Insurance education: A competitive advantage
Competing successfully, improving productivity, and avoiding costly E&O claims are goals all agencies must reach just to stay in business, let alone prosper. Regardless oi size, an agency has to use every tool available to survive and thrive in a business and regulatory environment that constantly shifts and presents new obstacles.
Hiring people who want to learn and then giving them appropriate learning opportunities, incentives, encouragement, and recognition gives some agencies a competitive advantage.
“J. Rolfe Davis doesn’t hire people based on what they know now, but on their ability to learn,” says Donald B. Boone, CPCU, CLU, senior vice president of the J. Rolfe Davis Insurance Agency, Inc., in Orlando, Florida. What’s important, he believes, is “being able to assess the prospective employee’s ability to grow into a position.”
The Davis agency employs 72 people and generates approximately $8 million in annual revenues. About 25% of its business is life and health. It uses the Insurance Institute of America’s (IIA) Accredited Adviser in Insurance (AAI) program for both CSRs and producers.
Boone has set an example for employees by teaching CLU, ChFC, CpCu, and AAI courses. “I started teaching AAI six years ago at the request of six CSRs in our agency,” he explains. “Classes are scheduled Tuesdays from 7:30 to 9:30 a.m., so there’s a sacrifice of both employee and agency time.
Sometimes it is necessary to meet on Saturday mornings for reviews prior to an exam. I also give employees the afternoon before the exam for review on their own.
“We have found that the knowledge CSRs gained in the classroom resulted in efficiencies gained in the office,” he continues. “The CSRs are able to accept greater responsibility and authority when they understand not only the coverages but how they meet customer needs. When our insureds call and request changes, the CSRs are able to ask the insured not only for the information for the endorsement, but know how it might affect other coverages. This reduces the number of call-backs from underwriters and follow-up calls to our clients for additional information. One way to avoid E&O exposures is to do it right the first time.”
The Davis agency encourages all new producers to earn the AAI designation. “The three-semester AAI program provides a considerable level of knowledge and the tools to understand the risk management process,” Boone says. He places great importance on understanding the risk management process. “An agent can be a policy manager or he can be a risk manager. A policy manager has very little to offer the customer other than a low price. The qualified risk manager can give his account a certain level of comfort that his risk is being effectively managed.”
The Tolman and Wiker Insurance Agency in Ventura, California, with about 50 employees, puts entry-level employees through hAs Program in General Insurance (INS) and then through the AAI program.
Paula Wilcox, CPCU, CPIW, commercial accounts representative, has taught all parts of INS. She is one of 17 agency employees now taking AAI through group study. “No one was prepared to teach the class,” Wilcox says, “so we broke into teams, each of which takes turns teaching assignments. The study group has worked out very well. Everyone prepared for their assignment and wrote practice quizzes. Someone developed a crossword puzzle. We have had both mid-term and practice final exams. The class stimulated people to prepare and to do well,” she says. “No one wanted to be poorly prepared or give a bad quiz.”
The AAI class ran from 4 p.m. until 5:30 or 6 p.m. one day a week. The agency gave employees an hour of work time for class, and the employees gave an hour of their own time. They also came in on a Saturday for a review session headed by an outside instructor to help prepare them for the exam.
“We thought about submitting our class schedule to the California Department of Insurance,” Wilcox explains, “to see if we could get our classes certified for CE hours. We decided not to, however. We wanted people to be motivated to sit down and take the exam and earn CE credit that way.”
Having multiple employees taking classes pays off
Mike Merewether, CPCU, a partner with Tolman and Wiker, serves on the agency education committee.
“One of the major benefits of employees studying AAI in-house has been the common terminology they learn and the synergy that develops when everyone involved is talking about different exposures and case studies,” he says.
In addition, having real expertise in dealing with policy coverages can have a big payoff, according to Merewether.
“Paula reviewed the umbrella policy of a new client and found coverage for a loss that the policyholder had been told (by another agent) wasn’t there,” he explains. “The clients were preparing to defend the claim on their own. When Paula found that they did have coverage, they were thrilled.”
“Taking INS, AAI, and CPCU helps employees understand written coverage issues,” Paula Wilcox says. “Most of us have gone back to our desks and looked over our files when we’ve learned something that applied to our work. Our class work has made us aware of potential holes in coverage and uncovered exposures,” she says.
Having an environment in which education is valued affects the agency’s hiring. “We attract above-average people to work for us, people who want to better themselves and develop a career path,” Merewether says. “In addition, a component of the agency’s salary review system is tied to continuing education. Institute courses also have a role in meeting CE requirements.”
The agency awards employees a bonus of $150 for completing INS and for completing the AAI program. People who complete the CPCU program receive $500 plus expenses to attend the conferment ceremony.
“Getting to go to conferment is a good incentive,” Wilcox says. “It is nice to be acknowledged for having made a commitment and succeeded. The acknowledgment is probably more important to a lot of people than the money.”
Shirley S. Holsinger, CPCU, AAI, might agree with Paula Wilcox about the value of acknowledgment. Holsinger received IIA’s Distinguished Graduate Award in the AAI program last year. She achieved the highest grade average for the three AAI exams of all graduates of the program in the 1994-95 academic year. Her agency, Shomo and Lineweaver Insurance in Harrisonburg, Virginia, sent her to Philadelphia to attend the national CPCU and IIA award-winner reception and luncheon. She received $500 and a plaque from the Indpendent Insurance Agents of America, the award sponsor.
To surprise her, agency principal W. Price Lineweaver, CPCU, arrived at the luncheon to help Holsinger celebrate her achievement.
“I can’t believe that I kept (my coming) a secret and was able to surprise her,” Lineweaver says. “Our agency is supportive of education, and we think recognizing employees for their achievements is extremely important.”
When Lineweaver joined the agency in 1971, only one member of the staff had a professional designation, a CLU. “Then a few other people came who were interested in education,” he says. We had five people, so we formed a study group. All five of us got the CPCU designation.”
The agency encourages all employees to earn a designation that is pertinent to their job. Licensed staff use Institute exams and other courses to satisfy Virginia’s CE requirements. “We pay for all the costs-books, other materials, exam costs, and travel-and we give bonuses for completing various courses,” Lineweaver says. “We have a tremendous pass ratio.”
Holsinger, an outstanding student, didn’t start out as a producer, but got into sales 12 or 13 years ago. “My education credentials have meant a lot,” she explains. “Insurance education has increased my self-confidence when dealing with insureds and with insurance industry colleagues. It has also given me a broader view of insurance and the business environment. It is easy to get wrapped up in your individual job. Education helps you understand the different parts of the insurance mechanism that have to work together.”
Shomo and Lineweaver has 48 employees in four offices, which includes their life/financial/group office. The agency writes 30% personal and 70% commercial insurance.
When asked why the agency has been so supportive of education, Price Lineweaver says, “If you are going to be involved in the business and want to be viewed as a professional, you have to do something that warrants that-getting an education, studying, and going beyond the minimum required. Also, when dealing with company people, if you are as technically proficient as they are-or more so-things go much better. Finally, when dealing with a customer, if you are knowledgeable and know the ins and outs of your products and why they are better than competing products, you are more likely to write the business.”
Stephen L. Horn II, CPCU, ARM, AAI, is an insurance broker in San Francisco, California. He is co-author of the ARM 54 text, Essentials of Risk Management one of the three texts that serve as the foundation for IIA’s Associate in Risk Management (ARM) program. He has also served as a leader of CPCU and IIA classes for over 20 years.
Why does he take the time required to teach? “It keeps me in front of a group, which I enjoy,” Horn explains. “That’s a selfish reason. Another reason is that I feel I owe the industry something because I have gotten a lot out of it. Also, I enjoy working with people who are involved in education. They tend to be toward the beginning of their careers, and they often see things differently than the people I normally associate with. Getting involved with them keeps me current.”
When asked why he is a strong advocate of insurance education, Horn says, “Sometimes it is hard to tell one agency from another. The only thing that differentiates you from another organization is your people and their level of competence. If you have the right people in product design, sales, and in all the roles within the agency-people who are bright and want to achieve-that makes a difference and gives you a competitive advantage.”
The author Karen Burger, CPCU, CPIW, is director of public relations for the American Institute for CPCU and the Insurance Institute of America.
Copyright Rough Notes Co., Inc. Jul 1996
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