THURSDAY, AUGUST 5, 2010  

                                                Big “I” Association News





P-C Trends
Independent Agents Can Capitalize on Declining Customer Satisfaction in Auto
Survey shows an increase in customers shopping for coverage.

Customer satisfaction with auto insurance has decreased considerably this year, according to a J.D. Power and Associates study released this week. The study examined five areas, but the most significant decline in customer satisfaction was with the price of auto insurance.

In a single quarter, J.D. Powers observed that one in 10 households indicated they had shopped for comparison prices, which is double the normal rate going into the recession.

“As an agent, if you know more people are actively looking, the rate of turn favors those who are looking to promote policies [and] products,” says Jeremy Bowler, senior director at J.D. Power and Associates. “Direct companies are trying to compete with the unique value proposition of an independent agent. Direct carrier[s], when they offer competitive price quotes, really they’re just trying to emulate the unique value that an independent agents can present to the customer.”

Consumers are indeed going down that path, according to Bowler. They’re drawn in by the idea that they can see a number of carriers’ prices, but where Web pricing may fall short, independent agents have a distinctive advantage.

“I can ask questions and the agent can sit down and explain to me why one company may be a little bit more expensive, but would be the one they recommend,” Bowler says. “You’re paying a little bit more…if you buy this policy from Company X; but Company X has a sterling record, it’s been around for 80 years [and] includes certain benefits. So the agent’s able to really sell the total value in a more meaningful way.”

With customer close rates for an agent far higher than online close rates, the ability to capture the business of consumers dissatisfied with their auto offerings abounds. Once agents draw these shoppers in, keeping up with what direct and captive carriers can offer becomes important—especially in terms of technology.

“While the agent may not be able to craft a [smart phone] application, I would be looking to see which independent agent carriers are offering that kind of competitive technology,” Bowler says. “It could be a differentiator. If I’m appointed to seven or eight different companies, and they’re priced competitively with each other…but one of them has a nifty application that I can tell my customer base about, that might be the tipping point.”

Particularly with Generation Y customers, understanding what makes them tick is the key to keeping their business. According to the J.D. Power findings, Millennials tend to be hyper-critical, especially when it comes to the ability to reach a representative and have their policies explained clearly.

“A Gen Y customer is looking for something that is competitive with Geico,” Bowler says. “And the agent is able to say, ‘I can offer you many of the same benefits of Geico, plus I have a local office, so if you need me, I’m right here.’”

Diane Rusignola (diane.rusignola@iiaba.net) is IA managing editor.





L-H Leads
A Distinction with a Difference 
Travel agents and financial advisors have been forced to evolve. Is your agency touting its competitive advantage?

In the property-casualty world, independent insurance agents are acutely aware of the three primary distribution channels: captive agents, direct writers and independent insurance agents. Some insurance companies utilize more than one distribution channel. Of course, independent insurance agents tout the fact they can offer customers a choice of companies and can customize the coverage that best fits their needs. But have independent agents noticed the distribution evolution that has occurred in other industries?

Most people have witnessed the change in how consumers approach their travel needs.  With the advent of the Internet, the use of travel agents has undergone major evolution. For routine travel, consumers now perform the majority of airline bookings either through an aggregator like Expedia or directly through an airline’s website. As a result, in order to survive, travel agents have had to position their services for business travel and more intricate travel plans that include cruises, exotic destinations or adventure travel.

Should independent insurance agents be concerned with the airline model? The answer is yes and no. Certainly, the ability to book reservations online 24/7 has been embraced. For some routine tasks, independent agencies have had to follow suit to provide avenues for their customers to accommodate the ability to make routine changes to their policies. And, independent agents have been increasing their ability to facilitate online quoting for those consumers who want it.

Perhaps a better example for independent agents to consider is financial advisors. Over the past 50 years, most people who wanted to become financial advisors—remember the term “stock broker”?—joined one of the large Wall Street firms like Merrill Lynch or EF Hutton. In those days, brokers would use the brokerage sheet to recommend financial products to their customers. Typically, brokers would receive pressure to sell the proprietary products of the brokerage firms. Over the past two decades, with increased transparency, it has become more challenging for wirehouse brokers to follow this model.

Since the stock market turmoil of 2008, the independent advisory channel—Registered Investment Advisors (RIAs)—has been exploding, with a large migration from the wirehouses to the independent channel. Firms like Fidelity, Schwab and a plethora of independent broker/dealers have been serving the independent channel. This business model focuses on the advice, service and fees provided by the RIAs versus the more traditional brokerage channel. RIAs have had to focus on promoting the brand of their firm and their business philosophy versus the well-known Wall Street names—and the RIAs are thriving. Assets under management (AUMs) have been increasing in leaps and bounds under the RIA distribution channel.

Independent agents should learn from this evolution and remember to tout their independence and the ability to put their customer’s interests first. Consumer research has shown that independent agents need to explain the model, as many consumers are confused about the difference between independent insurance agents versus captive and direct writers. Don’t forget that this important distinction is the foundation of your brand—and your competitive advantage.

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





Tech Trends
The Best Web Marketing Strategy You’ve Never Heard
Boost your agency’s local search results.

By now, you’ve probably heard how creating a website or using social media can help increase visibility and generate leads for your agency. But there's one tool you may not have heard about—even though it’s a fast, easy way to reach thousands of people in your local area who are shopping for insurance right now. And, it’s free.

It sounds too good to be true, but “local search” can give your agency excellent visibility at the same moment consumers are looking for a local agent.

Quite simply, local search is the name used to describe search engine results that show local business listings when a consumer searches for products or services in his or her area. For example, if a consumer enters “insurance + Savannah, Ga.,” the results page will include a map and a list of the top ranking local agencies. Think of it as the new online alternative to a Yellow Pages directory.



Because local search sifts through business data—not websites—your agency doesn’t need a website to be included in local search (however, websites are still recommended to help consumers find information about your agency). And since local search listings are often positioned higher on the results page than websites, your agency may show up above the top ranked insurance website—a position many spend thousands of dollars in search engine optimization to achieve. By claiming your agency’s free local listing, you’ll open the door for additional exposure and new business leads.

Why does local search work?

• 97% percent of consumers use the Internet to shop locally.
• 90% of online searches start with a search engine, not a company website.
• Americans conducted 16.4 billion searches in June 2010, and 20% of Google searches are local in nature. This suggests more than three billion local searches are conducted in the U.S. every month.
• Of the more than 20 million businesses in the U.S., only 2 million (10%) have claimed a Google local listing.

The Internet has changed the way consumers look for information about products and services. But according to a Progressive survey, three out of four independent agencies still haven’t taken advantage of local search. Now is the perfect time for you to take the lead in your market by developing a local search strategy.

The easiest way to claim your local listing is by visiting GetListed.org, a free service that checks your current listings and helps you claim them with major search engines including Google, Yahoo and Bing. Type in your agency name and zip code, and GetListed.org will score you on how well your agency is represented in local search. If you haven’t claimed your listings, the site will also link you to the claiming page of each search engine.

The rest is simple. For each search engine, just register for a free account, and then provide information about your agency.  Be sure your listing includes the following essential details:

• Business address
• Local phone number
• Website (if applicable)
• Business hours
• Insurance products
• Special services

Next week’s IN&V will cover additional tips on maximizing local search results after you have created a basic listing.

Matthew Marko (matthew_marko@progressive.com) is a marketing process manager for Progressive Insurance. He works to provide local marketing strategies and tools to help independent agencies grow their business and has developed several online marketing webinars for Progressive agents on ForAgentsOnly.com. Marko prepared this article for ACT. This article reflects the views of the author and should not be construed as an official statement by ACT.


Big “I” News
N.C. and N.J. Teen Golfers Win 42nd Annual Trusted Choice^® Big “I” National Championship
Tournament is one of nation’s largest junior stroke-play golf tournaments.

Teen golfers Greg Bunner of Cherryville, N.C., and Kuriko Tsukiyama of Bogota, N.J., won the boys and girls divisions, respectively, at the recent 42nd Annual Trusted Choice® Big “I” National Championship in Chesterfield, N.J.

The tournament featured 156 players from 35 states and was played at Old York Country Club at Chesterfield. The boys division was played at par 71 and 6,743 yards, while the girls played the course at par 72 and 5,828 yards.

Each summer more than 3,000 junior boys and girls nationally vie to earn a place in the final tournament. More than 300 state and local qualifying events determine the final roster.

Bunner won first place in the boys division by shooting a 1-under-par 70 in the final round, with a 283 and a 1-stroke lead. Tsukiyama shot an even par 72 to claim the girls division title by seven strokes.

In the boys division, Will Bishop of Lexington, Ky., and Cory McElyea of Santa Cruz, Calif., tied for second place one stroke behind Bunner at an even par 284. Sean Friel of Rochester Hills, Mich., placed fourth.

In the girls division, Ally McDonald of Fulton, Miss. placed second with a 9-over-par 297. In third place was Ashlee Pickerell of Salem, Ore., at 11-over-par 299.

The Trusted Choice® Big “I” National Championship has proven to be a critical test for many of today’s golf professionals. PGA and LPGA fields include numerous past champions and participants, including: Billy Andrade, David Duval, Charles Howell III, Cristie Kerr, Candie Kung, Justin Leonard, Phil Mickelson, Grace Park, Craig Stadler, Bob Tway, Cheyenne Woods, Tiger Woods and Fuzzy Zoeller.

The tournament began in 1969 and every year, more than 2,000 agents help organize and administer the qualifying tournaments that lead to the national finals. Independent agents donate time, effort, and in many cases, personal resources to conduct local events.

For more information, visit www.bigigolf.com.

Margarita Tapia (margarita.tapia@iiaba.net) is Big “I” director of public affairs.


Agency Management
What Is Your Binding Authority?
With seasonal storms hitting, agents need to know the rules ahead of time. 

An agent writes, "One of our carriers has added this paragraph to our agency contract regarding binding authority:

"The Agency shall have no authority on behalf of the Company to provide new coverage or increase existing coverage when the National Weather Service has issued a tornado warning, tropical storm watch or warning or hurricane watch or warning for an area within a 200 mile radius of the risk location. This restriction applies during the time period beginning with the issuance of the above-listed watches or warnings and ending 72 hours after the expiration of the above-listed watches or warnings.

"Our agency tries to have the underwriters bind the coverage whenever possible; however there are times our producers need to either bind a new risk or increase coverage without talking to the underwriter. Often these risks are several states away. We are struggling with the task of getting all of our binding authority at the desktops of our producers and CSRs. Do you have a suggestion on how to handle this entire project?"

This is a timely question. With seasonal storms and floods (where such coverage is provided), summer tornados and fall hurricanes, it is important to understand one's binding authority. The example you give unquestionably makes this very difficult for multi-state operations. The VU faculty tackled the question.

This kind of restriction is perhaps reasonable for hurricanes since they're known well in advance and covered widely in the news, but a tornado warning? Is this really such a problem? Have they had instances where they paid property claims for tornado damage and discovered after the loss that it was bound only minutes before the loss? There are lots of problems here if you want to be really thorough about it.

1. The contract wording should be clarified by saying (if this is what is intended) that no new coverage or increase can become effective at a time (presumably 12:01 AM in all cases) which is within the "blackout" period.

2. Does an official warning of this kind clearly define an exact geographical area, so that the 200-mile radius area can be exactly compared with it?

3. Does new coverage or an increase mean just either a totally new policy providing any property coverage whatsoever, or an increase in the limits of an existing policy that provides any property coverage?  New coverage or increase in coverage could mean any change in the policy, such as an endorsement, that broadens or expands it in any way, regardless of whether or not it has to do with the windstorm peril.

4. Assuming the whole scope of the restriction on the agency's authority can be more clearly defined, the problem then becomes how to avoid violating the restriction without spending inordinate amounts of time and money finding out what is going on, exactly where and when, with regard to storm warnings. One way to deal with it in the binder might be to say something like: "This binder is subject to certain limitations on [the agency's] authority to provide coverage with reference to windstorm perils while official warnings are in effect." But this might have to be filed if binders are considered forms that have to be filed, and then it might not be approved.

5. The agency should try to negotiate a provision that says something like: "I am not liable if I inadvertently violate the restriction as long as I made a good faith effort to comply with it."

Bill Wilson (bill.wilson@iiaba.net) is Big “I” director of the Virtual University, an online learning center for agents and brokers. To read the entire article, click here. If you do not know your Big "I" website user name and password, e-mail logon@iiaba.net to request your login.