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Producer Success Lesson 12: Professional Image
Nothing happens until somebody sells something. To make sales happen, IMMS.com Key Sales Consultant Randy Schwantz has created a comprehensive series of 43 Producer Success Lessons. Used singly or in combination, these powerful tools can help your producers build their skills - and grow their sales. A huge man saw a sign in the window of a bar reading 'Bouncer Needed.' He walked in and asked, 'You hirin' bouncers? I'm the best - as professional as they come.' The bartender said, 'What makes you so professional?' The man replied, 'I can spot trouble from a mile away - watch this.' He walked over to a loud, obnoxious drunk at the end of the bar, lifted him, and threw him out the back door. He came back to the bar with a satisfied smile on his face. 'So, you can see,' he said, 'I know how to do this stuff. What else do I need to do?' 'Talk to the owner,' the bartender answered. 'Great, where can I find the owner?' 'He's coming in the back door right about now.' Have you ever been so caught up in presenting what you thought was the correct image that you made a silly mistake like this? Many people who regard themselves as professionals have a view of professional behavior that doesn't fit their style - so they either behave in a way that to them is unprofessional but comfortable, or they meet their own standard of professional behavior but they're uncomfortable. Neither scenario contributes to top performance. What is a Professional? One description of a professional is someone with extensive specialized knowledge and high standards of client confidentiality, such as a lawyer, doctor, or banker. They often surround themselves with layers of 'professional image' intended to impress others. What do you really want from such professionals? Not their fancy office or their degrees from Harvard - you want their specialized knowledge to be used to solve your problems. So what a professional is really someone with the extensive specialized knowledge and communication skills to help solve clients' problems. People Buy from People They Trust Notice that this definition doesn't mention expensive offices and Harvard degrees on the wall. I also didn't include trappings such as three-piece suits, Rolex watches, and snooty attitudes. These bits of veneer are fine, and you may want to use them to your advantage. But people put on the veneer to impress clients, and what clients care about is expert knowledge. Did you ever go to a doctor with whom you immediately felt comfortable? It was probably because the doctor was friendly, asked you questions, and listened. Now think about a doctor you didn't like. Was it because they were stuffy and 'professional?' Instead of imitating someone you've seen and heard about, try being yourself. Are you unprofessional in some way? Go back to the definition. Would being sincere and open build trust? Of course it would. In fact, taking someone else as a role model will almost certainly inhibit you, causing a breakdown in your ability to communicate and actually reducing trust in the relationship you're trying to build. The true professional is not someone with a pinstriped suit and highfalutin talk. True professionals are those who know their business, know their clients, and deliver what they promise when they promise. True professionals can be trusted because they are trustworthy, not because they act 'professional.' The Criteria for Professionalism We've established that trust is the key ingredient in a professional relationship. What can you do regularly to ensure that that bond of trust will remain in place? Here are some ways: Know the insurance business Know your clients (MVPs, Commercial producers, Risk Managers, executives) Solve problems Deliver results Knowing your business means knowing all aspects of it. You should be able to discuss almost any product or program. You should know all your markets, how to fill out forms, and what coverages are available. Stay on top of what your competitors are doing. Read constantly. According to one efficiency expert, reading about your area of interest for one hour every day will give you these results: In one year, you'll be recognized in your company as an expert. In two years, you'll be well-known throughout your industry as an expert. In three years, you'll be a nationally recognized expert in your field. If you really love the insurance business, reading about it is entertainment, not a chore! You're in a much better position to help your clients when you're the expert. Knowing your client means really understanding what makes them tick. Ask questions, and really listen to the answers. Spend time getting to know their insurance needs so you can make the best recommendations possible. The more time you spend listening to their problems, the better able to offer solutions you'll be. That's really all we have to build value in the insurance business - effective use of time. One of the most effective uses of your time is getting to know your clients' real needs and desires as they relate to your business. Solving problems is different from selling products. Some sales training courses euphemistically refer to hard-core selling as problem solving, but that just ain't so. When you're manipulating and pressuring clients, you're not solving their problems - you're creating more for them. Don't be fooled into believing your clients and prospects don't know what they need. They know. Getting them to tell you is the challenge. The only way to uncover that real problem and then offer the ideal solution is to question, question, question. Only when you really understand the client's pain can you offer the right medicine. Speaking of medicine, there's no reason your solution has to be an extremely technical, hard-to-understand prescription. Stay away from jargon and technospeak when presenting your solution. Clients don't care about that - they care about results. Delivering results means being on time, on budget, and on top of it. You must do what you say you'll do every time. Failure in this area even once can ruin a relationship. This goes for little things, such as returning phone calls, as well as bigger things, such as presenting proposals on time. Everything you do either moves the client closer to their goal or hinders their progress. Do you insist on results - every time? Take This Personally The true professional is able to move from a business relationship to a more personal relationship without a hitch. That's because there isn't supposed to be a wall between the two types of relationships. Business is personal. So feel free to be yourself, and devote the energy you were putting into your 'professional image' to listening to your clients and getting the results they want. Exercises List courses that will increase your insurance knowledge. Plan to attend them in the next few months. Mentally play back your last five interviews. For each one, focus on three areas: rapport building, questioning, and listening. Rate yourself from 1 (low) to 4 (high) in each area. During the interviews, did you ever feel so intimidated that you relied on your technical knowledge rather than your communication skills? Commit to improving in each area. ...

Join Forces With A Life Professional
Harlan Warthen provides a simple, field proven, cost-effective program that you can use to produce a consistent flow of highly qualified Life and financial services leads, as well as a significant number of cross-line sales. The concept of a P/C agency working with a Life professional isn’t new. However, up to this point, these relationships have seldom produced a steady and consistent flow of leads because no one ever decided who would do what and when. With all of the best intentions, the partnership becomes hit-and-miss at best, and never produces a consistent flow of leads. THE INSURANCE INDUSTRY: THINGS CHANGE The insurance industry has undergone a dramatic change. Clients today are completely different from those we dealt with just a few years ago; they’re well informed and can access an unprecedented level of insurance resources through the Internet. The ways in which insurance products are solicited and purchased have also seen dramatic change. Phone solicitation is almost non-existent, thanks to “No Call Lists.” Each year the number of insurance products purchased over the Internet increases. Although buyers of insurance products and services are still there, the sales strategies that we once used are no longer effective. Industry studies indicate that 15% of all households will purchase some form of Life and financial service within the next 12 months. If you use the Rule of 72, 100% of all insurance purchasing households will purchase Life or a financial service product in the next seven years from someone. It’s no longer a question of “if” — but “when”! Another study by the IIABA found that 70% of households polled were not aware of all of the products and services that their primary P/C agent offered. The study also pointed out that if the client knew what was offered they would have considered purchasing them from the agent. You have to ask yourself what’s gone wrong — and the answer is plenty! It doesn’t make any difference whether you’re a P/C agent or a Life agent or; it’s harder to do business for a lot of reasons. Clients are buying insurance and financial services from somebody. P/C agencies have these clients, but lack a process to solicit them effectively — while Life professionals need qualified clients. In this situation, joining forces makes sense for everybody concerned. THE ROLE OF A PROFESSIONAL ADVISOR Our industry continues to become more complex and requires a level of knowledge that might be impossible to attain. If your client asks for advice on Life insurance or financial services, you face a dilemma. Can you realistically assume the role of an advisor? Personally, I don’t think you can. The level of additional knowledge, training, and licensing required to make a recommendation in an area outside of your expertise can be staggering. To fulfill the role of an advisor, you must be able to recommend a professional advisor, either within your agency or from an outside source. When polled, clients say they would prefer to do business with a single insurance professional for advice and answers. Clients don’t necessarily need their primary agent to be able to provide the service or product, but they want to be referred to someone who can. Unfortunately, insurance has become so specialized that neither P/C agent nor the Life agent can provide accurate advice for the other discipline. We can no longer be all things to all people; and even if we could, the level of knowledge and licensing requirements make it virtually impossible. The P/C agents and the Life/financial services professional need each other. To provide clients with access to a full array of insurance products and services, you need to create a strategic alliance with a Life professional based on trust and professionalism. TYPES OF ALLIANCES These alliances come in two forms: An External Alliance between your agency and a Life General Agency or an Independent Life Agency. An Internal Alliance between your agency and a Life Specialist. Each of these types will work, as long as there’s agreement between the parties up front. In essence, the agreement determines who has responsibility for individual tasks and when those tasks will be performed. The choice is which type of alliance would be the most beneficial to you and the interests of your clients. Here’s an example of each type: EXTERNAL ALLIANCE A Life General Agency or an Independent Life Agency alliance with a P/C agency is essentially the same; both would be considered external alliances. The major difference is the size of the organization. The Life General Agency has a tendency to be the larger of the two. In most cases, they would have access to significantly more resources, several layers of management supervision, and many more agents. Independent Life Agencies operate the same as Life General Agencies, but usually on a smaller scale; they don’t necessarily have one primary Life insurance company, but broker policies to a number of companies. INTERNAL ALLIANCE An internal alliance involves your agency hiring an experienced in-house Life specialist who has access to Life and financial service products through your agency’s existing Life company appointments. This specialist should have an above average level of Life and financial services experience and hold at least their Series 6 and 63 licenses, as well as an advanced designation (CLU, ChFC, etc.) A MATTER OF TRUST Building a strong alliance between your agency and a Life specialist must be based on trust. You need to trust the specialist not to jeopardize your existing clients by “hard sell” tactics; the specialist must trust you to provide qualified leads. This mutual trust requires both parties to understand the benefits that each will enjoy. MAKING THE ALLIANCE WORK As was mentioned earlier, there’s nothing new about Life specialist arrangements with a P/C agency. Everything starts out great, with each party sending business to the other. If forming such partnerships makes so much sense, why have most of them failed? First, no one puts together a plan or process for developing referred leads on a regular and consistent basis. Second, no one determines who’s accountable for what and when. Finally, and most important, the P/C agency doesn’t perceive that the Life specialist brings any added value to the relationship. Make no mistake: Making your alliance with a Life specialist work will require time and patience. Although the relationship might be difficult at times, both parties will enjoy a dramatic long-term payback. HOW THE ALLIANCE WORKS This strategy is built around a “Client Coverage Survey” that will identify what products and services the client is interested in. Your agency doesn’t have to implement a new marketing plan because the survey is completed at the end of every client service request. The Client Coverage Survey will produce leads in a volume that you’ll have a hard time believing: Although results will vary, this sales strategy can produce three or more applications per week. BUILDING A WORKABLE AGREEMENT To build a successful, mutually beneficial alliance, you’ll need to Do your homework to select the right partner Analyze the client base Create a written Alliance Agreement that will deal with: Compensation The accountabilities and responsibilities of each participant Housing the Life specialist Covering additional operating expenses Other factors to consider include your agency’s: (1) premium volume; (2) Number of policyholders/ households; (3) percentage of Personal Lines and Commercial Lines business; (4) renewal ratios; and (5) resources. MAKING A COMMITMENT Last, but far from least, all participants must commit to making the alliance work. As so often in life, your commitment will determine whether you’ll succeed or fail. I guarantee that you’ll succeed if you commit to implementing the process as it was designed. If you want to change it down the road, be my guest — but keep in mind that my system works the way it was written. Consider doing it my way first before you decide to reinvent the wheel. EXPECTATIONS Make no mistake: an alliance with an in-house Life specialist will work to everyone’s advantage. The potential results from a well-structured alliance are enormous A Life specialist can expect to produce consistently 75 to 150 new Life applications per year. In addition to new Life revenue, your agency can expect 10% to 30% in additional cross-line sales, as well as improved retention — all with a minimum amount of effort. Establishing a strategic alliance between your agency and a Life specialist is a WIN/WIN situation for all concerned. ...

Professional Designations For CSR's
Education is often termed a 'ticket to success'-and with good reason! More and more career-conscious agents and their office-support personnel are attending professional development programs. Since 1987, nearly 18,000 people have enrolled in these three major industry education programs: Certified Insurance Service Representative (CISR) Certified Professional Service Representative (CPSR) Accredited Customer Service Representative (ACSR) People who participate in such programs gain practical knowledge that gives them an edge on the job and improves their professional image. The programs are offered through a series of one-day courses in major cities across the country. The training varies in format, testing, and prerequisites, but all require continued education once the designation is earned. The specifics of each program are outlined below, along with a phone number to call for more information. CISR This program consists of five one-day courses covering personal residential property, Personal Auto exposures, Commercial Property coverage, Commercial Casualty insurance, and agency operations. Participants must pass all five exams to earn the designation. The program has been offered by the Society of Certified Insurance Service Representatives since 1987. Call (512) 346-7358. CPSR Coordinated by National Association of Professional Insurance Agents (PIA), the program features nine one-day modules in three areas: Personal Lines, Commercial Lines, and agency-operation skills. Participants select from three learning tracks, tailoring the training to their job responsibilities. To be awarded the CPSR designation, individuals must have at least two years' agency/industry experience and pass the exams in at least six of the modules. The program is offered through PIA state and regional associations. Call: (703) 836-9340. ACSR This program includes nine day-long modules, with the option of Personal Lines certification (five courses), Commercial Lines certification (six courses), or certification in both areas (all courses). Developed by Independent Insurance Agents of America (IIAA), the program covers technical, account-selling, and professional skills. Candidates are tested by the state association upon completion of the courses for the desired certification. Call: (703) 683-4422. If you haven't pursued any of these professional development opportunities, consider what they can do for you and your professional image. Talk to your superiors about the possibility of attending. CSR FORUM's can contribute to your knowledge base, too! In fact, participants in THE CSR program may soon have the opportunity to earn continuing education credits. Stay tuned for more details....

The Agency Mission Statement
  THE AGENCY MISSION STATEMENT An agency mission statement is a simple outline of the agency's overall goal. It should be phrased in terms of meeting the needs of current and potential clients, and should indicate your business emphasis. The mission statement can address the type of service you want to offer and the clients you wish to attract, and/or it can outline your agency goals in a general manner. If you address the client and prospective client, since you can then also use your mission statement in advertising and brochures. Here's an example of a client-driven mission statement: 'It is the mission of XXX Agency to provide professional services and programs to our clients in keeping with our published service standards. Our service standards are given to all clients and represent our written commitment to those high standards. The written commitment is backed up by our staff of professionals, who are being exposed to training and developmental programs on an ongoing basis.' There are many different versions of mission statements. Whatever is used should highlight positive agency features and make some form of commitment. Here are samples of mission statements from a few successful firms: STAEBLER MISSION STATEMENT To achieve security and prosperity for our clients and ourselves through ongoing, rewarding and supportive relationships, by providing insurance and financial services. COMPANY POLICY We will achieve the Mission Statement: With highly qualified, sincere, caring and motivated staff and By continually assessing and improving our service and products   ANCHOR PACIFIC GROUP MISSION To be the vanguard of innovation by combining an array of Life, Health, voluntary employee benefits, Property/Casualty, and Workers' Compensation plans into creative, dynamic and cost-effective programs-designed, marketed, underwritten, and serviced by a single source.   TRISSEL GRAHAM & TOOLE, INC. DAVENPORT, IOWA MISSION STATEMENT Our mission is to continue to be the most successful independent insurance agency in the Quad Cities. Our objective is to NEVER lose an account as a result of poor service. We recognize the inevitability of occasionally losing an account to price, for we cannot control the pricing of our competitors. We can and will control the service we provide to our clients. If we attempt to place ourselves in our client's position and try to treat the client as we would like to be treated, we will succeed.   ULRICH VOORHEES WARNER ASSOCIATES OUR MISSION To provide superior insurance, risk management, and related services for a selective clientele. We will be recognized by our clients and suppliers as a highly respected, innovative, and professional sales organization that maintains excellence in all areas of interaction. We will foster a corporate culture that stimulates, recognizes, and rewards employees for achieving and exceeding individual and corporate goals.   THE LIEBERT GROUP STATEMENT OF MISSION Our mission is to be the best insurance agency in the New York metropolitan area. As a sales organization, we are committed to growth and longevity. This will be achieved by obtaining the highest level of profits, by providing our customers with the best insurance protection for their individual needs. We will maintain the highest level of honesty and professionalism in dealing with our customers on an individual basis. We will reserve a high sensitivity to their needs. We will actively solicit new clients that fall under our underwriting standards and sales objectives. We will service our existing clients as if each is our most important account. We will maintain the highest level of honesty and professionalism in dealing with our companies through our marketing, underwriting, claims handling, and accounting. We will strive toward open communication with our underwriters and their managers. We will treat all employees as our most important asset by providing equal employment opportunities, creating a learning and challenging environment and encouraging ongoing education to allow all employees the opportunity to grow within our company. We are committed to full automation within our agency and complete interfacing with our companies. We will strive to maintain leadership in our community by supporting our... local organizations.   GHA We are an employee-owned sales and service organization providing cost-effective Property & Casualty insurance, risk management, and financial services. OUR MISSION: To fulfill the changing needs of current and prospective clients, while striving for the highest level of professional excellence in our products and services. To provide an atmosphere of teamwork and employee participation with opportunity for professional growth, personal satisfaction and financial security. To build and maintain long-lasting, consistent and profitable partnerships with insurance markets. To enhance shareholder value by increasing our client base, dedicating ourselves to increased productivity and profitability consistent with long-term earnings-per-share growth. We will accomplish our mission with leadership that will ensure perpetuation of our corporate culture. We will adhere to rigid moral and ethical standards in all our dealings, as we meet the challenges of the future. We are confident in our ability to create and maintain a GHA Team that is the very best at what we do.   SPARKS INSURANCE, INC. Welcome to Sparks Insurance, Inc. We are a company that works together as a TEAM. We will: 1) Strive to develop individual and office professionalism. 2) Set and achieve sales and growth goals. 3) Create, establish, and perform efficient work habits and methods. 4) Strive for a unified and pleasant working environment. And last but not least: 5) After accomplishing all of the above, the Sparks Insurance team should become more profitable, and we will endeavor to pass a portion of these profits on to the team members.   MISSION STATEMENT: Sparks Insurance, Inc. is a full-service insurance agency committed to providing the best in coverage and service for its customers at a competitive price. We will secure all types of insurance coverage using risk management techniques for both Personal and Commercial lines customers. We will provide a pleasant work environment with opportunities for education, personal enrichment, and career advancement. We expect our employees to be professional, ethical, motivated, and concerned for the client and the agency. We will be a profitable, growth-oriented agency. We will have an annual goal of at least 15% growth in revenues without sacrificing service to our existing clients or profitability to our companies. We will offer our services in those geographic areas where we can achieve the previous mentioned commitments.   ROSS & YERGER'S GOAL To be the ultimate firm in the insurance profession, regarded as second to none in serving the interest of our clients MISSION STATEMENT Ross & Yerger is committed to... providing our clientele the highest-quality insurance and services that address risk management, bonding, employee benefits, and financial planning needs. serving the needs of individuals and businesses that are financially stable and seek long-term relationships. attracting and retaining employees with absolute integrity who are intelligent, dedicated, motivated, and committed to the highest standards of professionalism. providing the necessary training, support and motivation so each employee develops his or her maximum potential, including attaining the appropriate professional designation. serving others by encouraging involvement in civic, charitable, educational, and political affairs. maintaining profitability to ensure the continuity and perpetuation of the firm. Saginaw Underwriters, Saginaw Financial Planners, Inc. & SURCO   MISSION STATEMENT The mission of Saginaw Underwriters, Saginaw Financial Planners, Inc. and SURCO is to provide professional insurance, financial, and real estate services to the Greater Saginaw area; To help each of our employees develop to their maximum potential so they may feel completely fulfilled personally as well as a part of the Saginaw Underwriters team; Furthermore, for Saginaw Underwriters to operate in the most efficient method possible, to earn a reasonable profit for the company and retain enough earnings so that the company can grow and prosper in the future; Each employee is encouraged to spend a reasonable amount of their time in community service to help our community be a better place in which to live.   HORTON INSURANCE AGENCY, INC. MISSION STATEMENT FOR THE 90s To become a strong, regional, full-service agency by maintaining an aggressive sales posture; adhering to the highest standards of excellence; and providing a broad range of products to fiscally sound industries regarding their business and personal insurance needs. Our desire is to communicate a passion for service to our community, our companies, our customers, and our staff. We want our firm to be the epitome of professionalism, teamwork, integrity, and conservative business practices. We believe that our people are the key to the success of our organization. We feel a great sense of responsibility to continue a sound growth pattern that will enable each of our employees to achieve at their maximum level. We are committed to rewarding our employees by providing educational opportunities, benefits that protect them both now and in the future, and an environment that encourages growth as people, as well as employees. In summary, we believe that we have a sacred trust to protect our customers, encourage the growth of our employees, and achieve a reasonable profit. Our success will be measured against these principles.   PERSONAL LINES OTTAWA MISSION STATEMENT Our clientele is our life line. We are here to serve them professionally with integrity. We must continually improve on product knowledge to remain competitive. Our goal is to write new business; however, a bigger goal and one that really proves our competence is retaining business. With this in mind, a good attitude must be developed to serve our clients and convey their requirements to the insurers. STRATEGY 1) Prospecting will be increased from [YEAR] on single-line accounts. Also, Murray has and is calling all good cancelled files to see if we can re-quote. This will generate leads in [NEXT YEAR]. 2) We will use brochure drop-offs where appropriate. 3) Chris is working with one property management company to prospect tenants' policies. Results will be monitored. 4) We will continue to encourage Commercial producers to write Personal Lines. Murray will continue to attend Commercial Lines meetings. 5) [NEXT YEAR] risk counts will be followed closely to determine growth. We anticipate these to be accurate this year. 6) Compu Quote is to be installed February [NEXT YEAR]. This will assist prospecting and free up Personal Lines producers to write more business. 7) Advertising in the Ottawa Carleton teachers bulletin has commenced. Results will be reviewed for analysis. Same for advertising done in Century 21 bulletin.   COMMERCIAL LINES OTTAWA MISSION STATEMENT We want to be a department that provides professional and innovative attention to our customers. We want our clients to consider us an important part of their business. We want to create and nurture an environment that is harmonious, supportive, and friendly. We want to work to ensure the ongoing prosperity and growth of our company, as well as that of our insurers, so that we too may prosper. STRATEGY 1) Continue use of sales centre to develop leads. 2) Continue IMMS tapes to help generate sales ideas. 3) Establish an exclusive jeweler block program with Gore (first quarter). 4) Establish a farm equipment program in January [NEXT YEAR] through Gullivers. 5) Analyze company results and review companies we wish to support. 6) Continue to encourage Personal producers to write Commercial Lines. 7) Continue IIS as a source of income.   RHODES & WILLIAMS LIMITED (Toronto)  MISSION STATEMENT Rhodes & Williams Limited's mission is to be the very best at helping people and companies protect all their assets. To be a well-recognized insurance brokerage in the province of Ontario for offering professional advice and management of insurance services. To be a well-recognized and profitable insurance brokerage. STRATEGY 1) Continue to account sell. 2) Use more Yellow Pages advertising. 3) Improve service to our existing book to maintain clientele. 4) Continue to offer Life or Group to all Commercial accounts. 5) Review availability of purchasing a small producer if one became available. 6) Continue to watch expenses closely for savings needed to be profitable. BHJ, Inc. We Believe:'BHJ, Inc. is a group of professional people specializing in the sale of insurance and real estate with a common goal of profitability earned through sound and ethical business practice, while benefiting the community, our employees, and their families.'   POTTS, DAVIS & CO. POTTS, DAVIS & CO is the leading independent insurance agency in the mid-Willamette Valley. We are committed to the professional sale of quality insurance services, focusing our efforts in Salem, Portland, and the surrounding areas. We are dedicated to growth and profitability for the continued security of our clients and employees. Policy Statements WE WILL conduct ourselves with honesty and integrity. WE WILL recommend and provide coverages that meet the protection needs of our clients. WE WILL represent quality markets on behalf of our clients. WE WILL provide opportunities for the professional growth of our employees. WE WILL treat people with courtesy and respect. WE WILL place coverages that provide insurers an opportunity for profit. WE WILL total-account sell. WE WILL provide complete, accurate submissions to our carriers. WE WILL support the growth and development of our community by encouraging employee involvement. WE WILL seek and represent clients whose business provides us an opportunity for profit. WE WILL follow and enforce our agency credit policy. WE WILL maintain an environment that encourages the highest and best use of each employee's individual strengths and skills for the overall corporate good.

Divorce And Agency Value: Separating Goodwill
DIVORCE AND AGENCY VALUE: SEPARATING GOODWILL by Roy Phillips In my agency valuation work with agents and their spouses in divorce cases over the past 15 years, the issue of professional goodwill has often arisen. When a couple divorces, they seek to divide their community interest between them. All assets and liabilities must be assessed to enable the court to make an equitable division of property. If one of the spouses is an insurance agent, his or her book of business thus becomes subject to valuation, and such intangible property often depends a great deal on professional goodwill. In my opinion, there are two types of goodwill in every insurance agency. The first is intrinsic goodwill. Simply stated, this is the continuation of the client base even after the owner has departed because of death, disability, or retirement. It takes into account the ability of the agency to retain clients through very little effort of the owner. Elements of this goodwill include the service of tenured staff, insurance companies (including their products and prices), location, history of the agency in the community, and other factors. These elements are not based factors that are separate from the clients' dependence on the agents' expertise, reputation, contacts, and special relationships. A doctor's clinic serves as a good analogy. If a sole-practitioner physician dies, becomes disabled, or retires, intrinsic and professional goodwill both come to an end. If another physician acquires the practice, the clinic might retain some patients from the previous doctor. These patients retain the new doctor because of past good experiences, friendly nurse and staff, location, and the clinic's long history in the community. This is intrinsic goodwill. The new doctor, if experienced, may bring professional goodwill of his or her own. That is, the new doctor may keep some patients and attract new ones with skill and personal qualities. In divorce cases involving a professional person, Texas courts have tended not to grant the spouse an interest in professional goodwill. In one case, the court held that the goodwill of a professional person may be as much an asset to be sold as that of a merchant. The professional person is seen to have individual goodwill that can't be detached from his or her person, and thus can't become a part of the community property. Take the landmark case Rathmell v. Rathmell, for instance. In 1975, agent John Rathmell, and his non-agent spouse divorced. After a settlement, which divided the agency's value between the parties, the spouse appealed, alleging that disclosure of the agency's value had been improper. Attorneys filed a Bill of Review asking the Court of Appeals to correct the inequity. Although a number of issues were involved, the Court of Appeals made an important decision concerning the division of professional goodwill. It determined that the sale and service of insurance accounts, which primarily exist in an intangible form, was based on the professional goodwill of the individual agent. What's more, the agent had the opportunity to compete for the business without the prohibitive contractual considerations that might exist in an employment contract. The court essentially decided that the trial court had erred in not assessing this type of goodwill and attributing such value to the agent. The Court found that the appellant, the insurance agent John Rathmell, had developed professional goodwill even though he was not a lawyer or a doctor. It went on to state that the value of the Rathmell companies should have excluded the value attributable to the time, toil, and talent Rathmell expended after the divorce and/or his willingness not to compete with the agency. (It's important to note that Rathmell served without an employment contract, and was not obligated to refrain from competing for the corporation's business. In addition, there was no buy-sell agreement that established the valuation method to be employed in transfer of the firm.) In this case and others, the court established a doctrine of non-divisibility of professional goodwill. It's obvious that this issue has many facets. For instance, sometimes both spouses work in the agency, and have achieved a loyal following through their individual and collective goodwill. Another landmark case in Texas arose from the divorce proceedings of a physician (Nail v. Nail). The court held that the 'accrued goodwill of his medical practice did not constitute property subject of the division upon divorce as part of the estate of the husband and wife.' The opinion continued, 'Professional goodwill has the following attributes: It attaches to the person of the professional man or woman as a result of confidence in his or her skill or ability. It does not possess value as an asset separate and apart from the professional's person or from his individual ability to practice his profession. It would extinguish in the event of the professional's death, retirement, or disability.' Frequently, I'm the only consultant making the appraisal. This is common, as it is in mediation action directed by the court. This can save significant amounts of time, money, and (maybe most important) grief. It's also important to add that both parties often disagree on their own vested interest in this issue of professional goodwill. As a result, there has been a movement to change the law. A spouse contended to the Court of Appeals that the Nail v. Nail case law was wrongfully decided. The Court of Appeals basically responded, 'Appeal it to the Texas Supreme Court, and let them grant a writ of error and change the law.' The Supremes refused to do so. In December 1993, the Texas Supreme Court denied a writ of error in Guzman v. Guzman, and let the issue of non-divisibility stand. They concluded, 'Two Texas Courts of Appeals have recognized that a professional person practicing with others under a corporate structure or as a partnership may have accrued personal professional goodwill, and that there might exist at the same time goodwill attributable to the business or partnership-but goodwill that exists separate and apart from a professional's personal skills, abilities, and reputation is divisible under divorce.' Where does this leave a consultant attempting to determine an agency's value? The court has made it clear that if the aforementioned conditions exist, the personal professional goodwill must be allocated a value. If not, the findings of value are offensive to Texas law. Let's use an example. An agency is a corporate entity, and the agent is the firm's sole shareholder. The contending spouse has been active in the firm to a minor extent in primarily clerical work, but not to the extent of having created personal professional relationships with insureds or markets. The agent and spouse begin the divorce process, which requires evaluation of the business to determine the community interest to be divided. The value components to be considered in determining the agent's professional goodwill might include: the number of major accounts produced by the professional the revenue of such accounts in relation to the agency's gross commission revenues the tenure of such accounts in the agency the accounts' tenure with the carrier insuring them the loss history of such accounts the accounts' payment history the personal relationships that the agent enjoys with the decision-makers in the insured firms Questions affecting professional goodwill might include: Did the agent originate the agency? How much personal supervision does the agent provide on major accounts? Does the agent have significant relationships with the major carriers providing products and services to the agency? Does the agent have important contacts with community members (participation in clubs, networks, and social or civic organizations), which provide exposure that leads to business relationships for the agency? Does the agent have a covenant not to compete in the event that he or she leaves the firm? These are not the only considerations to be investigated by the evaluation consultant, but in my opinion, they're the benchmarks from which to determine that elusive value: personal professional goodwill. Roy L. Phillips, CIC, CPIA, can be reached at Dan R. King & Associates, 4888 Loop Central Drive, #100A, Houston, TX 77081, (713) 667-03...

Doing Your Duty: Professional Conduct, E&O, And You
DOING YOUR DUTY: PROFESSIONAL CONDUCT, E&O, AND YOU by Roy Phillips and Rick Oldenettel Every agent, and every agency, has specific legal duties to its insureds and insurers. The U.S. judicial system has always shown the flexibility of a contortionist. In the 1960s and 1970s, it appeared to tolerate litigation. However, since the 1980s, the system has made a turn to the right. Because some state legislatures are frustrated by federal court interpretations contradicting the wishes of their constituents, they have been working to reverse the direction of the judicial system. Meanwhile, Congress sits on the sidelines struggling to implement its own agenda for tort reform. But regardless of the obstacles individual jurisdictions have set to bar the recovery of damages, your agency has a duty to meet certain professional standards of care. With this fact in mind, here are some observations about what constitutes such conduct, how failure to meet the standards can lead to errors and omissions (E&O) claims, and what you can do to prevent such claims. As you read this article, keep in mind that each jurisdiction has its own ideas about what is correct or incorrect agency conduct. Your first duty is to understand the nuances of the applicable court decisions in your state. If you think that sounds like a disclaimer, you’re right. Duties to Insureds In most jurisdictions, to establish a cause of action for negligence against an insurance agent, a plaintiff must show that: A duty was owed to the plaintiff-insured. The defendant-agent breached that duty. The breach was the proximate cause of damages. What duties do agents owe their customers? One court defined them this way: “An agent owes his clients the greatest possible duty. He is the one the insured looks to and relies upon. . . . The insured looks to the agent he deals with to get the coverage he seeks, with a sound company that can and will promptly pay claims when they are due. It is his duty to keep his clients fully informed so that they can remain . . . insured at all times.” This definition calls on agents to probe for and identify their insureds’ needs and concerns. After examining many E&O actions, we’ve found that many agents have fallen on their own swords simply by superimposing their ideas, needs, and concerns upon the voiceless insured. In fulfilling their responsibility, be sure to document the results of needs-analysis conversations. A good axiom: If something is important to the insured, it deserves to be explored and documented in detail. An agent also has a duty to use reasonable diligence in placing the requested insurance and to inform the client promptly if unable to do so. In addition, an agent has a duty to notify insureds of the expiration of their policies (except for direct-billed renewals) and to pass on any information pertaining to expiration dates that’s intended for their customers. Practically speaking, an agent has a duty to renew a customer’s policy, replace the policy with one from another company, or notify the customer of a non-renewal so the customer can obtain insurance elsewhere. It’s important to remember that each jurisdiction has time frames for giving notice of non-renewal. Many of these requirements are stated in mandatory endorsements to various policy forms used in each state. Agents also have a duty to investigate the solvency of an insurance company with which they place a client. One legal decision held that, in the event of an insurer’s insolvency, an agent is not liable for an insured’s unpaid claim as long as the insurer was solvent when the policy was procured. However, the agent could still be held liable if, at a later time, when the insured could still be protected, the agent learned — or by exercising of reasonable diligence should have learned — of facts that would put a reasonable agent on notice that the insurer presented an unreasonable risk. Many jurisdictions have statutes that impose a higher degree of care on the placement of an insured’s coverage with non-admitted carriers. Some statutes also place a duty upon the agent to seek admitted carriers for the placement first and, if unsuccessful, to advise the insured of placement with a non-admitted insurer. Agents also have duties arising from state licensing requirements. The statutes explicitly state what they require of agency personnel involved in insurance acquisition. The license definition of an agent clearly states that anyone involved in acquiring insurance must be tested and then licensed. After being licensing, and in tandem with the license code, all licensed personnel must meet the state’s requirements for continuing education. Some states have “grandfathered” agents who received their licenses before a certain date. However, in our opinion, exempting anyone from regular continuing education poses a danger to an agency. Someone in your agency, preferably a principal, should oversee the continuing education of each employee. The moment you sign an application to become a licensed insurance agent, you assume a duty to perform services to any and all future insureds. Among other things, this means that you have an implied duty to: Become professionally aware of your products and make every effort to communicate that knowledge to every individual in your organization; Apply that knowledge to each client’s requirements, which you’ve gathered by researching the client’s business and personal activities; Seek the appropriate product(s) to fill those needs; Communicate the availability and other pertinent issues for each product presented, using written and oral communications that would be ordinarily understandable to the client; Insist on acknowledgment whenever the client rejects your opinions concerning exposures that you think require treatment; Properly apply for, receive, review, and transmit selected policies to the client, ensuring continuity through all four actions; Document the actions in steps one through six, and be prepared to ensure that changes are made in a timely manner on behalf of the client.; and Be prepared to show that you have established internal agency procedures that indicate a “reasonable intent” to control actions taken under steps one through seven. We believe that these abbreviated steps are among the important elements that make up an agent’s “duty to perform.” We’ve arrived at this opinion after reviewing dozens of cases every year. Duties to Insurers Agents also have duties to their insurers. One authority defined this duty in these terms: “An agent owes the insurance company he represents a fiduciary duty that includes loyalty and good faith, integrity of the strictest kind, fair, honest dealing, and the duty to not conceal matters which might influence his action to prejudice the company.” In addition, the agent owes the insurance company the duty to comply with its guidelines, policies, and procedures for issuing policies. Many courts have held that any person who solicits an application for insurance shall be regarded, in any controversy between an insured and the company, as the agent of the company, not as an agent of the insured. Despite being an agent of an insurer, an agent does not have the power to waive, change or alter any of the terms or conditions of an insurer’s application or policy. Causes of E&O Claims Let’s consider a few examples of how breaching these duties can lead to E&O allegations. Our clients in these cases are usually the agents (defendants), although we have represented insureds and carriers in dozens of cases over the last 10 years. Our job is to wade through the volumes of pleadings, depositions, exhibits, interrogatories, and causes of action that such cases generate to find answers to four questions: Did the agent fail to satisfy a legally imposed duty to perform on behalf of the insured (or insurer)? Did the agent represent the goods and services he or she provided to have characteristics, uses, or benefits they did not have? Did the agent fail to disclose information about a policy to induce an insured to purchase it? Had such information been disclosed, would the insured have rejected the policy? Did the agent engage in any unconscionable conduct? Here are a few cases from our files that demonstrate common breaches of agents’ duties. One of the most prevalent is failure to obtain proper coverage, as these two cases show. Case 1: The insured had asked the agent to find appropriate coverage for his fur-cleaning firm. Unfortunately, the agent did not obtain insurance covering the bailee exposure that comes with cleaning and storing valuable fur items. Result: Finding for the plaintiff (the insured). Case 2: The insured, a swimming pool subcontractor, required General Liability and other coverages to maintain his business relationships with his clients (general contractors). A Certificate of Insurance was issued to a general contractor indicating that the insured had all the coverages required by the general contractor’s contract. The general contractor reported a loss arising from the insured’s work. The loss resulted in discontinuation of underground utility service to a major manufacturing plant. The insured did not have appropriate coverage for the underground property damages. The general contractor’s insurance carrier responded to the loss, and then subrogated against the insured. The insured then sued the agent. Result: Finding for the plaintiff (the insured). Failure to obtain proper coverage accounts for more than 50% of all losses reported to E&O carriers. A similar, but slightly different, error is the failure to obtain requested coverage, which accounts for 20% of such claims. Here are a couple of examples: Case 3: The insured instructed his agent to review his insurance and determine whether he was adequately covered for the consequences of having to move his premises after a property-insurance loss. (Doesn’t this sound a bit like Time-Element coverage?) A loss occurred, but Time-Element coverage had not been purchased, so extra-expense monies were not in place to hire the mover, lease the new location, put in the phones, bring in new inventory, and notify the insured’s customers of the change. Getting back in action rapidly was crucial for the insured’s business of selling upscale formal gowns to high-school seniors who were graduating within the next few weeks. Result: Finding for the plaintiff (the insured). Case 4: The insured asked the agent to obtain coverage that would pay first-dollar claims to his clients in the event that their property was damaged through theft or vandalism. He was willing to pay for the additional coverage since he was in the business of servicing Mercedes-Benzes, Rolls Royces, Jaguars, BMWs, and other expensive cars. Vandalism occurred one weekend, and the insured was forced to spend thousands of dollars repairing 11 vehicles left in his care. Primary Garagekeepers Liability insurance was not in place to respond to the claim, but you can guess what was: the agent’s E&O policy, of course! Result: Finding for the plaintiff (the insured). These four cases demonstrate the need for continuing education. All of these E&O losses could have been prevented if agency personnel had been trained to recognize the sources of clients’ potential claims and know the products available to cover them. The final two causes of E&O claims addressed in this report are failure to bind coverage and failure to obtain renewal coverage. While these represent only 10% of claims reported, they demonstrate the need for establishing standard operating procedures within an agency. A System Is the Solution When errors or omissions occur in an agency, it’s often because employees don’t perform tasks the same way each time. To achieve uniformity, your agency must have a “system.” Your agency management system coordinates several interrelated system components. Specifically, the system provides these service components: Locates potential clients (marketing component) Gathers data and analyzes needs (risk-management component) Coordinates risks with products (coverage component) Approaches the marketplace (placement component) Presents findings to the client (proposal component) Implements selected products (application component) Arranges for payment selection (accounting component) Maintains interim service (service component) Reviews changes in client profiles (renewal component) Maintains quality of staff training (training component) Because these system components are interrelated, it’s vital to use procedures that preserve their integrity. First, it’s important to define “automation.” If the computer database includes only accounting information, the agency isn’t really automated. Remember that accounting is only one system component. The truly automated agency is driven by a single database that includes all client information required to perform the tasks associated with the 10 system components. Once the agency management system is in place, everyone in the agency must observe certain rules. If Moses had been an insurance agent, there would have been three additional commandments: Thou shalt consistently perform all procedures the same way every time they’re carried out. Thou shalt document all customer transactions, identifying date, time, recommendation or action, resultant action, and follow-up; and Thou shalt not allow anyone to circumvent or destroy the system. The three groups of offenders most likely to violate these commandments are the agency’s principals, producers, and long-time employees who have an “anti-system” attitude. What can be done about them? Based on the theory that agency principals think they actually operate their agencies, we can assume that the enlightened ones will either seek training to become system-literate or depend on someone who has this training for all transactions. Outside producers gather data out of necessity, but the integrity of this data isn’t always reliable. The solution: Equip producers with appropriate forms that reflect the requirements of the system – and let them know that using other “forms,” such as cocktail napkins, is as breach of the system. As for system-loathing employees who have been with the agency since the original tablets came down from the mountain, give them a clear message: Adapt or leave! To find out if your system is working, audit the flow of transactions through the 10 agency service components. Have this audit done by an objective observer. In other words, don’t let folks audit their own trails, so that they can learn the strengths and weaknesses of their subordinates and identify training needs. The audit format should reflect your agency’s procedures and objectives. For example, if your policy is to offer umbrellas to each Commercial account, the audit should determine whether this policy is being implemented. Essentially, the audit checklist should mirror the task list constituting each system component. Your agency’s system can be as simple as a notebook containing standard operating procedures or as extensive as your needs dictate. The key is to have a system. Innovation, spontaneity, and creativity have their place in agency management, but not in the arena of daily insurance transactions. With so much at stake, variation is no virtue — which is why parachutes are packed the same way each time! Roy L. Phillips, CIC, CPIA, can be reached at Dan R. King & Associates in Houston, (713) 667-0333, ext. 227, e-mail [email protected], or ...visit www.kingphillips.com. Rick L. Oldenettel is a partner at Oldenettel & McCabe, Attorneys at Law, in Houston. Adapted, with permission, from American Agent & Broker magazine.

Grow Revenues Or Shrink Expenses: How To Improve Agency Professionalism
GROW REVENUES OR SHRINK EXPENSES: HOW TO IMPROVE AGENCY PROFESSIONALISM by Elizabeth Miller Although we’ve seen many agencies enjoy tremendous profits over the years, Elizabeth Miller believes that the potential for growth remains very high. With strategic acquisitions, strong sales efforts, efficient processes, and good expense management, there’s no reason why agencies can’t continue to increase their profitability.   Most business professionals understand that there are only two basic ways of improving profitability: Grow revenues and/or shrink expenses. In the insurance industry, growing revenues can be done in several ways (such as acquiring a new agency, increasing rates and engaging in good, old-fashioned selling). Expense savings can come about in many ways, from improving the efficiencies obtained through automation to adjusting the compensation packages for different employees. REVENUE GROWTH Acquisition activity has remained a major growth strategy in the industry. During the past few years, about 13% of agencies have acquired another agency. However, the size of the acquisitions has shrunk. On average, the growth in revenue obtained from acquisitions went from $525,000 in 2000, to $550,000 a year later, peaked at $833,000 in 2002, and then dropped off significantly to slightly more than $500,000 in 2003. Although the industry is still using acquisitions as a growth strategy, the fact that average revenues from acquisitions are down substantially means that profits won’t grow as quickly as revenues. This is because the average organization takes about eight months to consolidate operations from newly acquired subsidiaries, regardless of the size of the acquisition. Because the time to consolidate remains constant, smaller acquisitions take longer to realize profitability. We might be hitting a lull in acquisitions, as the inventory of sellers is shrinking. Recent trends show that larger firms ranked agency or book acquisitions second or third in future growth strategies, while producer recruitment clearly remains the leading strategy. Executives in many industries operate under the assumption that bigger is better and often go to great lengths to show growth. I’d advise them, “Don’t grow for the sake of growing. A larger top line doesn’t always increase profits.” In the Independent Agency System, client sales grow the top line, but more importantly, efficiency will grow the bottom line. When servicing your client base, it’s important to understand the client’s industry and create workflows that will maximize automation, while serving the client with as few steps as possible. Agents often fail to understand the idiosyncrasies of certain industries. As you enter new markets, be aware of different service issues, and plan accordingly. Insurance agents and brokers act as intermediaries between insurance carriers and consumers in providing risk protection. The business partners on both ends of the insurance transaction can make changes that the agent and broker must deal with. Some carrier changes might revolve around the risk appetite based on loss trends. The consumer’s needs might change as their business evolves. As a service provider, agents and brokers need to look at their books on a regular basis and be ready to shed unprofitable business. When reviewing your book, first look at the average net revenues that a client sale generates, and then examine the work required to service this type of client. Hopefully, you’ll be pleasantly surprised. If not, ask yourself why you’re writing this class of business. Be aware of the entire client relationship while you assess the profitability of writing for a certain market. If you’re servicing a client as an accommodation for other business opportunities, review the profitability of the entire client relationship, not just a single product. Profitable revenue growth should be the main focus of agent and broker activities. Look to create a workforce that’s driven by profit, not just sales. Define, communicate, and monitor your organization’s goals and objectives clearly. If you have a small boutique agency, you need to support sales and service efforts that fall within a well-defined scope of business. If the agency is creating a new niche as a growth strategy, you must educate producers on this line and create compensation plans that will motivate producers to sell it. Over time, complacency might set in. Many producers reach a point at which their renewal book helps them sustain a comfortable lifestyle, without the effort of trying to grow their book. Your compensation packages should continually motivate producers to increase their sales. Create a “pay-for-performance” atmosphere, while maintaining a strong support team for producers. Make the team responsible for retention, allowing producers more time to sell. P/C producers in smaller agencies tend to be jacks-of-all-trades and spend more time servicing their existing book than soliciting new business. This also holds true of very large agencies, which look at producers more as risk managers than salespeople. Their client sales calls tend to involve more consultation than selling. Medium-size firms generally have the most aggressive sales force, in which producers have historically focused equally on servicing existing clients and soliciting new business. SHRINKING EXPENSES Expense savings come in two forms: tangible (measurable) and intangible (unquantifiable). Tangible expense savings can be as basic as renegotiating your office supplies or as complex as reallocating space to accommodate more work in a smaller area. Intangible savings are usually more complex and generally involve how work is processed. Don’t belittle changes that you can’t quantify. More efficient operations that might not be measurable can improve your productivity significantly. Agents and brokers measure productivity by commission revenue per employee. This figure should average between $100,000 and $150,000 — and even higher in large firms. Although the Independent Agency System has adopted a variety of automation tools during the past few years that should’ve improved productivity significantly, productivity grew only about 3% from 2002 to 2003. This is about half the 6% annual productivity gain realized between 2000 and 2002. Some sectors of the agent-broker industry even witnessed a decrease in productivity. Despite the robust capabilities of agency management systems, many agents and brokers haven’t realized productivity gains because employees, especially producers, have resisted automation. Since producers are usually the starting point of any new business transaction (“nothing happens until somebody sells something”), it’s essential for them to embrace the automation solutions available. Until producers agree to use the agency management system, it will be difficult to implement automation fully. Integration of acquisitions can challenge many buyers. After a purchase closes, obstacles to tackle include: (1) consolidating operations; (2) blending the cultures of the two organizations; and (3) clarifying and communicating the chain of command. Although consolidation is usually the easiest to achieve and will yield the largest boost to the bottom line, many organizations try to blend the cultures and establish reporting relationships before they consolidate. This approach doesn’t work as well. When making an acquisition, be prepared to make the tough decisions — or don’t do the deal. People are not only your most valuable asset, they’re your largest expense. You need to make good choices, announce them quickly, and then get on with the rest of the process. Yes, the consolidation of operations will usually yield an overall reduction of workforce, especially in the administrative areas — and that’s tough to face. But decreasing overhead salaries will increase profit margins. And isn’t increased profits one of the reasons you made the acquisition in the first place? Today, we’re in the midst of a soft market. As premium hikes slow, it will become more important to boost your bottom line by shrinking expenses. Agencies that reinvested their high profits generated during the hard market in people and technology will be best positioned to produce profitable growth in the near future. Elizabeth Miller is a vice president with Business Management Group (BMG), a consulting firm that has been helping independent agents and brokers for more than 20 years. To learn how BMG can assist you, visit www.bmgconsulting.com, call toll free at (800) 772-0208, or contact the author directly emille[email protected]. Reproduced, with permission, from Professional Agent magazine. ...

Online Education For Risk And Insurance Professionals
According to a Wall Street Journal article, there’s been a dramatic increase in the number of executives returning to classrooms to 'brush up on traditional management skills and to learn new ones.' In the risk management and insurance industries, this is nothing new. Whether it’s a required continuing-education course, or a CPCU class, risk and insurance professionals have always pursued higher education. For years, classroom courses that prepare students for national exams have been available throughout the nation. Some students, though, don’t have the time or the patience to sit through a weekly three-hour course for 18 weeks. That’s why the Institutes, Risk and Insurance Management Society (RIMS), and other organizations have created online exam-preparation courses that offer risk and insurance professionals more educational options than ever before. RIMS’ ONLINE ASSOCIATE IN RISK MANAGEMENT (ARM) COURSES I was intrigued when I heard that RIMS was offering online exam-preparation courses for the ARM series. My classroom experience with the ARM 54 course was less than engaging, as I spent the requisite instructional time confined in a small classroom listening to an instructor ramble on about many topics unrelated to risk management. I passed the national exam for ARM 54, but wanted to self-study for ARM 55 and ARM 56. Knowing my tendency to procrastinate, I looked for a course with structure to help me avoid cramming the night before exams. RIMS’ new online course for ARM 55 was just the ticket. I enrolled online, paid the fee, and within 24 hours had a user name and password to enter the Web site. RIMS’ easily navigated Web site contains all the needed study information. Online courses are divided into four sections: Schedule: assignment and exam schedules Media Center: course materials and exams Discussions: students’ bulletin board forum for posting thoughts and answering instructors’ questions Profiles: instructor and student profiles RIMS’ online learning environment is somewhere between the two extremes of traditional classroom learning and self-study. Instead of dominating the learning environment with a lecture, the instructor serves as a facilitator, laying out the coursework weekly and leaving it up to the students to download the material, study, and take the quizzes. Students must be highly motivated. The success of RIMS’ online learning environment relies on active student participation. When class began, the discussion area was very active. The instructor posed questions and most students followed up with their thoughts. It was interesting to finish an assignment, jump online, and instantly read other students’ solutions. But after a few weeks, the number of postings dropped and the instructor had to send weekly e-mails to solicit participation. I sometimes waited days before receiving a response from the instructor or other students to my postings in the discussion area. My interest in the course began to wane and I visited the Web site less and less. When it was time for the national exam the online classroom allowed me to go back and review discussions and assignments. I studied the course materials and sent e-mails to the instructor asking for help in certain areas. With his help, and a review of materials on the Web site, I passed the national exam. Overall, RIMS’ online learning experience served its purpose. Students who take online courses must remember that it’s up to them to stay current with the assignments and discussions. Aside from the ARM series, RIMS offers other courses, including Fellow in Risk Management test-preparation courses, general risk courses such as Managing Business Risk and Small Business Risk Management, and skill-enhancement courses which focus on improving basic business skills. CPCU ONLINE SERIES The American Institute for CPCU recently teamed up with Blackboard.com, an online learning provider, to create an e-learning environment that’s very similar to RIMS’ online educational program. They divide the 'classroom' into three main sections that lead students through their daily activities: announcements, calendar, and tasks. Claire Reiss, director of the Grants and Research Program at the Public Entity Research Institute, recently completed the online course for CPCU 8-Accounting and Finance, possibly one of the most difficult CPCU courses. As a working mother of two, Reiss appreciated that the course helped prepare her for the exam in a way that fit her schedule. Instead of sacrificing one night per week for a classroom course, Reiss studied online whenever and as often as she liked from her home. The best part of the course for Reiss was having someone to turn to with questions: 'The teacher was very helpful and responsive. She provided thoughtful responses to our answers to assigned questions, quizzes, and the practice final. She also provided lecture notes that highlighted the main points of each assignment and gave us some advice about how to focus our efforts.' Overall, Reiss enjoyed the course and says it adequately prepared her for the national exam, which she passed. THE FUTURE OF ONLINE EDUCATION Claire Reiss and I had similar experiences and outcomes in our online learning adventures. Both RIMS and CPCU provided ways to study on our own time and at our own pace; yet we both noticed that the interactivity of the programs was virtually nonexistent. The format has potential for discussion among students, but lacks the urgency and leadership of a traditional classroom environment that promotes expression of ideas. Creating the feel of a traditional learning environment online is nearly impossible because it requires more bandwidth (very rapid connections) than most people currently have to deliver the audio, video, and animation required for an interactive educational experience. Nevertheless, one online education company appears to be ahead of the curve. Corpedia, a Phoenix-based e-learning company specializing in Web based business management and compliance education, uses streaming audio and creative animation to teach courses. I recently completed a one-hour course titled 'Recognizing and Preventing Employment Discrimination,' a look at the laws, history, causes, and other issues surrounding employment discrimination. I was thoroughly impressed with the course’s in-depth content and streamlined visual presentation. Corpedia presents the material with audio and visual cues that make it interesting and easy to follow. Exams test your knowledge throughout the course. The learning experience is somewhere between watching a training video and sitting through a live presentation. Students can rewind, fast-forward, or pause the lesson at any time. In addition, users can completely stop the course and return later. The course remembers where you left off. The programs also have some nice features for managers who require employees to take the courses. The employer can monitor each employee’s performance and progress, and keep online records of who took which courses. Although Corpedia’s class catalog focuses mostly on general business management training, many of the topics apply to risk management professionals, particularly such sections as safety, health, legal compliance, and workplace issues. CONCLUSION Online learning is in its infancy and far from replicating the interactive experience of traditional classrooms. Nevertheless, students taking online courses benefit from the ability to study anywhere at anytime. As with traditional classroom environments, students must be highly motivated to learn the material, stay abreast of the latest assignments, and join in discussion groups to reap the full benefits of learning online....

From 'Mom-and-Pop' to Professional Shop: Breaking Through
It used to be the $1 million ceiling. That was the level of revenue at which an individual performing agent with a few helpers had to become a business with different people handling different clients and responsibilities. Everyone still worked for the agent, but the agent no longer made every decision. However, running an agency as a business doesn't automatically result in growth and a high quality of professional service. By the time the agency reaches $2 million, it runs into another "invisible ceiling." The $2 million revenue mark around which many agents hover for several years is one in which a change in management must occur in order to break into the next level of growth. Owners who have been jacks of all trades, filling the gaps to ensure that customers are serviced adequately, must convert themselves into managing partners. If owners wouldn't spend $100,000 for a Personal Lines customer service representative, it behooves them to staff the agency properly. Then they can use their time in a way that's appropriate for their skill level and that justifies their compensation. The key to moving into the next generation of growth is to develop a deeper understanding of the power of management. Management is a productive profession, not a frill that can be trimmed in favor of sales or service. How do you explain the appreciation of fine painting to a blind man? He knows he can live without it and can't understand the fuss about applying some textured paint to a canvas. If he were able to see, he might find out that art adds a dimension to his life that he never knew existed. Most owners of small agencies facing the $2 million ceiling without knowledge of management are like the blind man. The only way they know to grow is to repeat they've done in the past, but since the old familiar methods no longer work, they're at a loss. New ways seem risky. But they don't have to re-invent the wheel. All they need do is review similar companies that have grown through the $2 million mark and into double-digit growth. They'll find that these companies hire enough of the right people to manage the daily workload. They focus their managers on growth, profitability, productivity, and monitoring and managing others to accomplish more than they could ever do themselves. It takes fortitude to build businesses from scratch-but leverage is what builds large businesses from small ones. The reason that 93% of all businesses never grow beyond their owners' ability to produce personally is that they refuse to invest in people and learn the arts of delegation and management. They feel that their long experience puts them beyond the learning stage. However, the special 7% use their historical success as a springboard to a different level of success and understand that they'll never cease learning their business. Each subsequent level brings new challenges and responsibilities. If you're facing the $2 million barrier to further growth, consider taking these steps: Formulate a strategic and tactical plan and budget. Nothing happens until it's written down. Relieve your owners and key managers of daily process-driven work. If necessary, hire people to accomplish administrative tasks at lower compensation levels. Determine the most productive thing that each owner can do to justify his/her compensation and focus on those tasks. Growth, productivity, or profit to twice the owner's compensation level is the minimum. Triple justification is more likely to sponsor profitable growth. Delegating functions doesn't mean delegating control. Maintain control over day-to-day operations through a reporting system that informs you how much comes in, how much goes out, and how many and how old are the items remaining undone. Knowledge about your business is not just an important thing, it's everything! "I'm too busy" is a poor excuse. Evolve a Management Information System to tell you about new business, renewal status, and lost business. These steps are the preliminaries to creating a professional agency as compared to the Mom-and-Pop shops that still dot the landscape. The professional agency knows how to move in the right direction to grow. The Mom-and-Pop shop believes that the fates control its destiny and trust in luck. Which would you prefer?...