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2018: A Look Back, Then Forward!

Feb. 14 will be the 45th anniversary of my first employment in the insurance industry. I’ve enjoyed the ride.

Here are two memories from my first three years in the business that I think personify the best and worst of our industry and, more importantly, suggest a path for differentiation and prosperity for those willing to transform.

“Different isn’t always better, but better is always different.” — Dale Dauten

On Feb. 14, 1973, I began employment as a claims adjuster at General Adjustment Bureau (GAB) in Baton Rouge, LA. Late that year, I handled a substantial burglary loss in the home of the manager of a major industrial complex. It was a legitimate loss, and in the adjustment process I never sensed any mischief or exaggeration by the claimant.

After interviewing the policyholder, visiting his residence, obtaining pictures of the damages, studying the police report and obtaining an inventory of the loss, I prepared my report and valuation on the loss to the regional claims manager (Vernon) for Republic Vanguard.

Vernon called to explain the “way we do things around here.” He said that, if the policyholder can’t produce a receipt on items lost, we’ll commence negotiations at 50% of actual cash value.

See also: Top 10 Insurtech Trends for 2018  

In my next report, I explained that the policyholder was a sophisticated businessman well-respected in the community and was making a legitimate claim. I explained that I believed that, if I acted as instructed, we’d be working through this claim with the insurance commissioner or a judge.

The day Vernon received my letter, he called my boss and said, “This boy is trying to trap me.”

I was not trying to trap him. I was trying to protect a policyholder and to “cover my a___ for when the s____ hit the fan.”

This company was known for ruthless claims handling. The modus operandus was to lowball the settlement offer made by the adjuster and, when things got ugly, blame the adjuster.

In the end, I was vindicated by a newspaper article on the front page of the Baton Rouge Morning Advocate that exposed the ruthless nature of this carrier.

This case was, in my opinion, an example of the “worst of times/behaviors” in our industry.

The “best of times” was demonstrated to me two years later.

I was a wide-eyed rookie producer working for an agency in Baton Rouge. We were the Louisiana administrator for the Professional Protector Plan (PPP) endorsed by the American Dental Association and underwritten by Chubb through Poe & Associates (the national administrator) in Tampa, FL.

This PPP was tailored to dentists, and the policy was written in the language of dentistry. The PPP included malpractice coverage and flood (physician and surgeon’s floater) coverage. It was a state-of-the-art product.

When I attended the annual state administrator’s program in Tampa my rookie year, Harry Chadwick with Chubb introduced himself to me at the cocktail party on the opening night. He was the senior executive in charge of this program. He was a gentleman. He volunteered to me the philosophy of Mr. Chubb and his company.

He said, “Mike, Mr. Chubb built this company on two principles:

  1. You deny the claim in the underwriting process.
  2. You interpret the policy based upon the ‘intent and not the content.'”

I represented that program for about eight years – Chubb lived the two principles. The only complaint I heard was when one dentist said, “They pay too much on claims.” This was after a slight rate increase. In my opinion, if every carrier was as “client sensitive” and honorable as Chubb, our industry brand would be more positive than suspect.

The 1970s were simpler times – the marketplace was local, comparative rating was still an experiment, batch processing was the norm, fax machines were still on the drawing board and agents were friendly competitors who divided up the markets among themselves. The vast majority of folks were sold a commodity (price-driven) or a product (price-sensitive, with a few added coverages). In today’s hyper-competitive and global markets, the ’70s were the good old days.

Here, in my opinion, is the lesson: Chubb provided an excellent buying experience. That included a quality product, fair pricing and superior customer and claim service. Chubb was then what only a few companies are now.

With the wisdom of 45 years of hindsight and reasonably good foresight, I offer the following admonition: To survive and prosper, agencies must:

  1. Be niche marketers – meet each group of people (even a niche of one) who, where and how they are.
  2. Be defined by clients and driven by them.
  3. Create, tailor and deliver the right client experience for the niche served.
  4. Leverage technology to ensure profitability as commissions “skinny down.”
  5. Use technology for admin and service – the staff will provide the intimacy with clients.

See also: 5 Predictions for Agents in 2018  

I’m not suggesting anyone agree with me. I’m suggesting that you project the future as you believe it will be, build the model to meet the clients and their needs in that future and leverage technology to ensure profitability regardless of how much commissions are reduced or policies are being quoted net of commission. Then live with the result.

The Planning Process in a Twitter World

I’m an analog dinosaur in a digital world. In the 1970s, I participated in an organizational planning process that lasted for nearly a year, concluding in an excellent document with many dozens of pages that came to rest on the “bottom shelf” and not the “bottom line.”

Then, ours was a Father Knows Best World – driven from the top down, operating at a snail’s pace compared with today, where we live at the speed of thought – where opportunities happen within the blink of an eye. Planning is still critically important, but the process now must be “fast, hot and cheap!” Real fast.

To convert this concept of planning to a concrete “Tweet” (fewer than 140 characters), I offer the following formula/framework: Planning includes purpose, passion, perseverance and precise performance creating a personalized and positive client experience. (128 words) This planning can be completely researched in less than an hour or two. I offer the process as “framing your future” – not the pyramid (top-down hierarchical model of yesterday) but rather a square framework capturing the part of the world marketplace that you wish to define and serve.

The base (foundation) of this framework is PURPOSE. This is the “why” of your future. Simon Sinek in his video – “Start With Why” –explains this as well as it can be done. If you are serious about the process of planning, start with the first 10 minutes of his presentation. If you don’t have time to do this, quit the process now and “continue to do what you’ve always done.”

See also: Go Digital… but Don’t Change Who You Are  

The left side of the frame is about PASSION. It is about the drive needed to live your purpose. Check out Susan Boyle’s audition on “Britain’s Got Talent.”

Watch the audience as she introduces herself – the skepticism of some and the contempt of others. In my mind, they were pre-judging the age, shape and condition of the “jukebox” from the outside and not the excellence of the “sounds (music) and passion” that was inside the “box.” In about three seconds, she won her skeptics over. Passion is needed for success.

The top side of the frame is PERSEVERANCE. It is about never quitting. It’s what (I believe) drove our troops onto the beaches at Normandy. It was about prevailing against all odds or to die trying. Check out online – Nick Vujicic, the limbless preacher. After watching about five minutes of any of his presentations, tell me about your problems or why you can’t-do something. Perseverance and quitting are choices. One will sustain you; the other will “restrain” you. You choose. Your results will be dictated by the choices you make.

The right side of this “planning” model is about performance, precision, and perfecting your product and delivery. It is about standing above the mediocrity that is most markets. It is about exceeding the expectations of your clients and the markets you serve.

It is not about being perfect in everything for everybody but is about being relentless in your pursuit of perfection. It is about becoming the “choice” of those individuals and populations that you choose to serve while recognizing they have many, if not unlimited, options. It’s more than “standing out in the crowd” – it’s about your clients and prospects searching for you and the experience you provide TO THEM in a very crowded global marketplace.

Sunday morning, my wife and I stopped at Starbucks. She loves the place and its drinks – I visit to observe the culture. I drink a small decaf coffee – she chooses a grande drink defined by words I don’t understand. She’s hip – I have an artificial hip.

Although I’m not a fan of Starbucks, I am envious of the marketing genius that was their creation. In 1970, a cup of coffee cost three cents at home and 25 cents out. Coffee was a commodity if you bought it by the pound at your supermarket. If you enjoyed coffee after a meal in a fine restaurant, it could be considered a “service.”

Starbucks leapfrogged all these distribution options and made coffee an experience. Today – for its devotees – it remains what some might consider an addiction. As I sat in the Starbucks last Sunday, I watched people stand in line to order their drink du jour and occasionally a “treat” to eat, then stand in line again to await its preparation. Many would grab and go with their drink – others would then move to a small table in a crowded room alone or with their posse – trying to talk loud enough to be heard and soft enough to not be overheard. Get the picture?

See also: The Challenges of ‘Data Wrangling’  

What caught my eye were the “splash sticks” that were being inserted into the cover of the filled coffee cups. I don’t know if they are there to keep the coffee hot or to keep it in the cup. To me, it was Starbucks’ never-ending pursuit for the “perfect experience” for their customer or more correctly their “followers.” Starbucks has been successful – it is the “little things,” the endless pursuit of perfection, that will assure their future.

Does your organization live its Purpose, with Passion, Persevering regardless of the circumstances, and constantly monitoring and demanding Performance, Precision and innovating to assure Perfecting the client Experience?

Don’t Lie to Yourself About the Future

Most folks accept that their funeral is not a good place to do a deal. Nonetheless, they don’t plan!

Twenty years ago, at a PIA convention at the Grand Hotel we were having a discussion about the future of agencies, maximizing their value, planning for contingencies and timing an exit strategy. I was being provocative. One business owner stated proudly that he had made so much money in his agency through the years that, even if he didn’t get $1 for his book, it didn’t matter because he and his family were fine.

I believed him because his agency was his wife, him and one administrative person effectively managing a large book of marine business. I didn’t doubt his description of his agency as an “asset” – it had and continued to throw off more cash than needed.

See also: Future of Digital Transformation  

I asked: What if you and your wife were killed and the agency had to run itself for months? Could “legal problems” (read E & O) result from these complex accounts being unmanaged following your deaths. He realized that both his assets and liabilities need professional management.

With an audience including more agency owners comfortable with “yesterday” than agency leaders and managers right for  “tomorrow,” I asked the Big Question: “Would your death, disability or retirement increase or decrease the value of your agency?

The oldest agency principal in the room said, “Boy, you’ve done gone from preaching to meddling.”

Our comfort zone is a most dangerous place. We are lulled into a false sense of optimism. We start to read our own press clippings and financial statements. We believe we are in control. We are in control until we are not. Unfortunately, we don’t know when the merchant of misery will visit us and if we can recover.

Don’t assume your own readiness – until after you have recovered from a challenge. Changing others is hard – changing yourself is often impossible!

In 1996, the nationally syndicated columnist Robert Novak was speaking at LSU. He told about a friend of his who was furious with Bob Dole because he wouldn’t change, and his inability to be flexible was going to cost him the 1996 presidential election.

Novak asked his friend, “Are you married?” His friend replied, “You know I’m married.” Novak inquired further, “How long have you been married?” The friend said, “50 years.” Novak asked if he loved his wife. The friend answered, “Of course, I love her. We’ve been married for 50 years.”

See also: To Predict the Future, Try Creating It  

Novak asked, “Can you change your wife?” His friend quickly said, “NO.” Novak closed the discussion with this simple advice, “Love Bob Dole.”

For most of us, change is difficult. Maxine (the cartoon character) says it best, “Change is good as long as I don’t have to do anything different.” Love your friends who live in the past but don’t stake your future on them.

If you’re one of these “yesterday dwellers” – take action now, even if it scares you to death!

How Not to Make Decisions

Nancy Newbee is the newest trainee for LOCO (Large Old Company) Inc. She was hired because she is bright, articulate, well-educated and motivated. She is in her second week of training.

Her orders include: “We’ll teach you all you need to know. Sammy Supervisor will monitor your every action and coordinate your training. Don’t take a step without his clearance. When he’s busy, just read through the procedures manual.”

Nancy is already frustrated by this training process but is committed to following the rules.

Upon arriving at work today, Nancy discovers the kitchen is on fire! As instructed, she rushes to Sammy Supervisor. Interrupting him, she says, “There’s a major problem!”

Sammy is obviously disturbed by this interruption in his routine. He tells her, “Nancy, my schedule will not allow me to work with you until this afternoon. Go back to the conference room and continue studying the procedures.”

“But, Mr. Supervisor, this is a major problem!” Nancy pleads.

“But nothing! I’m busy. We’ll discuss it this afternoon. If it can’t wait, go see the department head,” Sammy responds.

Nancy rushes to the office of Billy Big and shouts, “Mr. Big, we have a major problem, and Mr. Sammy said to see you!” Mr. Big states politely, “I’m busy now,” all the while wondering why Sammy Supervisor hires these excitable airheads.

“But, Mr. Big, the building…” Nancy interrupts.

“Nancy, see my secretary for an appointment or call maintenance if it’s a building problem,” Mr. Big says impatiently, thinking, “Where does Sammy find these characters?”

Near panic, Nancy calls maintenance. The line is busy. As a last resort, Nancy calls Ruth Radar, the senior secretary in the accounting department. Everyone has told her that Ruth really runs this place. She can get anything done.

“Ruth Radar, how may I help you?” is the response on the phone.

“Miss Radar, this is Nancy, the new trainee. The building is on fire! What should I do?” shouts Nancy through her tears.

“Nancy, call 911!” Ruth says.

Now, of course this is a ridiculous example… or is it?

See also: How We’re Wired to Make Bad Decisions  

Assuming you are the boss, try this eight-question test:

  1. In your business, do you hire the best and brightest and then instruct them not to think, act or do anything during their training, except as you tell them to do?
  2. Do you promise training and, instead, substitute reading of procedure manuals?
  3. Do you create barriers to communication, interaction and effectiveness by scheduling the new employees’ problems and inquiries to accommodate the busy schedules of your other personnel?
  4. Do you and your staff ignore what new employees are saying?
  5. Is the process more important than the result? Does the urgent get in the way of the important?
  6. Do layers of bureaucracy between you, your employees and customers interfere with contact, communications and results?
  7. Is “Ruth Radar” running your shop?
  8. Do you have any fires burning in your office?

If you answered “no” to all of these questions, congratulations!

Now go back and look at the questions again. The perfect business would have eight “no” answers, but very few businesses are perfect. If you are like LOCO, our large old company, you might be so far out of touch with your trainees, employees and customers that you won’t hear about a “fire” until it starts to burn your desk.

Look back at IBM, GM and Sears in the late 1980s. These were  the kings of their respective jungles. Yet all of these leaders nearly burned to the ground. Many thousands of employees were terminated, profits were ended and stock values fell. If you would have talked to any of these terminated employees, you would have learned that the fire had burned for a long time and that many people had tried to sound the alarm.

Remember the large old insurance companies that are no longer here: Continental, Reliance, etc. Did their independent agents smell the smoke? Did the leadership of these carriers ignore the alarm?

Sam Walton, who had reasonable success in business during his lifetime, once said, “There is only one boss — the customer. Customers can fire everybody in the company from the chairman on down, simply by spending their money somewhere else.”

Walton was right. In your business, do you or Nancy have the most direct contact with the customer — the ultimate boss? If Nancy has the most contact, is she adequately trained, motivated and monitored? Is she providing feedback? Are you listening?

Take a minute to draw a picture of your organization. Now, draw a frame around your picture. Does this frame create a pyramid? Are you, as the boss, at the pinnacle? Are Nancy and her fellow trainees at the base? Is it prudent to have the least experienced personnel closest to the customers?

Your organization was formed to meet the needs of customers. You exist to serve these same customers. Where are these customers in the organizational chart? Did you “forget” to draw them into the picture? How much distance is there between you (as boss) and the customers?

Does this pyramid model facilitate the free flow of information between you and the customers, or does it buffer you from the real thoughts and feelings of the real boss (the customer)? In your business, is the customer and his problem seen as an interruption of the work or as the very reason for your existence?

If you had to downsize your company, where would the cuts be made? At the top, middle or bottom of the pyramid? Are the people in the hierarchy of the pyramid there because they did or can do more for the consumer, or were they pushed up by the people they hired to support them? Is your company fat or lean?

See also: How Basis for Buying Decisions Is Changing  

If your employees answered all the above questions, would they agree with you? If your customers were asked, what would they say? If your customers voted tomorrow, who would be retained? Who would be fired?

Think about it!

Do you dare ask?

Change Management Is Not About Change!

In 1993, my business cards included the tagline: Risk, Insurance and Change Management. When asked for a definition of change management, I would explain that change was the transition from today through tomorrows (the “s” on “tomorrow” suggested it is a process not an event). Management was about solving problems and capitalizing on opportunities as you worked through the process. More and more people now claim to manage change. I no longer do.

See also: 3 Main Mistakes in Change Management  

As the term became over- and misused, I moved to “change architect.” The tagline chosen was a quote from Peter Drucker, “The best way to predict the future is to create it.” I even copyrighted and added the term “carpe mañana.” (Seize tomorrow.)

Early in the process, I heard a speaker state correctly, “Change isn’t progress. Change is the price we pay for progress.” How true it is.

Today as I was struggling to address an issue of resistance to change, I had an “aha moment.” I realized that, in most organizations and most cultures, change management is not about the change; it’s all about the management (control of change). It is not about making the future better. It is about protecting and preserving the status quo – the individual and collective comfort zones.

If you are serious about the future, don’t stand in today and look back to the good old days. Instead, turn your back on yesterday and look boldly to the horizon and design and build your own tomorrow – your future.

See also: Is It Time for Un-Change Management?  

Remember, “The greatest risk is not taking one.” (AIG Annual Report).