I recently had an interesting question from a Big I agent who was taking advantage of the free 30 minute consultation that all Big I members get every quarter under the Free Legal Service Program that I operate for the Big I. The question concerned why a broker that the agent sometimes used to find a market for one of his customers could quote a higher cost for obtaining a particular insurance coverage than the insurance company would quote if approached directly by an agent. The difference was a fee added by the broker for its services.
After reviewing the applicable sections of the Georgia Insurance Code, it appeared to me that the Code did not impose a limit on what an insurance broker could charge for its services, where the broker was acting purely as an intermediary between the insurance company and another insurance agency or agent. If the broker (i) has no contact with the customer in connection with obtaining the insurance coverage, (ii) does not assist in servicing the coverage, and (iii) does not share the commission paid by the insurance company for that coverage with the insurance agency or agent, the disclosure requirements of the Code and the limitations on what a customer can be charged for obtaining insurance coverage do not appear to apply.
For those agencies and agents that are looking to increase their revenue, acting purely as a broker for other agencies or agents where possible may be one way to do so. The fact that many insurance companies will not allow their agents to broker business is a problem, but where that restriction does not exist, the opportunity to increase your revenue does. However, that opportunity does come with some risk as I am not aware of any definitive ruling on this subject from either the Insurance Commissioner or the Georgia courts.
One of the risks posed by the burgeoning use of social media sites and other online methods for business development is that someone will post a negative comment about your agency on one or more of them. We have all heard horror stories about how the posting of one negative comment can mushroom into an all out war of words on the internet and do far more damage to a business’ reputation than would have otherwise occurred. So how do you respond, if at all, when you learn that a negative comment about your agency has been posted online.
Kent Campbell of InternetReputationManagement.com recently offered five tips on how to deal with a negative online comment about your business. First the Don’ts: 1) Don’t respond online, 2) Dont’ file a lawsuit or send a cease and desist letter, and 3) Don’t share the bad news online. All three of these actions can lead to more exposure of the negative comment than would have otherwise occurred.
What should you do? Mr. Campbell recommends calling the person (no email as it can be put online) who posted the negative comment to find out (in a calm manner) the reason for the comment. Then offer to try to resolve the problem that lead to the posting of the negative comment and see if the person will retract the comment if the problem can be satisfactorily resolved. Even if the person is not willing to retract the comment, you should try to resolve the problem, as doing so will be an effective way to negate the impact of the comment if it does end up circulating widely on the internet.
A couple of months ago, I posted an article about how the coming changes in the tax laws as of January 1, 2013 may impact the sale of an insurance agency (click here to review that article). A couple of weeks ago, the Insurance Journal had an article about some other financial actions agency owners may want to consider taking in light of those coming changes. The author pointed out that the rise in taxes for those in the upper income group that is expected to occur, when coupled with the rise in the tax rate for capital gains and dividends for all taxpayers, would indicate that it is a good idea to accelerate income into 2012 and defer deductions into 2013.
One way for an agency owner to accelerate income into 2012 would be to pay themselves a qualified dividend, while the tax rate for such dividends is still at 15 percent. This could be done by using the retained earnings of the agency. Even if your agency does not have a significant amount of retained earnings, the Insurance Journal article discusses how an agency owner may be able to take out some of their equity in the agency in the form of qualified dividends by having the agency buy back, or redeem, a portion of their stock in the agency using borrowed funds. The article also addresses other ways that an agency owner can obtain financial benefits out of their agency before the end of the year to take advantage of the current tax rates. Click here to see that article in its entirety.
If you have any questions about the financial options discussed in the Insurance Journal article or my earlier blog post, please feel free to contact me.
A couple of weeks ago I posted a blog about three basic principles for how to successfully develop new business. First, present yourself as a problem solver. Second, listen and ask questions first to determine what the potential customer needs. Third, offer solutions to address the potential customer’s need. These are sound general principles, but the question then arises, how do you implement them in your daily activities to become the best insurance agent you can.
One way to answer this question is to avoid doing those things that turn potential customers off and thus, prevent you from being a great insurance agent. What are those things, you may ask. Well, I recently came across a great list of what those things are posted by a Ohio insurance agent, whose blog is titled “Confessions of an Insurance Goddess.” In one of her blog posts, she listed seven things that, in her opinion, make for the worst salesperson ever. My favorites are (i) upon meeting new people immediately begin your sales pitch without first taking the time to engage in any friendly “get to know you” conversation, (ii) talk only in industry jargon without explaining what that jargon means, and (iii) use all the technology at your disposal to make a presentation to a potential customer without first finding out how the customer would prefer to communicate and receive information.
To find out the rest of the seven deadly sins of sales and read the Ohio agent’s amusing explanations for those sins click here. As with doctors, an insurance agent’s first objective in dealing with a potential new customer should be “do no harm.” By avoiding the conduct described by the Ohio agent, an insurance agent will go a long way toward achieving that goal and in thinking about what not to do, what to do should become clearer.
The IIAG’s annual Fall Conference was held in Macon last Thursday and Friday at the Macon Centreplex conference center, which calls itself “Georgia’s largest entertainment facility and convention center outside of Metro Atlanta.” Having made the long walk from the adjacent Marriott Hotel to the IIAG meeting rooms on more than one occasion, I tend to believe that statement. It’s modern ambience was enhanced by the presence of the Trusted Choice Chopper, which was built by Paul Teutuls, Sr., and featured on the September 17 episode of the show American Chopper.
There were programs on Digital Marketing, E&O Risk Management, and Frequently Asked Questions by insurance agents, the latter of which was presented by me. By not attending the conference, agents missed out on hearing about the IIAG’s new “Agents Go Digital” program that offers website and social media marketing services for member agencies, receiving a discount on the premiums for their E&O insurance through IIAG, and receiving a copy of the new booklet that I have created for agents that provides answers to 26 questions about the creation and operation of independent insurance agencies. The booklet addresses everything from what type of entity should be used to conduct an insurance agency business to the handling of insurance certificates to the various ways in which agents can be compensated for the services they perform.
For those of you who did not attend my presentation in Macon, the booklet can be found in pdf format on the IIAG website by clicking on the link “Answers to Frequently Asked Questions Booklet” at the top of the web page that discusses the Free Legal Service Program that I provide for IIAG members. That web page can be reached if you click here. You must be a member of IIAG to access that booklet. I would appreciate any comments or suggestions that you might have about the booklet, as I want it to be relevant to the members and the issues they face in their daily business activities. I hope to create an expanded and updated version of the booklet next year, so your feed back is important.