Do You Want the Good News or the Bad News??

The good news is that only 25% of consumers shopped their auto insurance in the last year. This is down from 33% for the prior year.

The bad news is that 43% of all those shoppers changed insurance carriers. To put it in a different perspective, almost 11% of all of the insurance buying public changed insurance companies last year.

This information came from JD Powers and Associates research paper of April 29, 2012. The full report can be seen at the JD Powers  website.

Even though fewer consumers are shopping their insurance, more are actually changing insurance carriers.

Some of reduction in shoppers may be attributed to the drop in cost savings by changing insurance companies. In 2011 the savings by changing insurance companies was around $412. That savings has dropped to $359.

All of this does not seem to be slowing down the amount of money that the insurance companies spend in trying to increase their market share. The industry spent an amazing $5.7 billion last year in advertising.

A couple of interesting items to note are that 52% of shoppers started their process online and 32% got all of their insurance quotes online. Last year 34% of insurance shoppers said they prefer to buy their insurance online.

For information on license training or insurance continuing education visit our website at www.itaamerica.com

Crop Insurance For Marijuana Growers

It looks like the marijuana growing business is going mainstream. Growers in states where medical marijuana is legal can now purchase crop insurance that will provide protection for unforeseen losses. This got us to thinking about how the conversation between an insurance agent and a pot grower might go. We decided to listen in.

Grower: "What does this insurance do for me?"
Agent: "It pays for losses, including lost profits, in case a natural disaster destroys your crop. It also covers theft."
Grower: "Theft? Does it cover Dennis E. Anderson or Alfred T. Friggin confiscating my plants?"
Agent: "Who?"
Grower: "You know, DEA or ATF."
Agent: "I don't think so, since marijuana is considered a controlled substance by the Feds."
Grower: "How much will this cost me?"
Agent: "Between $1200-$2000 with a $5,000 deductible."
Grower: "If I lose some plants, will I get paid in cash?"
Agent: "Probably by check."
Grower: "Bummer. What do you call a natural disaster?"
Agent: "The policy pays for bugs, fire, hail, windstorm and most acts of God."
Grower: "Acts of God? That is cool. He would bless us because we help thousands of people fight pain everyday. We also help people sleep at night with our special blended AK-47 assault dose."
Agent: "AK-47?"
Grower: "Yo man, it will blow your head off and you'll sleep like a baby."

Insurance Ranks Well in Best To Worst 200 Jobs

Career Cast recently completed a survey and rated 200 jobs in the US from the best to the worst. Insurance agents came in a solid #68; ahead of some notable and high paying jobs and behind a few strange ones.

Let's start with a look at the criteria for the survey. Career Cast based their survey on hard evidence broken into 5 key categories; Physical Demands, Work Environment, Income, Stress and Hiring Outlook.

Insurance agents scored well in most of the categories in the survey. Although I take some exception to many of the factors that went into the methodology of the survey, I do believe that overall, insurance agents were given fair treatment. You can view the methodology that Career Cast used by visiting this site,  http://www.careercast.com/jobs-rated/2012-jobs-rated-methodology.

I found a number of surprises in the jobs survey; both in jobs ranked higher than insurance and jobs ranked lower. The number one job was Software Engineer, no surprise there. But the number two job was Actuary! I find that hard to believe....must be the lack of exposure to anything risky like people, food, stress, and upward mobility!

Other notable jobs that scored better than insurance in the survey were; Financial Planners at #4, Web Developers at #15, physicians at #40, Loan Officer #59 and Executive Assistant and #67.

There were also some interesting jobs that came in worse than insurance. Actually more than two-thirds of all of the jobs scored worse than insurance. Some of the notable "worse" jobs were; School Principal at #74, Recruiter (probably not insurance!) at #78, Insurance Underwriter at #79 (must be the death threats!), Attorney #87 (I thought they would score around 195!), Clergy at #93, Military General #141, Real Estate Agent at #155 (strange!), and the very worst of the jobs at #200 is Lumberjacks.

Overall I was rather pleased that insurance agents, although maligned by many, is still one of the best jobs in America.

Insurance agentsTo view the complete list of the best and worst 200 jobs in America go to:  http://www.careercast.com/jobs-rated/2012-ranking-200-jobs-best-worst

Watch Out! Your License Plate Maybe Telling Secrets

Connecticut lawmakers are considering adding a small transmitter embedded in the license plates of cars that will send out signals that will verify that an insurance policy is in force. 

It seems that in Connecticut more than 10%, or 250,000 vehicles, are being driven without insurance. The police write approximately 65,000 citations each year for driving without insurance. Of the 65,000 citations issued only a fraction actually paid a fine. This new law has the potential to provide as much as $29 million of increased revenue each year. 

This attempt to crack down on uninsured drivers does have some critics. Many believe that it violates privacy laws as anyone with an RFID scanner will be able to secure information from the embedded transmitter.

We will let you know if this potential law sees the light of day.

Have You Considered Securing a Consultant's License?

Many insurance agents are getting an additional license in their state-a Consultant's License. Most states allow this added license without an additional exam. Just complete a simple application and pay appropriate fees.
So why would an agent want to add this license? There are several reasons, not the least of which is the new healthcare law which will limit the percentage that insurance companies can charge for expenses (15% or 20% depending on total insurance company premium). Insurance company expense ratios include commissions paid to insurance agents. Downward pressure on expense ratios mean downward pressure on commissions which means agents must find other income sources to make up the lost revenue-become a Consultant.
Consultant's can charge a fee for their services because they are working on behalf of the client. Be sure and check with your appointed carrier to see if their contract allows you to do fee-based work.
Small businesses will need to comply with literally thousands of pages of new health insurance regulations in the future. They will welcome the advice and counsel of a professional insurance agent. This will provide an incredible opportunity for a knowledgeable agent, but it has to be worth their time and effort. Commission income will not be sufficient to compensate for the knowledge, time and effort that will be expected of insurance professionals.
If you would like more information on how to obtain a license as a Consultant, drop me a note or visit our website at www.itaamerica.com.

Self-driving cars and insurance

Over the last 6 months many articles have been written about self-driving cars.  There was a story about Google doing some testing on self-driving cars as a natural extension of their project to video tape every street in the world. In fact, Google has more than 140,000 miles logged in with self-driving cars. A story in the Wall Street Journal yesterday (L. Gordon Crovitz; The Car of the Future Will Drive You) discussed how the Executive Chairman of Ford Motor Company, Bill Ford, spoke to a group about how in the next few years, cars will automatically be able to maintain safe distances, using a network of sensors, V-to-V (vehicle to vehicle) communications and real-time tracking of driving conditions which are fed into the vehicle's navigation system.
Self-driving vehicles are sometimes called unmanned ground vehicles (although a person is in the drivers seat) or as the auto industry calls them "semiautonomous driving technology." Regardless of the name, self-driving vehicles are loaded with technology and may one day change the world. Some are saying that these type of vehicles will be commonplace within 7 years.
The most amazing thing is that the technology is already available for the self-driving automobile to hit society's mainstream.
If this is truly the future of driving what impact could it have on insurance?
Many are saying that self-driving cars have the potential to reduce auto accidents by up to 90% and others are saying that we can reduce traffic fatalities by as much as 50%. It does not take a genius to figure out that if auto accidents are reduced by such a large amount it cannot be good for the insurance industry, the body repair shop industry, glass shops, doctors, nurses, physical therapists, lawyers, and a host of supporting industries.
Let's focus on the insurance agent. We know there is a lot of pressure on insurance agents in the current environment from the direct writers like Geico and Progressive and it could be downright disheartening to add the insult of a reduced need for insurance agent services if cars start driving themselves. Before someone jumps off the cliff and starts looking for a new career, or before we go back to texting while driving, or let the dog sit on our lap, let's take a step back at look at this whole scene.
First of all, very few of the scientific advances of the crystal ball group have ever come to pass. We have not entered the era of The Jetson's as many predicted. There will be huge lobbying efforts from dozens of industries and industry groups to reduce or eliminate the scaling of the self-driven auto. Literally thousands of laws will have to be written to address hundreds of issues related to driving. I find it extremely difficult to believe that thousands of cars will be driving 100 mph on the freeway in a tight formation less than a foot from each other.
On the other hand, how cool would it be able to relax in rush hour traffic?

GEICO going after the remaining 90% of auto insurance market

In a special annual report to Berkshire shareholders, Warren Buffett says GEICO is poised to grow well into the future. An insurance company that just 18 years ago held only a 2% share of the auto insurance market is now at 9.3% and is going after the remaining 90%. According to Buffett; "Don't bet against (GEICO) acquiring chunks of it year after year in the future."

GEICO's current 9.3% auto market share generates $15 billion in premium. Buffett is proud that GEICO's  operations have maintained an underwriting profit for nine consecutive years while State Farm has had an underwriting loss in 8 of the last 11 years.

With over $900 billion in annual advertising costs (about 6% of premium) I guess we will continue to see the gecko, the caveman and who knows what other creepy icon they come up with for many,  many years.

Can a computer sell auto and home insurance?

Of course; it happens every day! Can a computer provide insight into how much insurance a person should carry? If not already, I am sure it will be able to very soon. So where does the professional insurance agent fit into the picture?

I spoke with an agent recently and he said his agency will never be replaced because insurance is a relationship business and as long as he takes care of his customer he will have nothing to worry about. I asked him to expand on the "relationship" aspect of his agency. He said that all phone calls were answered live within a few rings; he said that his staff is well versed in servicing policies and all questions are answered quickly and correctly; he then added something that surprised me a bit. He said that a big part of his and his staff's  time is spent in answering the "what ifs" from his customers. Things like; "what if my daughter gets her drivers license, how much will it cost to add insurance on her?" or "what if I get in an accident, will my insurance go up?" or even this one "I had a minor accident, should I pay for it myself?" These are things that are mind-numbing to an agency but are an important feature in the relationship that the agent has with the customer.

We all know that the direct insurance writers can easily duplicate the services of insurance agents in most areas; they can answer the phone within a few rings, the staff people can be well versed in the coverage of an insurance policy, but are they willing to take on the tasks of advice and counsel?  If they are an employee of the direct writer, can they be expected to take on the role of customer advocate? Are these employees willing to go out on a limb and advise a customer that it may be in the best interest of the customer to pay this claim out of their own pocket? I don't think so. Why should they take the chance with a customer that they do not know or will probably never talk to again?

So, there is the secret sauce of the professional insurance agent. Taking care of the customer "what ifs." There are, of course, many other aspects of running an agency. Things like; completing annual policy reviews, visibility in the community and becoming an expert in specific areas of insurance.

Another interesting aspect of this is that advice and counsel is provided without cost to the customer. Of course the customers pay their insurance premiums but they would have to pay some company anyway, so why not pay a local agent and get someone that can help them?

Someone may come up with a business model that incorporates all aspects of an insurance agency that can be available to the masses. If and when that happens agents may be at risk, but in the meantime the future is pretty bright for agents.

50,000 Insurance Agents in North Dakota!

There is one insurance agent for every 15 people in North Dakota!  I bet you thought the competition was tough in your area.

The number of insurance agents in North Dakota has doubled in just 10 years from 25,856 to 49,893 according to the North Dakota State Insurance Department.

Actually there are only 6,000 Resident agents in North Dakota, a much better ratio of residents to insurance agents. Why does the records show almost 50,000? It seems that with the surge of 800 number and internet insurance sales, a large influx of non-resident agents have entered North Dakota. People who answer the phone and deal with customers online must have an insurance license in the State.

Where are the worst drivers in America?

I was pretty sure that the worst drivers in America were right here in my state. Actually, I thought the worst drivers were not only in my state but right here in my city and in my community. It turns out I may be wrong.

An online company named Car Insurance Comparison compiled some information from three sources; the National Highway Safety Administration (comparing fatalities), the American Motorists Association (comparing the number of citations issued), and Mothers Against Drunk Driving, MADD (comparing drunk driving statistics) to come up with the states that have the worst (and best) drivers.

The absolute worst drivers in America come from (skip the drum roll), believe it or not, LOUISIANA. It was not even close, Louisiana was worse by 12 additional points over Missouri.

Does that mean that car insurance in Louisiana costs more? If so, it may be a great opportunity to get your insurance license and get started on a new career since insurance agent income is based on commissions.

Here are the results from the survey:

The Worst Drivers in America:

#1 Louisiana, #2 Missouri, #3 Texas, #4 Florida, #5 Oklahoma, #6 Arizona, #7 Kentucky, #8 Alabama, #9 Montana, #10 Nevada, #11 South Carolina, #12 North Carolina, #13 North Dakota, #14 Delaware, #15 Tennessee, #16 Kansas, #17 Arkansas, #18 Idaho, #19 Georgia, #20 Alaska, #21 Iowa, #22 South Dakota, #23 Mississippi, #24 New Mexico, #25 Colorado, #26 Pennsylvania, #27 Hawaii, #28 Wisconsin, #29 New York, #30 Vermont, #31 Indiana, #32 Michigan, #33 West Virginia, #34 Maryland, #35 Minnesota, #36 California (what!), #37 Wyoming, #38 Washington, #39 New Jersey, #40 Utah, #41 Ohio, #42 Nebraska, #43 Illinois, #44 Maine, #45 Oregon (my state!), #46 New Hampshire, #47 Virginia, #48 Massachusetts, #49 Connecticut, and the very BEST drivers in America, at #50 Rhode Island.

If you would like to see all of the statistics that went into this non-scientific survey, go to:
http://www.carinsurancecomparison.com/which-states-have-the-worst-drivers/

I can rest easy now knowing that the crazy drivers in my city are not the worst in the US.

You can now buy insurance from a smartphone!

A few months ago, several banks promoted an app that allows customers to deposit checks into their checking accounts by simply photographing the check front and back. Now the same technology is coming to the insurance industry to attract new customers.

Progressive announced an app that allows a person to use their mobile phones to upload photos of their drivers license, prior insurance card and/or vehicle identification number in order to get a quick quote. Progressive will even bind the coverage through this process.

Extensive use of mobile apps will certainly take off if this test program is successful. It will not be long before other insurance companies will be offering similar features.

Mobile phone apps carry with them a tremendous amount of potential for the insurance industry and companies are just beginning to get involved. Mobile apps will be able to assist in  underwriting, sales, and claims. Think about the underwriter who has questions about the wood burning stove and wants to see a picture of it. Or the claims adjuster who wants to see a picture of the accident.

Allstate offices at car dealerships?

Allstate insurance announced that they will be opening agents offices at car dealerships. The idea is to attract the business leads generated by auto sales and offer customers a full menu of Allstate products.

Car dealer referrals were once considered poor business practices by most insurance companies. The companies did not want their agents working this market. Apparently that is not the case at Allstate.

I am not sure this is a good idea. The reasons that insurance companies prefer to stay away from auto dealer referrals are legitimate. A high majority of these referrals are people who have no prior insurance; they are primarily interested in getting the car off the lot and therefore may provide false driver information; and of course, the car salesman also wants to make a sale and may encourage the customer to provide misleading or even false information.

Dealership auto referrals have also caused many agents to lose their license or their insurance company contracts. New agents are hungry for business and will do most anything to write a policy. Dealership sales managers are aware of this and will work on a new agent to try and get them to bind coverage over the phone instead of coming into the dealership. Sales managers do not want the cost of auto insurance to screw up the pending sale, so they may encourage a low ball quote. Remember that the goal of the dealership is to get the car off the lot with few hassles and insurance is a hassle.

I wish Allstate the best of luck in this venture, but I seriously doubt that it will be sustainable.

For the full story about Allstate's auto dealership plans, click here.

http://www.bodyshopbusiness.com/Article/96696/allstate_to_open_fullservice_agent_offices_at_auto_dealerships.aspx?categoryId=

The Gecko in China?

Chinese officials announced recently that they would soon open up the auto insurance markets to foreign companies in China.
The auto insurance market in China is currently $31 billion a year but rapid growth is expected over the next few years.
Does that mean that the Chinese will soon be seeing the Gecko?  Let's hope that they put all of their $900 million advertising budget into China and get rid of the Gecko here.
The largest distribution of auto insurance in China is through independent insurance agents. I wonder if we should move into China with an insurance pre-license training program.

Somebody needs a talkin' to

How can the insurance company that I worked with for 37 years do so badly on a satisfaction survey?

JD Powers just today released their annual report called Auto Claims Satisfaction Study and Farmers came out really, really bad!
The only insurance company's in the survey that did worse were 21st Century and Esurance. There are 4 categories (Overall Satisfaction, First Notice of Loss, Service Interaction, and Appraisal) with each having a 1-5 score.  A score of 5 means Among the Best, a score of 4 means Better than Most, a score of 3 means Above Average, and a score of 2 means The Rest.  Farmers scored 2's in each category except they scored a 3 in Appraisal.

State Farm scored 4, 4, 5, 4 and Allstate scored 3, 3, 3, 4.

Here is the full report:   http://www.jdpower.com/Insurance/ratings/auto-claims-ratings/

Will commission income increase in 2012?

I asked a friend of mine this question and his response was "It better increase, I need a pay raise". Most insurance incomes the last few years have either dropped or been stagnant.  So, what is the outlook for 2012?

The consensus is that commission income will increase about 10-12% in 2012.  There are several reasons for this:

* The soft insurance market in property/casualty is showing signs of change and insurance companies should be able to take some rate increases.
* Life insurance sales, after a dismal 3 years period, will start to rebound. This may not be from to an improving job market; it may have more to do with people finally making important life decisions after 3+ years of evading them.
* Internet social sites has forever changed the ways agents market by providing new insurance sales opportunities.
* New insurance agents are seeing increased volume and premium contract requirements from the insurance companies. Increased pressure on established agents to perform at a higher level.
* Improved efficiency in electronic processing of agent commission payments gets money in the hands of the agents faster and allows for greater agency efficiency.
* Inability or unwillingness of agents to hire staff the last few years has led to a more efficient agency operation. This efficiency will translate into increased sales in 2012. New hires will be better scrutinized and trained in 2012.
* The US population has grown by 6,000,000 in just the last 3 years alone (305M to 311M). Population increases equal more insurance sales.

My experience has been that one of the biggest reasons why incomes will increase in 2012 is the attitude change of the agents.  Many agents have been bogged down emotionally the last few years. They don't like it, their managers don't like it, the insurance companies don't like it, and it is time to do something about it.
I see 2012 as the years where agents make the decision that "if it is to be, it is up to me".

Veterans and Insurance sales

Late last year over 40,000 veterans returned from Irag and were able to spend Christmas with their families. That was the good news, the bad news is that these same veterans are now entering a not so good job market.

I served in Vietnam and returned to the US in late 1970 in similar circumstances; no job, no money and a family to feed and take care of.  I chose a career in insurance sales and moved into management.  I am still in the insurance business over 40 years later.

Is insurance a good career for the returning veterans in 2012? Read my recent article by clicking on the link below and see what others are saying.

http://www.articlesbase.com/recruitment-articles/recruiting-veterans-for-insurance-sales-5596334.html

Sell Insurance and Get Rich!

John was looking for a new career where he could help people.
John decided that becoming an insurance agent would be a great way to help people.
John got licensed to sell insurance so that he could start helping people.
John went through the training to sell the insurance that would help people.
John set up an appointment with a couple to sell the insurance that would help them.
John sold the insurance to the couple that would help them.
John was so happy and excited that he stopped off at the mini-mart and bought a lottery ticket.
John won the lottery!
John is rich.
Join John and help other people by selling insurance and get rich.

How can an insurance agent separate from the herd?

Many field managers will tell a new agent that they must find a way to distinguish themselves with potential customers in order to get them to buy.  Many agents come up with zany or crazy ways to get the attention of potential customers?

Is that really necessary?  Do we have to create an image like the beer commercials to get noticed? Isn't making a commitment to take care of your customer enough?  If we do not draw attention to ourselves, how will we get noticed?