Successful Young Producers – What do They Have in Common?

Would you be surprised to learn that a slight majority of the successful young producers studied by Reagan Consulting, an Atlanta-based insurance industry consulting firm, were recruited right out of college and most of the rest came from another industry?  How about that the producers who had GPAs in school under 3.0 (a B average) achieved validation(i.e., the income they brought into the agency equalled the compensation and other expenses incurred by the agency for them) over 6 months sooner than those who had GPAs of 3.5 or above?  These are just a few of the background facts that were common among successful young producers discussed by Brian McNeely of  Reagan Consulting in his presentation to the IIAG annual convention at the beginning of this month.

That presentation was based on the study conducted by Reagan Consulting in 2009 of 91 successful young producers, who were under 30 years old and selling commercial P&C or employee benefits products.  The validity of that study was confirmed in 2012 when Reagan Consulting followed up with the young producers and found that 80 of them were still working for the same agency in a sales position and all but one of the others were still in sale positions with other agencies.  The one who was not had left the business to have a baby.  The average new commercial P&C business production in 2012 for the producers who agreed to participate in the follow up study ranged from almost $41,000 a year for producers in agencies with less than $1.25 million in annual revenue to over $100,000 for producers in agencies with over $25 million in annual revenue.  Not bad for any producer, young or old.

Specialization with office support and value added services was one of the five keys to success for the young producers studied by Reagan Consulting.  The others were training in insurance and sales techniques, mentoring, and developing relationships with referral sources.  Not surprisingly, training and supportive mentoring were found to be the most important of these keys to success.  Along these lines, the May 30, 2013 edition of the IA Insurance News and Views spotlighted an article by John Graham on how to act like a salesperson.  In his article, Mr. Graham discusses eight basic principles that every salesperson should live by, and it would make good reading for all producers, but especially young ones just starting out.  None of these principles are new, but if learned and implemented they would get a young producer off to a good start. (Click here for the article.)

At their core, all insurance agencies are sales organizations. If they want to be successful, they must sell insurance policies.  That makes finding, developing, and retaining good producers one of the most critical things a successful insurance agency must do.  It is especially important for agencies to find and then develop good young producers.  To review the 2009 Reagan Consulting study that discusses how this can be done click here and for the 2012 follow-up report click here.

Can a Fee be Charged for Issuing an Insurance Certificate?

I attended the IIAG’s annual convention last week and the subject of insurance certificates was on the minds of a lot of people, including the Insurance Commissioner, Ralph Hudgens. Commissioner Hudgens mentioned the fact that his office had recently issued a regulation regarding the issuance and use of insurance certificates more than once in his Saturday morning speech to the convention. (Click here for my previous blog post on the new regulation and its significant provisions.)  However, the new regulation does not address and Commissioner Hudgens did not say anything about an issue that has come up repeatedly in my conversations with agents using IIAG’s free legal service program and otherwise.

That issue concerns the question posed by the title of this blog post.  In the past, I have been informally told by the Insurance Commissioner’s Office that the issuance of insurance certificates is considered to be an integral part of the placing and servicing of an insurance policy and thus, the Unfair Practices section of the Georgia Insurance Code, which prohibits charging anything more or less than the stated premium “for insurance”, would prohibit the charging of a fee for issuing an insurance certificate.  But what if an agent was also a licensed counselor? Would the issuance of an insurance certificate be considered an “ancillary service” for which an insurance counselor can charge a fee while also receiving a commission on the same insurance policy?

My answer to the above questions is that a good argument can be made that an agent who is also a licensed insurance counselor can charge a fee for the issuance of an insurance certificate if he or she follows the requirements of the statute that allows for the charging of a fee for “ancillary services.” (Click here for an article explaining those requirements.) That is because “ancillary services” are defined in that statute as services “in excess of acquisition services”, and it is clear that the issuance of insurance certificates is a service that has nothing to do with the “acquisition” of the underlying insurance policy.  This is an issue that deserves clarification in light of the increasing burden being imposed on agents who have construction industry and other customers who need insurance certificates issued.  As you meet with your legislators and Commissioner Hudgens or members of his staff, I would encourage you to encourage them to address this issue.

 

Summer Interns – Traps for the Unwary

Every business owner who is thinking about hiring one or more summer interns needs to be aware of the laws that apply to their use or the owner  could find himself or herself facing significant legal liability.   The primary law to be concerned about is the Fair Labor Standards Act (“FLSA”), which governs how employees are to be paid.  The FLSA requires that all “employees” be paid at least the current minimum wage for every hour they work, plus overtime pay of one and one-half times their hourly pay rate for any hours worked in excess of 40 hours per week, if they are not exempt from this overtime pay requirement.  An “employee” is anyone who is required or permitted to perform services for the benefit of a business engaged in or affecting interstate commerce, which nowadays covers almost every type of business activity.

If the summer intern will notto be paid anything or something less than the current minimum wage for the time they spend at the business, the burden is on the business owner to prove that the “volunteer intern” was in fact a “trainee”, who does not haveto be paid anything for their services, and not an “employee”, whomust be paid at least the minimum wage for their services. The fact that the “volunteer intern” willingly agreed toperform the services in question without being paid any compensation is irrelevant, as the United States Supreme Court has held that an individual can not waive their rights under theFSLA. This principle permits a “volunteer intern” to decide, sometimes years later, that maybe they shouldhave been paid for all the services they performed for a business owner, if for whatever reason they now need the money orhave a grievance of any kind against the business owner.

In April 2010, the United States Department of Labor (the “USDOL”), which is responsible for enforcing the FLSA, issued a Fact Sheet in which it explained what a business owner must show to prove that a “volunteer intern” is a “trainee.” (Click here for the Fact Sheet.) To begin with, unlike “volunteer interns” working for a non-profit or government organization, the USDOL will presume that such an intern working for a for-profit business is an “employee”. To overcome this presumption, the business owner must satisfy six criteria with respect to its relationship with such an intern.  For most business owners, the two hardest criteria to meet will be that “the intern doesn’t displace regular employees but works under the close supervision of existing staff” and “the business owner derives no immediate advantage from the activities of the intern, and on occasion, its operations may actually be impeded.” (Click here for an article I have written that goes into greater detail about the USDOL’s position on unpaid interns.) For those business owners who have 15 or more employees, the other laws to be wary of are the federal employment discrimination laws.  The Equal Employment Opportunity Commission (the “EEOC”), which has primary responsibility for enforcing those laws, has issued an informal guidance memorandum in which it stated that an unpaid intern will deemed to be an employee for purposes of the laws that it enforces if the intern receives “significant remuneration” in any form.  Such remuneration can include any type of insurance coverage or other employee benefit or “access to professional certification.” Business owners should carefully consider whether the potential benefits to their business are worth the risks of hiring unpaid or low paid summer interns.