) Rep. Sannie Overly (D-Paris) Senate Leadership Rep. Ruth Ann Palumbo (D-Lexington) President: Sen. Robert Stivers (R), District 25 Rep. Ryan Quarles (R-Georgetown) President Pro Tempore: Sen. Katie Kratz Stine (R), District 24 Rep. Jody Richards (D-Bowling Green) Majority Floor Leader: Sen. Damon Thayer (R), District 17 Rep. Jonathan Shell (R-Lancaster) Minority Floor Leader: Sen. R.J. Palmer (D), District 28 Rep. Fitz Steele (D-Hazard) Majority Caucus Chair: Sen. Dan Seum (R), District 38 Rep. Wilson Stone (D-Scottsville) Minority Caucus Chair: Sen. Johnny Ray Turner (D), District 29 Rep. Tommy Thompson (D-Owensboro) Majority Whip: Sen. Brandon Smith (R), District 30 Rep. John Tilley (D-Hopkinsville) Minority Whip: Sen. Jerry Rhoads (D), District 6 Rep. Ken Upchurch (R-Monticello) Independent Agents Elected to the House of Representatives 2014 Senate Standing Committee on Banking & Insurance Rep. Ron Crimm (R-Louisville) Sen. Tom Buford (R-Nicholasville) – Chair House District 33 Sen. Jared Carpenter (R-Berea) – Vice Chair Rep. Ron Crimm has served Jefferson Sen. Julian M. Carroll (D-Frankfort) County since 1996. A former teacher Sen. Julie Denton (R-Louisville) turned independent insurance agent, Sen. Chris Girdler (R-Somerset) Representative Crimm started his own Sen. Morgan McGarvey (D-Louisville) agency in 1977. He managed and owned Sen. Dennis Parrett (D-Elizabethtown) that agency until 1999 when it was sold Sen. Dorsey Ridley (D-Henderson) to Thoroughbred Associates in Louisville. Sen. Albert Robinson (R-London) He continues to be active in the insurance Sen. Dan “Malano” Seum (R-Fairdale) business on a daily basis. Sen. Brandon Smith (R-Hazard) He is currently a vice chair of the House House of Representatives Leadership Banking & Insurance Committee and Rep. Ron Crimm (R-Louisville) serves on a number of other committees House Speaker: Rep. Greg Stumbo (D), District 95 House District 33 including; Appropriation & Revenue, Speaker Pro Tempore: Rep. Larry Clark (D), District 46 Local Government, Veterans Military Majority Floor Leader: Rep. Rocky Adkins (D), District 99 Affairs and Public Safety. Additionally, Rep. Crimm is vice chair of the Life Minority Floor Leader: Rep. Jeff Hoover (R), District 83 Committee for the National Council of Insurance Legislators (NCOIL) and Majority Caucus Chair: Rep. Sannie Overly (D), District 72 serves on the Communications, Financial Services and Interstate Com- Minority Caucus Chair: Rep. Bob M. DeWeese (R), District 48 merce workgroup of the National Council of State Legislators (NCSL). He Majority Whip: Rep. Tommy Thompson (D), Disctict 14 has been a long-time member of IIAK. Minority Whip: Rep. John Carney (R), District 51 Rep. Crimm is a graduate of Shippensburg University in Pennsylvania.

22 | January/February 2014 | Kentucky IA www.iiak.org state government affairs 2014 Session

Rep. Jeff Greer (D-Brandenburg) House District 27 Rep. Jeff Greer has served Bullit, Hardin and Meade counties since 2007. He founded Greer Insurance in 1990 and has been active in the industry ever since. He served as the chair of IIAK’s Young Agents Committee in 2005. In 2012, he was presented by IIAK with the distin- guished E. Starling Holloway Award. Rep. Greer is co-chair of the House Bank- ing & Insurance Committee, is a co-chair Rep. Jeff Greer (D-Brandenburg) of the House Committee on Veterans, House District 27 Military Affairs and Public Safety, is liaison member of the House Budget Review Steve Riggs (D-Louisville) Subcommittee on Transportation, and member of the House Committee House District 31 on Tourism Development and Energy. Additionally he is a member of the Rep. Steve Riggs has been serving part National Council of Insurance Legislators (NCOIL). of Jefferson County as legislator since 1991. By trade, Rep. Riggs has over 26 Rep. Greer attended Eastern Kentucky University where he obtained a BA years of experience in the insurance in Business Administration. industry, both as a company representa- Rep. Jim Gooch, Jr. (D-Providence) tive and independent agent. He has been House District 12 a long-time member of IIAK and is a producer with Nelson Insurance Group Rep. Jim Gooch has served as a member in Louisville. of the Kentucky House of Representatives since 1995. He is an independent agent by Rep. Riggs is a vice chair of the House profession. Steve Riggs (D-Louisville) Committee on Banking & Insurance. In House District 31 addition, he is also chair of the House Currently Rep. Gooch sits on the House Committee on Local Government and Banking & Insurance Committee, is chair member of the House Committee on Transportation. of the Natural Resources & Environment Committee and sits on the Tourism De- Rep. Riggs is a graduate of the University of Kentucky with a degree in velopment & Energy Committee. Business Administration. Rep. Jim Gooch, Jr. (D-Providence) House District 12 Bart Rowland (R-Tompkinsville) House District 53 Rick Rand (D-Bedford) Rep. Bart Rowland serves Cumberland, House District 47 Green, Metcalfe and Monroe counties. He is the vice president of Rowland Rep. Rick Rand serves Carroll, Henry, Insurance Agency, Inc., in Tompkinsville Oldham and Trimble counties, and has and has been an independent agent since done so since 2003. Prior to serving 1999. in the House, Rep. Rand served in the Senate from 1991 to 1994. In addition to An agent member of the association, his legislative duties, Rep. Rand is both Rep. Rowland was active in the Young a farmer and an independent agent with Agents Committee (YAC) from 2002 to membership in IIAK. He is an agent with 2005. In state government, Rep. Rowland Rand Insurance Agency, Inc., in Bedford. Bart Rowland (R-Tompkinsville) is member of several House commit- House District 53 tees including; vice chair of Banking and Currently, Rep. Rand is the chair of the Rick Rand (D-Bedford) Insurance, Agriculture & Small Business, House Committee on Appropriations and Education, and Elections, Constitutional Amendments and Intergovern- House District 47 Revenue. In addition, his is ex-officio to mental Affairs. several House Budget Review sub-committees including; General Gov- ernment, Finance and Public Protection; and Economic Development & Rep. Rowland is a graduate of Western Kentucky University (WKU). Tourism, Natural Resources and Environmental Protection. www.iiak.org Kentucky IA | January/February 2014 | 23 From left to right: Andy Roe, Patrick Roe and Jim Roe

Arlington/Roe. You have our word on it. “Whether you choose Arlington/Roe for our breadth of knowledge, product line diversity, market access or industry know-how, you may be assured we are in business primarily to serve you. We will do our best to earn and keep your trust. You have our word on it.” Managing General Agents and Wholesale Insurance Brokers – James A. Roe, CPCU, ASLI, President 800.878.9891 s ArlingtonRoe.com

24 | January/February 2014 | Kentucky IA www.iiak.org benefits spotlight Want to Add LIFE to Your Agency?

s a member of IIAK and IIABA, you have access to two programs for • Short Term Disability for ALife and Disability products. your employees With the Big “I” and LifeSource (brought to you by Crump Group), you • Systematic Enrollment have access to the Crump’s multiple insurance carriers to provide you • A+rated carrier with a competitive advantage in the marketplace. With access to over two • Portable Benefits hundred insurance carriers, they closely partner with a subset of these You can ask for a quote carriers to offer a product suite with the depth necessary to meet almost any client need. With LifeSource you will have access to a full range of Life, today by calling (574) 231-6514 or email [email protected]. Disability, Annuity and Critical Care products and a dedicated sales and case management team to assist you during the sale. How to get considered: • Go to Big “I” Markets and go to “Offline Products” and select “LifeSource.” Click on “Request a Quote” to begin the electronic record. This starts the LifeSource Registration process 800-226-3224 (Please note you are not actually requesting a www.fcci-group.com quote). • Complete the information as requested on the Quote Request Wizard screen. ENTER YOUR AGENCY NAME & ADDRESS AS THE CLIENT, as you are actually the client in this case. Click Next. • Continue through the Quote Request Wizard Screen. On Underwriting Information: Step 4, print the LifeSource Producer agreement. • On Confirmation: Step 5, click submit to confirm the quote request which will alert LifeSource of your interest. • Complete the Producer Agreement downloaded in the quote request process. Fax the Producer Agreement and copy of your life license to 717- 703-4810.

What Happens Next? “The FCCI Surety team excels at nding LifeSource will review your Producer Agreement creative solutions to get bonds written. One and will contact you via email with your user id and of the things I enjoy most is working along password. LifeSource will also obtain all information with an agent to help a contractor evolve from necessary for your appointment to the appropriate being unable to obtain bonds to being the type carrier. of contractor sought out by surety companies.” Once you are in receipt of your log in information Dan Pikar from LifeSource, you will be directed to complete an Senior Contract Anti-Money Laundering training program - which Surety Underwriter is available at no cost and online. You will then FCCI Insurance Group have access to the Life, Disability and Critical Care Midwest Region products. Now, let’s talk about your business. Contact Christine Muñoz at 800-848-4401 with questions on LifeSource. General liability tAuto tProperty tCrime Workers’ compensation t Umbrella IIAK Life & Disability Inland marinetAgribusinesstSurety Through your relationship with IIAK, you have access to the IIAK Life & Disability Program, Coverage available in 18 states. © 2014 FCCI underwritten by Lincoln Financial. Here are some features of the program: • Up to $200,000 Guaranteed Issue Group Life • Up to $150,000 Guaranteed Issue Supplemental Life • $12,000/month Guaranteed Issue, TAX FREE, Long Term Disability www.iiak.org KYIA13_Pikar_5x6.625.indd 1 Kentucky IA | January/February2/11/14 2014 5:10 | PM25 technology Tools that Enhance Claims Information & Efficiency for Independent Agents & Brokers by Donna J. LaGoy AIT, ACE

bout this article: Several tools are now available to agents that can update the status on each of the claims, as it is paid or closed? The agency’s Astreamline their claims processes significantly and enable them to au- employees are already working overtime under terrific stress, and they tomatically download claims information. The author demonstrates how want the needed claims information to be handy in their system. They an agency can fit each of these tools together to create more efficient claims want to spend their limited time assisting their clients regarding the claim workflows. The article also points out the critical role agents play in advocat- and demonstrating the value added that their agency provides to its clients. ing for their carriers and vendors to provide these tools and then to imple- The last thing these employees want to spend hours upon hours doing is ment them in their agency. entering all of this claims information into their system.

This article discusses technology tools that have been introduced to permit Claims download allows for all of the claims to be: independent agents and brokers to serve their clients more promptly and • automatically entered into the agency management system effectively in claims situations. Claims download, real-time claim inquiry, • updated as the status is changed, and real-time filing of First Notice of Loss (FNOL), real-time requests for loss runs, and Activity Notes all have great promise to make agency workflows • closed when the carrier closes it. more efficient. Claims download would save the typical agency hundreds of hours per year, as well as enable agency employees to provide better service to their Most of these new capabilities have already been introduced by some clients should a claim occur. carriers, but we need to see much broader usage. The agents will play the critical role in making this happen, but first they need to be convinced Recommended Claims Workflow that these new technologies will materially improve their workflows. This The question, then, is how do claims download, real-time claims inquiries article seeks to make that case. and e-mail or Activity Notes work most efficiently together? Consider the following workflow: Claims Download One of the most exciting new opportunities is for the automatic down- 1) The claim is reported directly to the carrier by the client (FNOL loading of new claims and claims status information into agency man- reported by the agent is a different workflow and is addressed below.). agement systems. An ACORD standard has been put in place for claims download, and several vendors and carriers have begun to implement the 2) An e-mail message or Activity Note is sent to the agency instantly new capability. notifying it of the loss. 3) Overnight, the claims are processed via a batch process and down- However, an agent might ask: “How exactly will claims download benefit loaded into the agency management system. me? I already have claim inquiry available via carrier websites or through 4) A log is waiting for the agent in the morning, when he or she comes my agency management system using real-time inquiry.” Or, the agent in to review what was attached (similar to policy download) and what might say: “Why do I need download, when I already receive an e-mail or went to suspense to be attached. Activity Note into my agency management system that tells me there is a claim?” 5) The claim is now in the agency management system and is ready to be serviced. Real-time claim inquiry has been a great enhancement for agents and will 6) Claim inquiry can be used at this point to look at anything that has continue to be so for up-to-the-minute information. But, it is only benefi- transpired during the current day, if necessary. An example would be cial if the agent knows the claim has taken place! Further, real-time claim that the adjuster had not been assigned when the claim was down- inquiry does not populate the agency management system’s database, and loaded, and you need to get that information today. so the agent must enter the claims information into his or her system. 7) Any updates to the claim will download each night (or at given in- E-mails or Activity Notes1 are also great “incremental” steps, but again, tervals during the day, if the carrier and vendor provide this feature). the agent has to enter the claim into the agency management system and Again, this download information will populate a log for review. update the information as the status of the claim changes. 8) The agency is now in the position to run reports from the agency management system to track losses. The goal is for all of the latest features of technology to work hand-in-hand to make the claims process as streamlined as possible. First Notice of Loss (FNOL) Claim Reporting Claims Download Critical in Disaster Situations Another very important technology for agencies is real-time FNOL The horrific storm seasons we have had in recent years provide an instruc- tive example as to how claims download can help agencies. If an agent 1 has had no power and has had clients reporting claims directly to the Note that Activity Notes today are typically downloaded after the close of the business day. In the fu- carrier, how does he or she know what claims have been filed? Once the ture, it is hoped that carriers will deliver time sensitive Activity Notes multiple times a day to their agents’ agency finds out about the claims, who is going to enter the hundreds or IVANS mailboxes and agencies will pick up those messages several times a day as well. thousands of claims into its agency management system? Who is going to

26 | January/February 2014 | Kentucky IA www.iiak.org technology

claim reporting, where the agent can submit the claim to the carrier and Claims download and real-time claims inquiry will provide the founda- instantly get back the claim number and adjuster for the claim. What a tion for this enhanced consumer capability. Consider once again what this terrific service to be able to provide the client with this information on would mean to an agency devastated by a disaster, struggling to make or the spot! Even where the agent is using real-time FNOL, however, claims receive phone calls of any kind. What a godsend it would be if anxious download still plays an important role, because it allows for the automatic clients could go to the agency’s website and learn that their claim has been updating of the status of the claim, including payments made, adjuster received and is in processing, and receive the assigned adjuster’s contact notes, and the closure of the file. information. Organizations like ACT will continue to work with carriers and vendors to make this future a reality. Real-Time Loss Runs Requesting loss runs through the agency management system and Most important today, agents, carriers, and vendors should continue to receiving them back in Real Time from the carrier is another significant collaborate to harness the exciting technologies that are available to us improvement for agents, providing clients with immediate service and now to significantly improve the overall customer experience and to make saving considerable time for the agent. our distribution system more efficient and responsive.

Agents Play Key Role Donna LaGoy is a Client Partner of Applied Systems, Inc. and is Chair of Whether we are talking about claims download or real-time claim the ACORD Claims Download Working Group. Before taking her current inquiry, FNOL, loss runs, or Activity Notes, agents will play the critical role, Donna was an independent agent, with many years of experience role in making these improved workflows a reality within our industry. working for a national broker and then owning her own agency. She is dedi- Agents should advocate for these improvements with their carriers, and cated to improving the technologies and workflows available to independent then “walk the walk” by implementing them within their agencies when agents and brokers, both internally and with their insurance carriers. She they are introduced by particular carriers. High agency usage will be the has been deeply involved in ACT, AUGIE, ACORD, and ASCnet. Donna dominant factor in convincing additional carriers to leave the sidelines LaGoy can be reached at [email protected]. She prepared this and join the game by implementing these new capabilities. updated article for the Agents Council for Technology (ACT) which is part of the Independent Insurance Agents & Brokers of America. For more infor- The Future mation about ACT, contact Ron Berg, ACT’s incoming Executive Director, As exciting as these new technologies are, the future will require the who can be reached at [email protected]. This article reflects the views of industry to take yet another step, and that is to permit the agency’s clients the author and should not be construed as an official statement by ACT. to access their claims information directly from the agency’s website. www.iiak.org Kentucky IA | January/February 2014 | 27 education

Classified Ads Acquisitions Established Louisville agency interested in acquiring insurance agencies in Jefferson and surrounding counties. If you are interested in selling, merging or need assistance with perpetuation, we would like to talk with you in confidence. Call R. Alex Rankin, CPCU or Steve B. Thompson, CPCU, at Sterling G. Thompson, Co. at (502) 585-3277. Looking for Producers Independent with top best markets looking to expand presence in Jefferson, Oldham or Shelby counties. Wanting Personal lines, Producer or book of business to move or purchase. All arrangements possible, in strict confidence. Please send inquiries to Turner Insurance Agency, 2460 Shelbyville Road, Shelbyville, KY 40065 or call Kurt Turner, CPCU at (502) 633-6060. Acquisitions & Producers A well established regional agency is interested in individual producers and insurance agencies considering selling or merging. Commercial lines & personal lines wanted in Louisville, Lexington, NKY and BG. We represent the best and desired markets for growing an agency or book of business. Confidentiality provided to all interested parties. Call Scott Ferguson at The Underwriters Group (502) 244-1343.

Producer Wanted upcoming events Louisville Insurance LLC has producer opportunities with flexible compensation plans while offering ownership in book of business produced. Confidentiality provided to all interested parties. Contact Glenn Pike at www.iiak.org 502-473-5454 or [email protected]. To place a classified ad please contact Arlene You can register for these events and education seminars or find out more Adonis-Hawkins at [email protected] information by visiting www.iiak.org. You can also call IIAK by phone at or (502) 245-5432. (502) 245-5432 or email [email protected]. 28 | January/February 2014 | Kentucky IA www.iiak.org agency management Agency Financial Management by Chris Burand

gency financial management can make or break an agency. With a commission is only $200 and the potential profit is only $14? Why work so Alittle preparations and a proactive approach, good financial manage- hard to lose money? Let your competitor lose money on that client! ment can substantially add to an agency’s profits. Financial management is a very broad topic, so for the purposes of this article I will focus on Finally, bad debts obviously can be a killer and need little explanation. three critical aspects: managing accounts receivable, knowing and manag- However, do not underestimate how damaging they are to your bottom ing how much the agency spends to make a sale, and obtaining sufficient line. To make $10,000 in profit at a 7% profit margin, the agency has to capital to grow. generate $142,857 in revenue. Therefore, to make up $10,000 in bad debt, the agency has to generate an additional $142,857 in revenue! Accounts Receivable Frequently, agencies find themselves with many overdue accounts, con- Actively manage your accounts receivable. Stay on top of your overdue ac- sistently late paying accounts, and/or bad debts. Each of these accounts counts, do not pay producers until they collect the premiums, keep track receivable problems costs the agency money. First, let’s look at overdue of your consistent late payers, and get rid of the accounts that cost you more than you make. Poor management of accounts receivable can destroy an agency. Good financial management can boost your profits and give you a healthier bottom line.

Cost of a Sale How much time do your producers and CSRs spend to sell an account? What do lost sales cost your agency? How much management time, marketing expense, overhead costs, and labor expense goes into every sale? Very few agencies can answer these questions, but knowing the actual cost of a sale is critical because based on APRS data, the average agency spends $1.03 to $1.11 for every commission dollar generated! In fact, the results of our Cost of Sales Analysis often show agencies spending as much as $1.90 for every commission dollar they generate!

To help get your costs in line, the first step is to take a detailed look at all the costs of making a sale, including lost sales. An in-depth look at your costs will reveal if too much is being spent and if so, it will pinpoint where to trim the excess and uncover opportunities for improvement in many areas such as accounts. Imagine your agency has $10,000 consistently overdue and the productivity, hit ratios, retention, and account targeting. going interest rate is 10%. In this scenario, you are giving your clients an interest free loan that costs you $1,000 annually in lost interest (using sim- Capital to Grow ple interest). Meanwhile, at the industry’s average profit margin of 7%, the Agencies need to grow and growth requires capital. With good financial agency only makes $700 on the $10,000. Therefore, by giving these interest management, an agency can obtain capital from the best source and at free loans, the agency loses 3% on those accounts. Look at your overdue reasonable rates. accounts and before you continue to let them slide, ask yourself if you are in business to sell insurance or to be a bank giving interest free loans! First, what sources of capital are available? Most capital is supplied by agency owners, either out of their own pockets and/or from the agency’s The next trouble area is consistent late payers. On $500 in commissions, an retained earnings. This form of capital is the most expensive because the agency makes a $35 profit at the industry average of 7%. If an account pays dollars are after-tax dollars and none of it is tax deductible. The cheap- late two or three times per year, the agency will probably spend extra post- est form of capital is usually debt because the interest payments are tax age, office supplies, labor expense, overhead, telephone costs, possibly even deductible and a lender has less risk than a stock holder. Therefore, when travel costs, and definitely frustration on the account. These extra costs possible and reasonable, debt is the preferred method for financing commonly total $5 to $50. Suppose the agency spends something in the agency growth. middle, say $20. On the $500 in commissions then, the agency will make a whopping $15 and could possibly even lose money. And what if the The next question then is: where to get a loan? Many banks and thrifts www.iiak.org Kentucky IA | January/February 2014 | 29 agency management

will not lend to an agency because they believe agencies lack sufficient article. Regulated individuals/entities should also ensure that they comply tangible value in case of default. This is ironic because many banks believe with all applicable laws, rules, and regulations. agencies are good acquisitions while other banks will not even lend to them! If you do go to a bank, be prepared to prove your agency’s tangible value by having an appraisal from a qualified insurance agency consultant. Also present the bank with a strong business plan that shows you are committed to growing your agency.

Another alternative is insurance companies and they will often offer much better deals than any COMMITMENT other source. In return, most companies want more business and they will not loan to just any A PROMISE WE DON’T TAKE LIGHTLY agency. The agency needs to have a large book of business with them and/or the company has to believe the agency will build a large book with “Active listening helps me relate to them soon. To convince a company the agency is a worthwhile investment, present a strong busi- a variety of situations and gives me ness plan to the company and ask them how they the ability to empathize and make will work with you to achieve the goals outlined in the plan. If a company believes the agency has sure our customers needs are met. potential, I have seen them give agencies loans below market interest rates and even forgive the Connecting with our agents principal if things work out well. The first step helps me to predict and though, before a company will consider lending money, is the agency has to ask! understand their needs.”

The final consideration is to get a good interest Gina Fee, API rate. The difference between a 5% and a 10% in- Branch Manager terest rate on $100,000 over three years is almost $2,800 per year, which at a 7% profit margin is worth $40,000 in revenues. Therefore, before ap- proaching any lender, take the necessary steps to Call me for a present your agency as a low risk, good investment. Also, shop for the best rate and always ask quote today! for a lower rate. Be aware of loan initiation fess, mandatory offsetting accounts, and other buried 800.388.8178 costs. Help yourself to a more secure and brighter future. Actively practice good financial management foryour agency and watch your bottom line grow!

Chris Burand is president of Burand & Associates, LLC, an insurance agency consulting firm. Readers Managing General Agency Since 1920 may contact Chris at (719) 485-3868 or by e-mail at [email protected]. 800.388.8178 jmwilson.com Property/Casualty • Professional Liability NOTE: None of the materials in this article Commercial Transportation • Surety should be construed as offering legal advice, and Personal Lines • Premium Finance the specific advice of legal counsel is recommended before acting on any matter discussed in this

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• No restrictions on length of • Buildings undergoing • Online rating at our website: vacancy improvements also eligible www.boltonmga.com

• Coverage to $4,000,000 • Policy terms of 3, 6 or 12 • Very competitive rates months available

Tracking down the right coverage for over 47 years.

2400 Waterfront Plaza • 325 West Main Street • Louisville, Kentucky 40202 Telephone 502.583.8361 • 800.292.6597 • Fax 502.584.6131 • www.boltonmga.com