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Miscellaneous

This catch-all section of the VU research library includes all of those square peg topics that just don’t seem to fit the other round hole Agency Management categories.
Taxes, what would we do without taxes? (I’m sure most of us would like to find out.) When choosing your business entity type, you need to understand how each is taxed. This brief article lays out a few important taxation facts surrounding C-Corps, S-Corps and LLCs.
An agent invested many hours in landing a prospect only to have the business give all of the agent’s work to another agent, along with a BOR that was accepted by the same carrier that quoted the account. Is this legal? Is it ethical?
Eliot Spitzer, former New York Attorney General, sued Marsh & McLennan Cos. on October 14, 2004, for supposed bid rigging and other misdeeds and misinformation. This suit led to laws requiring insurance agents and brokers to disclose who they represent (the carrier or the insured), the sources of income, and sometimes the amount of income. Fifteen states currently have commission disclosure laws on the books possibly as an indirect result of Spitzer’s suit.
Apparently the FIO has set its sights on becoming the protector of the insurance consumer, maybe in partnership with state regulators or to the exclusion of state regulation – it’s not clear. But in its November 2016 report to the Treasury, the FIO addresses five topics it thinks state regulators aren’t managing as well as they could.
The Virtual University has undertaken to create a large reference library for member use. Part of accomplishing this is researching and creating spreadsheets, charts, and graphs to make finding the necessary information easy for our members. Since the beginning of 2017, the VU has developed several spreadsheets to accomplish this goal. However, they sometimes are forgotten about or get lost in the 17,000 pages of information.
Many good agencies that have worked hard, done things well, and are not grasping at straws, are still at a competitive disadvantage. The categories in which this is occurring are widespread. Here are some important examples....
A serious problem has been created by the misuse of the word “volume.” When companies say they want more volume, agency owners form clusters to “give” companies more volume. As a result, the company is no better off and arguably worse because now the cluster may have some leverage and may qualify for more profit sharing, and the company does not get a dime for better results. But, they got what the requested.
Many agents possess a significant fear that they are not big enough. No matter if an agency has $500,000, $1 million, $5 million or $100 million, I’ve had agency executives tell me they do not have enough volume to please their carriers. The carriers simply have an insatiable appetite. With such insatiable appetites, no one ever has enough and size in and of itself is the wrong goal.
In the past year, we have averaged an 'Ask an Expert' question about every other month involving agency clusters. In this article, we'll present the questions, our faculty responses, and an article by Chris Burand on cluster tips. In addition, an article and FAQs by Al Diamond are presented on an alternative concept he calls 'The Virtual Insurance Agency.'
A question posed to our agency management faculty: 'I am an agency owner. At one time we changed to an 'S' corporation and our CPA told us it was best to be a 'C' corporation. We changed and since then I'm of the opinion we should have remained an 'S.' Can you give any insight on the matter? We are about $15,000,000 in volume if that is of any help.'
March is Ethics Awareness Month. I want to ask if you can afford to be ethical? You may be surprised to learn that my short answer may be 'No.' It is expensive in many ways. To learn how from the findings of a study and my own personal experience, keep reading....
We recently received this question: 'Are you aware of any firm that provides insurance company scorecards...something an agent may use to compare companies that he/she may wish to do business with?' Well, as a matter of fact, we do...one of our VU faculty members has such a tool, along with one from our Best Practices Joint Agency/Company Planning kit. And while we're at it, we'll direct you to a VU tool for evaluating carrier solvency.
The ACORD certificates of insurance indicate that the issuing insurer will 'endeavor to' provide notice of cancellation to the certificate holder. Typically, nothing in the policy requires this and many of your insurers say they do not even want copies of certificates, much less plan to provide notice. Is telling the certificate holder that the insurer with 'endeavor to' provide notice of cancellation (when they clearly have no intention of doing so) ethical?
Change is hard for all of us. It is easier, however, for those businesses that face failure and losses due to performance-related problems. Change out of weakness, while difficult to implement, is always easy to reconcile and rationalize. The most difficult change, on the other hand, is changing from a position of strength. In this article, we'll dispel the myth of 'If it ain't broke, don't fix it.'
As a cluster matures, you can actually see the lines between agencies blurring. The Virtual Insurance Agency (VIA) takes a maturing cluster to its logical conclusion, a mega-merger of all of the agencies into one corporate entity with several owners based on the values of each owner’s business as it converts into the VIA.
Problem solving, innovating, cost cutting or just making things easier are all reasons why many insurance agency owners wish they had a Ouija Board at their beck and call. With new sources of problems and concerns exploding in our business arena daily, making the right decision has never been more difficult. Happily, it can be reported that a far superior decision making tool to the mystical Board already exists.
Sometimes when an insurer encounters financial problems (real or perceived), cut-through endorsements may be issued. A cut-through endorsement is usually attached to insurance policies of the primary carrier by both it and a reinsurer. The endorsement should specifically reference the policy by number and policy term. What, however, does the endorsement actually represent?
Inertia is the greatest force against progress and change. Too often, agencies run into the 'Inertia Wall.' The Inertia Wall is invisible. It is soft and comforting. It is “the way we’ve always done it.” It doesn’t stop progressive change. Rather, it simply absorbs it. What causes Inertia to become such a strong force against change? What can be done to defeat INERTIA? Let's find out in this article...
In March 2002, Ethics Awareness Month, we ran a contest with three ethical dilemmas, asking our newsletter readers to respond with their answers. Below is one of those questions, along with many of the responses we received. If you have any thoughts you'd like us to add, email them to Bill.Wilson@iiaba.net.
In March 2002, Ethics Awareness Month, we ran a contest with three ethical dilemmas, asking our newsletter readers to respond with their answers. Below is one of those questions, along with many of the responses we received. If you have any thoughts you'd like us to add, email them to Bill.Wilson@iiaba.net.
In March 2002, Ethics Awareness Month, we ran a contest with three ethical dilemmas, asking our newsletter readers to respond with their answers. Below is one of those questions, along with many of the responses we received. If you have any thoughts you'd like us to add, email them to Bill.Wilson@iiaba.net.
March is Ethics Awareness Month in the insurance industry. This has become an annual event, sponsored by the Insurance Institute for Applied Ethics and the CPCU Society, and endorsed by a number of industry organizations. In keeping with the spirit, below are some 'ethical dilemmas.'
You’ve seen those headlines about unscrupulous corporate executives cooking the books. The passage of the Sarbanes-Oxley Act is supposed to have forced many employers to take the ethical temperature of their workplace. It is coming as no surprise that what they're finding is an outbreak of seemingly innocent, yet clearly inappropriate, workplace behaviors that are often a breeding ground for unethical conduct.
I constantly discover huge accounting errors, legal problems, and operational issues in agencies, all courtesy of professional advisors like CPAs and attorneys. Part of the problem is these advisors do not know enough about insurance agencies. Many do not accept the fact that insurance agencies are different and have unique needs. Here's how to make these advisers work for you....
As an agent, you have knowledge of other agents telling their clients not to list youthful drivers. After all, the ISO PAP covers resident family members automatically whether listed or not. Is this fraud? Is it unethical? What will you do, what will you do?
The last three agencies we visited had problems so similar that we decided to see just how many agents have the same experience – and the same problems. The key issue for each agency owner was EXTREME FRUSTRATION. When probed for more information and better focus on the issues, the owners in each agency echoed the same sentiments...
With the beating that many carriers have taken over the past few years in personal lines, it is more important than ever to improve loss ratios. In this article, our agency management gurus will offer some suggestions to improve agency underwriting of personal lines accounts.
Several excellent studies have shown that a key cause of so many loan defaults has nothing to do with the economy or with the people taking out the loans. The weak link is underwriting. Which brings us to the focus of this article, the insurance industry....
In this article, agency consultant Chris Burand explores the myth of 'bigger is better.' While, in general, growth is essential for agencies to retain markets and profitability, Chris demonstrates why unrestrained growth via acquisition can be perilous. Getting big through internal growth, while slower and less glamorous, does work and has continually proven to be the most profitable method for growing a company.
Much of the call on consultants has to do with breaking through the barriers to natural growth that agencies experience at different stages of growth. Agencies find it particularly difficult to break through the $1, $2 and $3 Million revenue marks. Once the $3 Million ceiling has been broken, agencies seem to be able to grow to $10 Million without severe management changes. But getting there requires breaking some barriers.
Do you believe there has been an industry shift towards short-term profits at the expense of long-term stability and service? I am writing a book on the subject, and want to hear from agents willing to share their perspectives and ideas. In what ways do you see our industry letting consumers down, and losing their faith? Are there instances in which you, the agent, have taken steps personally to rectify situations in which your customers were not made whole as they and you expected?
Since this 'article' covers so much ground, the only logical spot for it was the Miscellaneous section of Agency Management. This was a question submitted to our 'Ask an Expert' service and the composite responses are shown after each part of the question.
Over and over again we encounter agencies for whom claims is and entry-level position, one combined with other clerical functions or relegated to a secondary responsibility for people who have other priorities within an agency. From the standpoint of your clients, claims are not just AN important reason for using an agent – it is THE MOST important reason for using an agent.
Time is running down! Of critical importance to agencies, companies and other financial institutions are the privacy provisions of the Gramm-Leach-Bliley Act (GLBA). In this article, we'll summarize some important features and tell you how to get more information, including sample notices.
Our father’s agencies are gone. If you wish things were like they were in the “good old days,” please remember that, along with 25% commissions, more respect and customers seeking agents services, came polio, high infant mortality rates and world wars. The past is, indeed, past. Look to the future and grow and profit and CHANGE with that future. Let's examine the past, present and future...
Many smaller agencies would like the market clout and economies of scale of larger agencies. Historically, about the only way to do this has been through mergers or clusters. Now there's a new way that has benefits for all parties involved.
In another article entitled 'Binding Authority Weather Restrictions,' we discussed how nebulous (and onerous) some underwriting restrictions can be when they're based on rapidly developing weather conditions. With the recent series of Gulf Coast hurricanes, similar situations arose involving both underwriting and coverage restrictions, one of which appears to violate the policy itself. In this article, we'll further explore what may or may not be permitted by the contract or underwriting guidelines.
An aggregator, according to our definition, is an entity that 'clusters' distribution entities together to achieve economies of scale, without assuming the autonomy or ownership from the individual owners. Consolidators and acquirers take over ownership. Aggregators may take a share, but leave the predominant ownership with the individual agencies.
An agent discovers that his insured, a childcare center, has been underpaying her premium for at least five years due to a clerical coding error. He knows for a fact that she cannot pay any past-due premium. His choices are remaining silent or telling the carrier about the mistake and risk subjecting his client, a surefire renewal without competition for the next 10 years, to an unexpected financial burden. What would YOU do?
Mission. Integrity. Ideal. Excalibur. Universal. Enterprise. Great Global. American Excel. Champion. Adjectives for the Virtual University? Nope...names of companies that used to insure millions of individuals, families and businesses. Perhaps you were affected in some way by these or other insolvencies because you were blind sided when they went belly up. There are proactive steps that you can take today to protect yourself and your clients.
Mission. Integrity. Ideal. Excalibur. Universal. Enterprise. Great Global. American Excel. Champion. Adjectives for the Virtual University? Nope...names of companies that used to insure millions of individuals, families and businesses. Perhaps you were affected in some way by these or other insolvencies because you were blind sided when they went belly up. There are proactive steps that you can take today to protect yourself and your clients.