Thursday, March 28, 2024

Place More Business And Get Paid Commissions Faster Using Life Standard Data Messages

It’s easy to think that this is over simplified, but if you want to place more life insurance business and get paid commissions faster, then you need to eliminate paper! Use eApp instead of submitting a paper application; don’t send licensing and contracting forms via mail or email—do it electronically on a platform like SureLC by SuranceBay; eDeliver life policies rather than mailing or hand delivering paper policies; and process commissions from a carrier’s commission data feed instead of manually using paper commission statements. Trading partners in the life insurance industry have their administration systems and distribution platforms interconnected by using insurance data exchanges that move data seamlessly via standard messages. What you get is speed, accuracy and reduced labor costs.

Accelerate Cycle Time with eApp and eDelivery
There are several ways to submit life business electronically such as using an eApp or eTicket platform plugged into one or more fulfillment models like a tele-interview, accelerated underwriting or predictive underwriting with auto-issue. Whether the agent is submitting the business on a single carrier platform like CBLife QuickApp or a multi-carrier platform like iPipeline iGO, the data is being transmitted to the fulfillment center or directly to the carrier using a standard data message. This data automatically populates the recipient’s admin system in good order, auto-creating the case and triggering requirement ordering or ultimately policy issue. Cycle time compared to processing paper is at least 60 times faster resulting in up to 85 percent placement of paid business.

Delivering life policies electronically (eDelivery) benefits carriers, agencies, agents and consumers. The cost savings are huge; there is also a decrease in NTO rates, better customer experience, tighter legal and compliance control, and commissions are paid faster. Here are some impressive eDelivery statistics:

  • 70 percent reduction in cycle time.
  • 55 percent of the eDelivered polices are being completed within 48 hours.
  • Consumer opt out rate is below 10 percent.
  • 95 percent of agents repeat use (Stickiness).
  • Reissue time is significantly decreased.
  • Eliminates the cost of postage and transportation.
  • Higher placement rate (ePayment).
  • No need to chase down delivery requirements.

Automate Commission Accounting and Paying Agents
The electronic transmission of commissions provides many benefits to the carrier, general agency and for the agent. If a BGA uses a commission accounting system either as part of their agency management system, like Ebix SmartOffice, or a separate commission system, like SPI GreenWave, to track commissions received, then a commission data feed from a carrier is critical for tracking payables on in-house deals to pay overrides on modalized premium to a BGA’s top producers. This improves the effectiveness and efficiency of commission processing by eliminating and reducing time delays, costs and potential errors with manual processing. The result of an electronic commission statement is automated reconciliation. The data in the electronic commission statement enables the BGA’s commission accounting system to verify if all participants in a case hierarchy were paid correctly on the expected modal premium, identify chargeback of commissions and adjustments, match the transaction total against the commission check amount, and list expected commissions on cases that were not received at all. Another benefit is persistency management, which provides an opportunity to improve and stabilize long-term income. The carrier can reduce expenses by eliminating the printing and mailing of commission statements, not to mention all the urgent “special requests” for commission information. The commission data empowers the BGA to handle more efficiently commission status calls from agents by providing better service, resulting in fewer status calls to the carrier. The commission data feed makes it possible for the agent to see their commission statements online at the carrier and/or BGA’s website.

The Advantages of Using Standards for Data Messaging
Using industry data standards such as ACORD XMLife delivers a significant strategic advantage. The need for a robust and flexible format is particularly evident as disparate systems and users require the ability to access and utilize data stored in multiple formats. It starts with a standard data model and then constructing standard messaging. The ACORD data model for life insurance has matured over the years, yet continues to grow and change with new life insurance products being introduced into the marketplace and refined messages to transact business today. The impact is enormous. With XMLife, every participant in the value chain—agents, agencies, carriers and service providers—can streamline their paper-intensive processes and standardize the way in which they interact and exchange information. The benefits of using data standard messages are reduced costs, speed to market, and eliminating redundancy in data entry.

The Principal Standard Transaction Messages for Life Insurance
ACORD Transaction Number and a General Description
111—Quote/Illustration Request
103—eSubmit a New Life Insurance Application
121—Service Requirement Order to a Paramed or other Service Provider
128—Licensing and Contracting Submission
1125—Pending Case Status
1122—Service Requirement Order Status
1128—Licensing and Appointment Status, Renewal and Termination
1206—Electronic Commission Statement
1203—Inforce Transaction

Blockchain is a Disrupter of Insurance Data Exchange
Several of the standard message transactions and data exchanges as we know them today will be retooled using Blockchain with Smart Contracts. The transformation will not happen until consortiums are established. The participation is the biggest challenge, not the technology. There are already initiatives underway such as the consortium being created through the efforts of the partnership between LIMRA and RiskBlock, who already have several life carriers onboard. Many of the business cases discussed are: Agent Llicensing and contracts, underwriting, health records, 1035 Exchanges, commission schedules, and death register for claims. The benefits of blockchain include a trusted environment (secure) where two parties can transact directly with each other without the need for a trusted third-party. Eliminating fraud, abuse or risk of double-spending because a blockchain contains a verifiable record of every single transaction ever made. Blockchain is known for its infamous Distributed Ledger, which is a peer-to-peer network that records a public history of transactions retaining a secure source of proof that the transaction occurred. Also, a key benefit is speed because the blockchain enables the near real time settlement of recorded transactions, removing friction and reducing risk.

It all comes down to joining the current eCommerce marketplace. The property and casualty world has made it very consumer friendly. You can download the Geico App, for example, on your smartphone and run a quote for auto insurance, complete an application, and then have your policy delivered right on your phone quick and easy. A similar experience exists in the life insurance world for an agent or consumer running a term quote on a mobile device like a smartphone or tablet, then completing an eApp with eSignature. A process is triggered ordering MIB, MVR and RX services with the information dumped into an underwriting engine that tabulates a score. If the score is favorable, then a policy is auto-issued, eDelivered and commissions are paid. This is all made possible because data seamlessly travels to and from all these systems using Life Standard Data Messages.

Stop Running Uphill

“All ballplayers should quit when it starts to feel as if
all the baselines run uphill.”—Babe Ruth

I am a simple man. My exercise program for over forty years has consisted of jumping rope, doing push-ups, pull-ups, dips and stretches. I always jump rope outside, wherever I am. I throw the rope in the bag, get on a plane and go.

I do not encounter much of anything that prevents me from exercising. Snow, cold, rain, heat, wind, traffic noise, people staring, smokers using the same space outside the hotel…nothing changes what I do or how long it takes.

Now…if I was a runner, that would be another blister altogether.

According to what I have read, a person’s running performance is impacted greatly by such things as dew point, temperature, altitude, incline and even posture. Take temperature for instance. At 60 degrees, a person’s running pace suffers a two to three percent increase, meaning that someone who averages an eight-minute mile pace experiences an increase of about twelve seconds per mile. At 80 degrees, the runner’s pace slows by 12 to 15 percent, so that a mile pace becomes more like 9:06. (There is actually a temperature calculator at Runners Connect, found here: https://runnersconnect.net/training/tools/temperature-calculator/)

Or consider altitude. High altitudes decrease the amount of oxygen getting to the muscles, and for runners there is the added risk of dehydration. Table 1 is helpful.1

Point: Runners are impacted by the physics of the environment, but they can make adjustments based on measurements and calculations.

Independent financial services professionals face an ever-more challenging environment. What should they measure in order to stay on pace, or even achieve improved performance?

Critical Success Factors
It is critical that independent financial services professionals measure the right things. The reason? They only have so much time.

“Time is the scarcest resource and unless it is managed, nothing else can be managed.”2—Peter F. Drucker

To improve time efficiency and business success, begin measuring these Critical Success Factors (CSFs):

  • Time invested by you per client
  • Revenue per client
  • The 20 percent of your clients who give you 80 percent of your revenue
  • Clients who provide you with referrals
  • Clients who provide repeat sales

The remainder of this article will address each of these CSFs.

CSF #1 Time Invested by You per Client
Like running the baselines in baseball, the progression from prospect to client is divisible into clear phases. There are at least these seven:

  • Uncovering a potential client through Prospecting
  • Pre-appointment communication
  • Scheduling the first appointment
  • The Fact-Finding appointment
  • The Closing appointment
  • Product Delivery
  • Annual Review

According to H. James Harrington, “Measurement is the first step that leads to control and eventually to improvement. If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.”

Measure » Understanding » Control » Improvement

Most independent financial services professionals I have met do not measure how much time is invested in each phase of the sales cycle. Here is a tool that I hope proves helpful. (Exhibit A)

What can be learned from analyzing the results in Exhibit A?

  • An average of eight hours is spent per client from prospecting through review.
  • The large disparity between clients in the amount of time involved in prospecting begs investigation. What controls could be implemented to improve efficiency?
  • Scheduling takes half an hour and should be delegated to an assistant.
  • Is the pre-appointment process well-understood? Can the process be improved through tighter controls?
  • A fair question is, “How long should product delivery take?” Is there a set process?
  • Should fact-finding take nearly as long as closing? Perhaps a well-designed agenda can be applied to both kinds of appointments to make the process more efficient.
  • What is the correlation between total time spent per client and the revenue earned per client?

CSF #2: Revenue per Client
Even for the independent financial services professionals who work specific markets and have well-honed client profiles, there is always a disparity in revenue earned per client. It is important to measure revenue per client—not because it makes one client more important than another, but because it provides insight into how efficient the sales process is. First, we will look at Exhibit B.

These five clients returned an average of $4,870 in revenue. How does the revenue earned per client compare with the amount of time invested in each phase leading up to product placement?

Allocating revenue to each phase in proportion (Exhibit A) to the total time spent per client is found in Exhibit C.1.

A quick look at the chart reveals that the two most revenue-intensive activities are prospecting and closing.

Revenue per client is best measured against time spent resolving the financial concerns of the client. To truly understand efficiency in the process, it is important to measure revenue in terms of income per hour. Only then can controls be applied to generate efficiency improvements.

Observations and questions:

  • There are only two ways to improve revenue earned per hour:
  • Keep total time static but increase total revenue.
  • Keep revenue static but decrease time required to make sales.
  • To earn a higher rate per hour the independent financial services professional must work with a higher revenue generating client, or, become more efficient in allocating valuable time.
  • The hourly rate for an independent financial services professional does not change by the activity, but by the client.
  • A fair question is, “Why should revenue from smaller income-generating clients be held hostage to the same process that the independent financial services professional uses with every client?” The process must be adjusted as soon as the revenue can be estimated.

Example: If the only activities involved in serving Client B were fact-finding and closing, then the revenue per hour would be $375, a respectable rate according to the chart.

CSF #3: 20 Percent of Clients Generate 80 Percent of Revenue
I meet with many people in our industry who feel much like the aging Babe Ruth. Every step in the process seems to be uphill. I remind them that exertion is minimized through efficiency.

Efficiency is achieved in any business by innovating to the point where the process generates a maximum return. The most important innovation is to identify the ideal prospect and design the process to best serve that type of prospect.

In our example, Client C returned the highest revenue in the measured period. However, Clients C, D and E combined for 84 percent of the total revenue in our sample of five clients. Not quite the 80/20 Rule; however, the point can be made that by knowing the commonalities and similarities of the top three revenue-producing clients we could establish the profile of the ideal prospect.

Shared Threads to Discover:

  • Industry
  • Occupation
  • Position
  • Age
  • Referral Source
  • Affinity Groups
  • Financial Needs Resolved
  • Objectives and Dreams

Armed with an understanding of the kind of client that returns the highest revenue per hour invested, the independent financial professional can begin to control the referral process and improve the kind of prospect generated. For instance, instead of asking, “Who do you know that may need my kind of services?” ask, “Do you know any computer software and systems software engineers, between 35 and 45 years old, married with children, who enjoy the outdoors, especially golfing?”

CSF #4: Clients Providing Referrals
This leads naturally to something many independent financial professionals fail to measure. Not all clients provide good referrals. The ones who do should be rewarded. In addition, there was a reason that they were willing to make introductions to new prospects. It is important to understand their motivation and learn how to control the process of asking for referrals in order to improve overall results.

The fact is, most independent financial professionals simply lack good tools and processes to ask for and collect referrals. The best tool in my experience is a simple survey presented to new clients at product placement.

Have you heard the phrase, “Happy customers make happy customers?” Clients who are satisfied with the process and the acquired products will refer more people. Therefore, whenever independent financial professionals meet or exceed the expectations of the client, and receive affirmation to that effect (perhaps through a survey), that is the exact moment when the request for referrals should be made.

CSF #5: Clients Providing Repeat Sales
F.J. Raymond said, “Next to being shot at and missed, nothing is really quite as satisfying as an income tax refund.” Similarly, better than receiving referrals from existing clients is getting repeat sales from them. Yet many independent financial professionals do not measure the frequency of this occurrence, nor the circumstances.

Repeat sales can be measured by calculating a repeat purchase rate, which is the percentage of clients who make another purchase. There is never a better time than right now to begin calculating a repeat purchase rate.

It’s equally important to measure and understand how receptive existing clients are to subsequent appointments to discuss additional financial needs. The most important factor is time between purchases.

Time between purchases shows how long a typical client goes before making a repeat purchase. This is a good metric to know because it aids in tailoring the optimal client review process to their behaviors.

Time between purchases and the repeat purchase rate are critical metrics for increasing purchase frequency among existing clients.

Practical Tips:

  • Always send “Thank You” notes after each sale and each referral.
  • Take great notes during every appointment and send them out in a summary email that includes “Next Steps.” These should always include the areas of planning that remain unaddressed.
  • Use a survey to secure a client’s written satisfaction with the process and product.
  • Send articles addressing the needs that are yet to be resolved.
  • Conduct annual reviews if only via Skype or FaceTime.

Summary:
Every independent financial professional requires a defined process to turn prospects into clients. For those experiencing “uphill” climbs along each phase of the process, the answer is not to quit or slow down. The answer is to measure in order to understand, and in understanding eventually to control and improve the process.

References:
1.
https://www.runtothefinish.com/sea-level-to-high-altitude-running-how-it-impacts-running/
2. “The Effective Executive,” New York: Harper Business, 2006, p 51.

The Name Game Of Own Occupation Definitions: What’s In Your Policy?

It’s imperative to understand the definition of total disability and how it can relate to a client’s current occupation. Disability policies come in all different shapes, sizes, and definitions, so you always need to read your client’s policy or the proposal you may be showing. Even better, read the specimen contract of the policy you are proposing. We would like to give you a brief overview of some of the more common definitions of total disability that we’ve seen throughout the years.

Definition of Occupation: It’s important to recognize that for most companies, when defining occupation in terms of a disability contract, the definition of occupation may be more generic in nature for some companies and contracts. For example, someone who teaches high school math may not be seen as a high school “math teacher,” but just as a teacher. Someone who sells cars or mattresses may not be considered a car salesperson or mattress salesperson, but just a salesperson. These are important distinctions that tie into definitions of total disability in DI and LTD policies.

Definition of disability: With many insurance companies there are different definitions of disability along with the naming of these definitions. Please note that this is intended to be a more generic view of many of these definitions. We’d urge you to obtain clarification on whatever product you may be presenting. We’ll be using some generic names of these definitions to help illustrate these differences, so please consult the company you are presenting to clarify the definition(s). In addition, each company may vary in what definitions are offered based on state, product, and occupational rate class.

In general, we’ve seen five different definitions of total disability, but as stated above, companies can differ in the names and definitions. Most would appear to adhere to something similar to the following: Suitability, Own Occupation—not engaged, Own Occupation, Specialty Own Occupation, and Transitional Own Occupation. Sometimes companies will label the last four as just “Own Occupation” so it’s important to read the definition that is being quoted and presented to your client. Please note some companies also require a loss of income in addition to the inability to be able to work. These definitions and riders may determine if and how a claim gets paid, so it’s important to know and recognize the differences.

The Suitability definition: Many times this is defined as the insured being unable to perform the material and substantial duties of the insured’s occupation and not having the ability to perform another occupation that the insured is suitable for based on their prior education, background, experience, and (sometimes) prior income. At times, this definition can be restrictive because the insuring company has more flexibility to contemplate if an insured has the ability to work and if that work would be suitable for the insured to perform. We’ve often seen this definition in policies designed for higher risk occupations, but we’ve seen some variation on a wide range of policies as well.

Own Occupation—not engaged: In addition to the definition above, we’ve seen this definition used as a base definition for various contracts. It’s usually defined as: Due to an accident or sickness, can the insured perform the material and substantial duties of their occupation and is not engaged in any occupation for wage or profit. This is a typical definition in many contracts designed for higher income earners. This may be added by rider to enhance the base definition on some individual and group contracts. The problem is that some professionals and companies label this definition as their Own Occupation definition as well. Since there is not uniformity in the industry, labels can cause some confusion.

Own Occupation: This is the classic definition that may allow the insured to work in another occupation and still be able to collect from the disability policy. The definition tends to read something similar to: Due to a sickness or injury, the insured is unable to perform the material and substantial duties of his or her own occupation. This is why understanding how the insurance company defines occupation is important. For example, consider a high-end retail shoe salesperson who can no longer sell shoes due to a back and knee injury. So, he gets a new job working in a high-end men’s suit store, selling suits. Can this person go on claim and be paid as being totally disabled? Many, if not most, companies would not consider a retail salesperson going from shoe sales to suit sales as someone who is totally disabled as the person is still in retail sales. A better example of this definition in practice would be a dentist who develops progressive MS and can no longer practice dentistry. Now the dentist becomes a licensed social worker counseling people who have medical issues like MS. While we can’t speculate on any individual claim, in general, this most likely would be a claim in which the person could no longer perform their occupation as defined by the insurance company, but could still perform work in another occupation. This person should be able to collect total disability benefits with out integrating the income from the new occupation.

Specialty Own Occupation: Depending on the company, this definition would typically expand on the definition above, recognizing specific medical and dental specialties as a policyholder’s occupation. Some companies even recognize classes of attorneys, such as trial attorneys. Some of these highly trained professionals may desire a disability product that would have a definition of total disability that would read something similar to: Unable to perform the material and substantial duties of your occupation at the time of claim. If your occupation is a board certified recognized specialty, then the company will recognize that specialty as your occupation. For example, a board certified surgeon can no longer operate due to a severe back injury and retrains to become a psychiatrist. Even though this person is still a practicing physician, the specialty own occupation definition may still allow the insured to qualify for benefits under the total disability specialty own occupation provision. You would want to check with the insurance company regarding the contract and whether the proposal you’re showing your professional client is covered in their specialty.

Transitional Own Occupation: This is a hybrid definition we do not see too often. It usually will combine an own occupation definition with an own occupation—not engaged definition. For example, let’s consider a client who becomes disabled, no longer able to work in her career as a real estate agent. So, she becomes a computer consultant. With the Transitional Own Occupation definition, she may be allowed to keep her computer consulting income from being integrated until her income reaches a certain percentage of her pre-disability income. When the income from the new occupation exceeds the policy’s income threshold then the person is no longer eligible for claim. Again, there may be variations of Transitional Own Occupation.

A word about residual. We’ve been addressing total disability definitions. We would always recommend a residual definition be put on the policy, assuming it’s an available rider. A residual rider may allow for more flexibility when an insured does not qualify for a total disability claim.

While this information may seem daunting at first, most companies only have a few definitions to learn. In addition, an experienced MGA may be able to offer you assistance with training and case design recommendations. So what’s in your policy?

New Jersey Transportation

New Jersey Senate Bill No. 1567 was signed by the Governor into law on March 1. The law states: “This act shall take effect immediately but shall remain inoperative for 365 days following the date of enactment or upon the effective date of rules and regulations adopted pursuant to Section 5 of this act, whichever occurs first.” That means that the earliest employers will need to comply is March 1, 2020. Per Section 5 of the law, rules need to be adopted in consultation with Transportation Management Associations (TMAs), transit agencies in the state, and third-party transit benefit providers.

This bill requires every employer in New Jersey that employs at least 20 persons, not subject to a collective bargaining agreement, to offer a pre-tax transportation fringe benefit to all of the employer’s employees that are not subject to a collective bargaining agreement. The federal government is only required to provide the benefit to federal employees that are not already eligible for a transit benefit equal to or greater than the pre-tax transportation fringe benefit.

A pre-tax transportation fringe benefit is a benefit that allows an employee to set aside wages on a pre-tax basis, which is then only made available to the employee for the purchase of certain eligible transportation services including transit passes and commuter highway vehicle travel. The employer is not required to offer a qualified parking or bicycle benefit, but may offer those benefits.

The bill also establishes a $100 to $250 penalty for the first time any employer is found to be in violation of this requirement. An employer has 90 days from the date of the violation to offer the pre-tax transportation fringe benefit program before the fine is imposed. After 90 days, each additional 30 day period in which an employer fails to offer a pre-tax transportation fringe benefit is a subsequent violation subject to a $250 penalty. The penalty is to be imposed only once in any 30 day period. The Commissioner of Labor and Workforce Development is authorized to ensure that employers provide the pre-tax transportation fringe benefit if required and issue citations for failure to comply with the requirement.

The bill also requires the New Jersey Transit Corporation to establish a public awareness campaign in conjunction with the New Jersey Turnpike Authority and the South Jersey Transportation Authority. The campaign is to encourage the public to contact employers about pre-tax transportation fringe benefits.

Pre-tax transportation fringe benefits can be offered directly by employers or through third party providers. The federal benefit levels available for 2019 are $265 per month and are subject to cost-of-living adjustments by the federal Internal Revenue Service (IRS) for transit passes and commuter highway vehicle travel. The New Jersey transportation limit will be consistent with the IRS limit established for 2020 and beyond. The transportation fringe benefit is not subject to payroll tax for the employer or the employee, allowing both the employer and employee to reduce their federal tax payments.

Inevitably certain changes and clarifications will be made prior to March 1, 2020, as the State outlines rules and regulations concerning the administration and enforcement requirements of this pre-tax transportation fringe benefit.

WageWorks will keep you up to date on changes as they occur.

The information contained in this article is not intended to be legal, accounting, or other professional advice. We assume no liability whatsoever in connection with its use, nor are these comments directed to specific situations.

Epilepsy

The term epilepsy denotes any disorder characterized by recurrent, unprovoked seizures. Seizures are disturbances of cerebral function that are electrical discharges in the brain. It may consist of violent shaking, convulsions, absence spells, automatisms (unusual recurrent behaviors), up to the loss of consciousness. Epilepsy is quite common and occurs in up to one in every two hundred people. Even though it is common, there can be times where living with this condition can be tough on many people. With this being said, it then comes as no surprise to find that some residents of Utah may choose to get a cannabis card in Salt Lake City. This way, they’ll be able to get their hands on medical marijuana, which is said to help manage the symptoms of Epilepsy (and other ailments/conditions). Making sure you have a local supply is important so if you aren’t in the Salt Lake City area and you live in Vermont, it might be wise to try out i49 as a local source for your medical marijuana needs.

The unprovoked seizures are generally recurrent and may persist for seconds (in absence seizures) up to hours when the post-seizure state (also known as the post-ictal state) persists. People may have seizures provoked by reversible causes, such as withdrawal from alcohol or drugs, low blood sugar and kidney failure from severe electrolyte imbalance, but these seizures are not considered to be under the true definition of epilepsy.

Most epilepsy is either structural or metabolic in origin, although genetic epilepsy does exist. Abnormalities a person is born with or injuries acquired during the birth process may cause epilepsy. Metabolic causes, vascular diseases, degenerative disorders and infectious diseases are causes. Seizures associated with infectious diseases are generally reversible when the disease passes. Trauma is a very important cause of seizures, especially in young adults.

Seizures are generally classified as either focal or generalized. Focal seizures may or may not involve loss of consciousness. They can consist of anything from jerking rapid movements to involvement of visual, auditory, olfactory and other sensations bordering on hallucinations. Generalized seizures can run the gamut from absence seizures (where someone is unaware of an impairment of consciousness for a short period of time) to tonic-clonic, or grand mal seizures. These types of seizures generally involve a sudden loss of consciousness, a fall to the ground, and rhythmic, jerky contractions followed by a period of drowsiness. Grand mal seizures are most common in adolescence and early adulthood.

Since there is a large differential diagnosis of neurologic seizures, testing is always indicated. An EEG (electroencephalogram) is the single most useful test in the diagnosis of epilepsy, with evidence of seizure activity being shown with characteristic spike and wave patterns. CT scanning (or MRI) also help to exclude lesions (such as tumors) as a cause, as a sudden seizure later in life may be the first sign of a malignancy. Focal seizures may be confused with transient ischemic attacks (TIAs), the aura to migraine headache, panic attacks and even rage attacks. Generalized seizure disorder has to be differentiated from syncope and cardiac disease. Getting the proper diagnosis is essential to providing the most appropriate treatment.

Medical and surgical treatment are both used to control epilepsy. Numerous medications, similar to cbd oil and water soluble cbd for example, are used depending on the type of seizure involved, as some may provide excellent control of the disorder. Often they are trial and error until the right medication with the least side effects is found. Surgery may also be tried, in the people who are not responsive to medical therapy, to disrupt the focus of seizure provocation.

Mortality and morbidity in general are higher in epileptics. Sudden death is a risk in those who have grand mal seizures and who are not well controlled on medication. Accidents, and in particular motor vehicle incidents, can have quite adverse consequences with the development of a seizure while driving. Falls, particularly in the elderly who have epilepsy, can result in severe consequences. Industrial accidents in those who have epilepsy and may be affected during mechanical work are also problems that have to be taken into account.

Certain information is helpful to the underwriter in assessing epilepsy and especially in evaluating the more difficult cases. Compliance with medication is foremost in a favorable outcome. Single seizures do better than multiple ones. Concurrent use of alcohol is a poor prognostic factor. Single medication use as opposed to multiple medications and the duration of time since the last attack are considered. Older age and the results of trauma from a fall also have poorer outcomes.

Many to most epilepsy cases may be handled with standard classification, and occasionally preferred status can be used when there are single seizures, no prolonged treatment, no history of alcohol use and no high risk avocations (like aviation or scuba diving). Medication records as well as MVR records are reflexed and looked at in evaluation. Medications and surgery over the recent past have shown very positive results in seizure control.

Why You Should Or Should Not Become Your Own IMO/BGA

Is this you? You have had a successful career and you feel like you have worked your tail off. As a result, you have always gotten over the obstacles that you have been presented with—at least so far. You know you are not an idiot, you’re a quick learner and you have succeeded almost every-time—at least so far. You are a student of the business and not only know the business but also how to effectively communicate the need along with that need’s respective solution. Whether your customers have been financial professionals or retail clients, those customers have always given you great reviews and as a result you produced—at least so far. You feel like it doesn’t matter what type of product or service you are given, you will always be able to use hard work and effort to make sure that you succeed—at least so far. Do you love your work, your quality of work and take pride in doing a good job as well as getting well compensated for it? Is this you?

Is this also you? As much fun as you have had over your career and as much money as you may have made, you have begun to feel somewhat of a sense of emptiness. Is this emptiness brought about by the feeling that you are not able to influence your business as much as you would like because, in short, you work for somebody else? Furthermore, do you feel that, because you work for somebody else, the ideas that you would like to run with—that you know from your vast experience will work—are not being implemented? Do you feel that there is an imbalance between how much you care about your job and how much your job cares about you? Is this you?

Now, is this also you? Have you occasionally thought to yourself, “Then why don’t I start my own IMO/GA/agency?” But every time you ask that question, does the devil in your ear say that you will fail? That devil in your ear says, “Yes, you have been successful, at least so far, at almost everything you have done—but this time is different. Starting a business is different and you will fail.” That devil in your ear has also said things like the below:

  • “The amount of knowledge around technology that you need today is beyond you…after all, you are a salesperson!”
  • “You don’t have enough contacts to get the business running quickly.”
  • “The IMO/GA/agency business is consolidating and only the big ones will succeed.”
  • “You need massive contracts in order to succeed, which are very hard to get at the outset.”
  • “Staffing at the appropriate levels is astronomically expensive.”
  • etc.
  • etc.
  • etc.

If you are somebody currently in the position that I just explained, or one of the many successful IMO/GA/agency owners that read this publication, you are probably nodding your head because you know what I am talking about. You are either there, or you have been there.

The purpose of this article is to explain my high-level observations since I started my own marketing organization months ago, after several years of listening to the devil in my ear and not doing so. If I can help somebody change their lives for the better by writing about my experience then it was worth it. Much of the fine details are beyond the scope of this article, so if you want further advice please contact me.

Just Do It
I remember as a kid seeing old western movies where the cowboy would pull up to saloon on his horse, get off the horse and take the leather “leash” and merely wrap it one time around the post in order to keep the horse from bailing while the cowboy went to drink. As a kid, I always wondered how that would keep the horse in place. Heck, if the horse pulled just a little bit instead of just standing there, he/she would realize that it can run free! That is the equivalent of the devil in our ear. That devil is the psychological “leash” that tells us to just stand there and not pull.

Your gut is almost always more accurate than the devil in your ear. If you feel in your gut that you are the person I described in the first few paragraphs, and if you are financially able to—then rip the leash from the post! The other concerns about your ability to handle the technology, etc. will take care of themselves once you jump in. That’s right. Jump in and figure out the minor details later! If you have a value proposition and a plan/strategy for getting that value proposition in front of the right people, don’t sweat the small stuff yet.

One year ago I never would have thought that I could create a website, an agent microsite, marketing material, or a company “network” in our office. I was wrong! This stuff is not that hard! Although I am getting to a point where I don’t have time to do all the minor stuff and am hiring for it or outsourcing it, I learned that I am much more capable than the devil in the ear told me I was. You would be the same if you are the person in the first few paragraphs.

Again, if you have a value proposition that is unique from your competitors, don’t worry about what the “bigger guys” are doing. We have all read about the success stories of companies like Microsoft, Apple and Walt Disney, and how they started their businesses when the odds were stacked against them. But they succeeded! If you have a unique and strong value proposition relative to your competitors you will succeed.

But first, a word of caution about money—because that is one of the top determinants, if not the top, of whether you are able to do this.

You Need Money To Make Money
Now the bad news. There is truth to the cliché of “needing money to make money.” While starting an agency is not like starting a construction business, where you might need several pieces of $500,000 machinery, you still need money. Your LLC can be started with merely a couple hundred dollars. However, there are many other expenses—most of them technology. Here is a list off the top of my head: Errors and Omissions (both personal and agency), state insurance licensing fees for each state, computers, printers, website provider, antivirus/firewall for your network, email service like Constant Contact, Gotowebinar/WebEx, prospect lists, agency management system, health insurance. And the last one: Ultimately, if your business starts taking off, you will need staff!

Two additional thoughts about “needing money to make money” are:

  • I believe that, whether one is a principal of an IMO or just a personal producer, with today’s regulatory environment he/she should have an affiliation with a broker/dealer or an RIA firm—especially the RIA firm. The fiduciary genie is out of the bottle, if not from a regulatory standpoint then certainly from a client mentality standpoint. I have been asked a few times by some personal clients if I was a “fiduciary.” Now you are probably like me in that you always act in the clients’ best interest whether you are officially a “fiduciary” or not. However, licenses matter to the regulators! One of the first things I did when I started my business was to retake my Series 66 and Series 7 exams (I dropped them years ago). Not only did the exams cost money, but the fees associated with the BDs/RIAs range anywhere from $1,000 per year to upwards of $7,000 per year. I believe that in order to build a healthy business in financial services and to hedge against regulatory uncertainty you need a securities license. Starting your own business is an opportunity to start a business the healthy way.
  • The main reason I believe you need a large cushion before you start your own IMO/GA is because of this: Relationships with agents are just like relationships with consumers. It takes time to develop. Before I elaborate, let me step back a second and discuss my opinion on the genesis of the negative reputation that “insurance agents” have. I think one of the reasons our profession has gotten the reputation it has is rooted in the way that many of us got started in the business. I was almost straight out of college when I worked as an agent for one of the big career insurance companies. I was on a “commission draw” that the company gave me for the first six months, which was good because I had virtually no money because I was young. On the very first day of my employment the clock started ticking for me to produce so I could offset that “draw” with commission. If this didn’t happen, I would be gone six months later. The urgency was huge. On day one I knew nothing about the business, but I did know the phone numbers of my friends, relatives, and even a few people I hadn’t spoken to in ten years that I was sure would be thrilled to get a call from me (sarcasm). Needless to say, over that first year I was more “aggressive” with potential customers than I am today. Why? Because I needed to be. I needed to put food on the table! I had no cash cushion.

The fact that I have been smart with my money over the years allows me to follow the pace of the customer, whether those customers are the agents or my personal clients. I am not going to starve if an agent does not have an immediate need for my services. Persistence and patience always win! Money buys patience and patience earns trust. Trust is what our industry revolves around.

Buy It As You Need It
Although you need money to make money, the good news is that you don’t have to go crazy at the outset. One thing I learned about running my own firm is that you get solicited every day. Everybody is calling you offering you this system or that system. It would eat up your whole day if you allowed it to. And some of the systems are good and you get tempted to buy. But at the outset there are certain things that you do not need, at least not until the proper time comes. For instance, one of the first systems I bought was Gotowebinar. Webinar was obviously crucial because this was how I was going to discuss my value proposition with my potential customers/agents. This was needed at the outset! On the other hand, I did not need to buy licenses in all 50 states at the outset so I didn’t. Now, however, every week I am buying a new license for a new state as a new agent from that state submits a case. Let the revenue precede the expenditures whenever possible! In other words, it’s easy to justify spending $100 to get licensed in XYZ state when there will soon be a $1,000 override check coming because of it.

So Many Reasons To Do It

  • As mentioned, if you are who I described in the first few paragraphs, then building your own business is for you. Here are just a few reasons that you should run your own company:
  • When you run your own business, it is very satisfying to know that every minute you work, every idea or tool that you create, is going toward the value of your company.
  • You are building a legacy for your family, should they ever want to work with you.
  • When you run your own company you can do business with whomever you wish. In order to run a healthy business you need to do business with those that will not be a liability to the firm—whether literally or figuratively. I have had to tell a handful of folks that I would not pursue a partnership with them for this reason.
  • The upside is unlimited. I have a friend that just sold his IMO for a very large sum. I was talking to him about money. I said, “How long did it take you to make merely six-figures when you started your own IMO?” He said, “Five years.” I was hoping he would say five months! However, he then came back and said, “But I made seven-figures within ten-years and this was 30 years ago.” That is real money. Again, if you have the cash cushion and the time, it will be worth it.

Final Tip
I have been in the industry for over 20 years, have worked with many BGAs/IMOs and have learned what to do and what not to do. I have seen some awesome firms that have created their own awesome empires. I have also seen firms that have been built in an “unhealthy” manner. However, they have gotten so big that they can’t change now. In your company’s infancy, you have the opportunity to kill that monster while it is still a baby. Kill those bad habits and inefficiencies before they grow! (I wish somebody showed me the correct golf swing when I got started 20 years ago!)

Build your company the right way from the beginning by having a securities/fiduciary affiliation. Build your company the right way by being patient with your customers versus high pressure overpromise/underdeliver tactics. Build your company the right way by focusing on the relationships versus the transactions. When people do business with CG Financial Group, they do business with me personally, not the company. Don’t lose sight of that! I have seen many companies get big and have the founder get too “disconnected.” Thus, the culture that attracted customers/agents to the firm is now gone.

Lastly, build your company the right way by affiliating with other IMOs/agencies that will give you great advice. I have learned that when you go out on your own, you realize who your true friends are—those who truly want you to succeed versus those that view others’ success as a zero-sum game. As it turns out, I have many friends that have given me a lot of help. You know who you are, and I will forever be grateful.

Clients Don’t Care If Your Dad Is Stronger Than My Dad

Kids that are somewhere between the ages of five and 10 are funny to talk to. This is because they are old enough that they have become smart enough to make observations that are accurate. Yet, they are not so old that they have become politically correct. As a result, the observations they make flow out of their mouths the very second those observations register in their brains. For instance, once my family and I were on our boat at the lake and I was wearing just my swimming trunks. My eight-year old—Matthew—after giving me a curious stare for about three seconds said, “Daddy, you need to start eating at subway instead of McDonalds.” By the way, if an eight-year old tells you that you are fat, you can bet that you are indeed fat! Their worlds are so simple and non-political that they have no motives, no agendas and no reason to say anything other than what they believe to be the truth. They are still unpolluted by political correctness and 100 percent unfiltered.

However, many times the free-flowing thoughts of young kids lead to small disagreements among each other. For instance, a couple of months ago Matthew came into the house very frustrated and was crying— like he does five times a day. At that point I cynically asked, “What is the problem now Matthew?” He then went on to explain that he had just had an “argument” with his best buddy and neighbor—Blake—who is also eight years old. They have a love/hate relationship. I asked Matthew what the argument was about this time and in his chipmunk sounding voice he responded, “We were having drama over who’s dad was the strongest.” My laughter did not do much to sooth Matthew’s frustration. (By the way, I was hopeful however that Matthew pled a convincing case!)

This is analogous to what frequently happens in financial services when everybody is fighting over market share by trying to separate their product from another product. Sometimes it gets petty enough that some of us in the industry—whether carriers, IMOs, or agents—start to lose focus over the real problem that consumers are faced with today. To give an example: I have attended hundreds of conferences over the last 20 years. At these conferences, where life and annuity agents are being presented to by carriers and/or marketing organizations, it is not uncommon to hear the presenters—usually wholesalers—say something like “Because of all of these great product features that my product has, it is able to provide your clients with $20 more in distributions per year than my competitor’s product.” A lot of times this conversation is based off illustrations that are purely hypothetical and based off minute details that nobody cares about.

Another example: I recently heard a webinar that a carrier was doing for agents and this carrier was comparing how the product he was showcasing was superior to the competitors’ products because of the way that the “loan arbitrage,” as he put it, was much more aggressive. He went on to state that because of the massive multiplier on his product and the resulting credit that comes from it, it would illustrate much higher distributions than his competitors. He proceeded to explain that this is because the “multiplier credit” is not the same as a high illustrated rate. What this means is that his product was effectively exempt from the AG-49 rule that mandates no more than one percent “arbitrage” between the loan rate and illustrated rate, therefore his product was better. He also went on to flex his intellectual muscle to discuss how, with his product, the frequency with which the premium is swept from the fixed account into the indexed account was better than the others. I can go on and on about what I heard. Unfortunately, this happens frequently in our business.

The question that I always ask while hearing one of these presentations—or preparing my own—is: Would the end consumers care about this and will this information help the agents write more business as a whole? If the topic is something that clients would care about, then I can guarantee that the audience (whether agents or IMOs) is going to care. Why? Because eventually that language must be spoken at the point of sale, and if you are helping formulate that language your value as a wholesaler is significant. When was the last time a consumer asked an agent how big his/her multiplier was versus his/her competitors? Or how frequent the sweep dates were versus the competitors? This never happens. These comparisons are made not at the client level, but rather at the level of the IMO and/or carrier. Why are we doing this?

Don’t get me wrong, agents need to know the ins and outs of products and “how the watch is built.” Heck, I have trained on deep product and concept analytics and will continue to do so. That is one of my differentiators as an IMO. The reason I do this is somewhat of a paradox: The greater an agent understands something, the easier it becomes for them present it simply. As Einstein said, “If you can’t explain it simply, you don’t understand it well enough.” Again, it’s an interesting paradox.

At this point you may be thinking I am contradicting myself. Allow me to explain. There is a difference between educating agents on the information they need to know and shining spotlights on very niche technical features, or features based off “hypotheticals,” in order to incite a reason for IMOs/agents to sell those products. The latter is not what our industry needs. The industry does not need “my product is better than your product,” or as I now call it, “my dad is stronger than your dad.” What the industry needs is the training that agents care about and the language and solutions that clients demand. This is much more important than “my product is better than yours.” I don’t believe that any agent in the industry would say that he/she has the problem of not having good products to represent.

The above is why at my company/IMO we create content based off two points of view, which I will share with you:

  1. Client up: This is where we put ourselves in the clients’ shoes and think about what would interest them. What clients care about is living out their retirement dreams, not outliving their income, hedging tax increases, understanding this complicated world of finance, trusting their agent/advisor, etc. Again, by creating content from the mindset of a client, agents can not only use effective content but also speak the language that clients seek. By the way, this is also why I personally produce—to be on the front lines so that I can continue to understand the needs of the clients.
  2. Agent down: Here we put ourselves in the minds of the agent. The typical agent wants to learn practice management, simplification, marketing practices, behavioral finance, how to be better at building trust with the clients, etc.

A couple of months ago I saw a video clip on LinkedIn of two antelope fighting in the desert of Africa. The video went on for about a minute that showed these two scuffling about in circles and knocking heads. What was the issue they were disagreeing about? Obviously, I have no clue. However, I can guarantee that their disagreement was not as severe of a problem as what was approaching them from about a mile out. As they were distracted bickering with each other, what started out as a tiny speck in the background was quickly getting larger and closer. It was a lion! By the time they pulled themselves out of the distraction it was too late—at least for one of the antelopes. Unfortunately, the ending was not a happy one for that antelope.

We as an industry should not be like Matthew arguing with Blake. Or antelopes fighting with each other. We need to address the bigger issue—the lion. To me the lion represents the millions of households that don’t have life insurance, long term care insurance or savings for an adequate retirement. To me, the lion represents the fact that over a third of all households would feel an adverse financial impact within one month of the death of the primary wage earner. To me, the lion represents the fact that the number one reason people do not buy life insurance is because they believe it is too expensive, while at the same time they have misperceptions about exactly how expensive life insurance really is. Educating each other on how to have these conversations effectively is how we address the lion. That should be our focus.

Now please excuse me—because I must go arm-wrestle Blake’s dad.

Wounded Warriors Family Support

“When America goes to war, our families go to war.” That’s the motto of Wounded Warriors Family Support, and that short sentence is the reason I support this fine organization and why I nominated Wounded Warriors Family Support for a NAILBA Foundation grant.

Wounded Warriors Family Support’s mission is to help “heal the wounds medicine cannot.” When a young soldier, husband, father is severely wounded, his family is “wounded” as well, and they need help, too, in many cases.

Unlike previous conflicts, 22 percent of the casualties returning from Iraq and Afghanistan have Traumatic Brain Injury (TBI), which, in many instances, is moderate to severe. A young soldier with moderate TBI needs assistance with his daily living activities. Things we take for granted-driving, cooking, dressing-are challenging, if not impossible, for these veterans.

Whilst a traumatic brain injury is more likely to happen in soldiers who have faced combat, they can still happen to anyone who finds themselves in an accident through no fault of their own, like a car collision for example. This could also happen in cases of severe domestic abuse. That said, unfortunately, the consequences can be the same, and in the worst of circumstances, it could even result in death. So, if you know someone who has faced something similar, don’t be afraid to reach out to somewhere like this firm of lawyers to help with your claim. It won’t bring your loved one back, but it could help with the grieving process. For veterans, this can happen all too often.

The catastrophic effects of Improvised Explosive Devices (IEDs) also severely maim our soldiers. Too many soldiers have lost all four limbs. More have lost three. IED blast effect also causes severe spinal injuries that make our once-athletic soldiers quadriplegics who require assistance in their daily activities.

If a young soldier is married, the responsibility becomes his wife’s. She must do all the driving. She must do all the cooking. She must help her husband bathe. She must help him get dressed. She must do it all and more if she is a mother with young children to look after.

A sad fact is that a few wives left their husbands because of “caregiver burnout.” The emotional and physical strain proved to be more than they could handle. They left because there was no one to back them up. They felt isolated and vulnerable without options.

She needs a break, or respite, from the daily emotional and physical strain of being caregiver, cook, chauffeur, maid and mother.

While the Department of Veterans Affairs has respite programs to help, they are limited to 240 hours each year and eight hours on any given day. That’s when Wounded Warriors Family Support comes in: It fills the gaps in coverage and provides the support a family needs, regardless of hours.

While the VA provides respite care for the caregiver, it won’t help care for children. Wounded Warriors Family Support will step in to find qualified caregivers to help look after young children when needed. A case in point was a caregiver wife and mother who needed an emergency hysterectomy. At home was her veteran husband, suffering the effects of TBI, and their young children, who all needed help during her medical emergency. One frantic phone call to one of our family case workers was all it took to get action. In only a few hours, a qualified Certified Nursing Assistant (CNA) arrived to take care of the young soldier and their two children.

Respite care is not the only program under the mission of supporting families of combat wounded. This organization also provides handicapped-equipped Ford F-150s to veterans who have spinal injuries or whose legs have been amputated.

Wounded Warriors Family Support, in partnership with UAW-Ford, sponsors a welding program for combat wounded veterans four times a year. Every graduate from this program has a high-paying job waiting.

The support Wounded Warriors Family Support received from NAILBA and its generous members made our support of two wonderful families possible:

In one family, Minnie has to care for Anson, a quadriplegic as a result of a horrific IED blast when he was deployed to Iraq. Minnie has help from the VA and another local government program, but it’s not enough. Wounded Warriors Family Support provides this family with a CNA three nights a week, 52 weeks a year. Their staff has worked with Minnie and Anson for over four years, and they’ll be with the family as long as they’re needed.

In November 2017, an IED blast almost decapitated Kenton, a Navy ordnance disposal expert who was deployed to Syria. He was not expected to live. He cheated death, but he was left a quadriplegic and needed intense medical care to heal his wounds. Evacuated to Walter Reed National Military Medical Center in Bethesda, MD, his family in San Diego came to his side and lived at the local Fisher House. Lindsey wanted to be with Kenton as much as she could, but with four young children, she couldn’t do it all. She called Wounded Warriors Family Support.

The organization arranged to fly Lindsey’s mother to Walter Reed to look after the children-Logan, Mason, Annabelle and Sadie-while Lindsey stayed at her husband’s side. Wounded Warriors Family Support provided money so the family could get away from the hospital grounds and have a needed break. Later, Kenton was transferred to Brooke Army Medical Center in San Antonio. Lindsey and the children went, too, and took up residence in Fisher House there. Wounded Warriors Family Support helped this time by paying the airfare for Kenton’s mother to come in when Lindsey’s mother went home.

We don’t like to think in terms of dollars when it comes to supporting our combat wounded families, but that’s reality. Without the NAILBA grant that Wounded Warriors Family Support received, the support extended to the families of Anson and Kenton would not have been possible.

Wounded Warriors Family Support, while not a large or well-known charity (you won’t see any television advertising because they don’t spend their money that way) is highly effective and recognized as one of the best veterans’ charities by Consumer Reports and CNBC. With a four-star rating (the highest) from Charity Navigator, Wounded Warriors Family Support not only performs a great service for veterans, but also is a great steward with all funds donated.

I have been on the board of directors for several years and serve as treasurer of this great group. I am proud of the work this organization does, and I am proud that NAILBA and our members support the work that Wounded Warriors Family Support does to “heal the wounds that medicine cannot.”

To learn more, or to donate time or money to Wounded Warriors Family Support, visit www.wwfs.org.

Cyber Security… Join The Party

In the spirit of Tech-Tock, I’m going to discuss cyber security from a compliance perspective. This is still about technology and does have a sense of urgency for financial services professionals. The trend I’ve witnessed for the last few years is pushing downward into the supply chain-compliance. Cyber security companies like SimplicIT that provide managed it solutions in idaho believe they have a good handle on defensive, layering, real-time protection, and that the problem today is pushing down into the supply chain and continues to close vulnerabilities. They develop software that tries their best to protect your data from external breaches, for example, companies similar to Fleetsmith try their best to protect your business with application security.

Technology-wise the movement here is “Trust No One” when it comes to securing data and data access. The day is coming soon where two factor log-ons will be required for everyday users. Two factor access starts with your typical login and a strong password, you know, the one you never change. The system will then send you a code (i.e., text message, email, phone call, fob code, etc.) which you will enter into your log-on process and you’re in. As you move deeper into IT Land you see a group of professionals that keep that cyber world running and have all the keys to the kingdom. Not trusting them is taking shape in third-party key vaulting; companies have a key and the D3P have a key and to decrypt the data requires both parties to participate. Layers.

So these Cyber professionals mentioned previously believe technology in the market today, when properly deployed and maintained, can protect confidential information. They claim today’s vulnerabilities are those businesses that let their partners into their world in various degrees that pose the threat. Making their case over time in many forums has created more compliance and is pushing deeper into the supply chain. This has produced the recent rollout of the European Union’s General Data Protection Regulations (GDPR) which added some user rights and big fines. The most popular user right is the ability to have your personal information destroyed after use. When this hits the U.S. hang on! Revenue models will implode-no more data markets. California has just released their new state law in effect killing the data resale market. Fines that start at 20 million EU and can go as high as four percent of the company’s EU revenue has everyone’s attention.

Privacy and identity protection is also beginning to hit some current technology we use today-E-Signing, the backbone of the E-App initiative. Case law has taken a turn whereby judges are not accepting login and password as adequate for signer authentication. In two 2016 cases the California courts ruled that login and password were insufficient evidence to prove identity. After a decade of identity theft, who can trust anyone’s documentation. Courts want more evidence to authenticate- like adding biometric to the signing event (e.g., voice signatures and video signing).

So, what does that mean to the brokerage and agent community? More compliance. In my experience, the BGA/agent was not a real threat because regulations had a high threshold before you needed to report and execute a breach event. The trend today is that these thresholds are falling fast and breach level record counts of 50,000 or more are dropping to 500 or more (NY DOR Regulation 500). So, the world of compliance is descending upon the BGA/agent community.

This means significant change for many BGAs and agents and the way they look at cyber compliance “peer apathy.” The “because the majority of your peers don’t spend the resources on compliance, so why should you” mentality is over. You’ll know it’s over when you get your first request for your annual SOC2 Type2 audit report. I know because I receive many calls these days asking me: “What is a SOC2 audit and should I care?” Service Organization Controls testing level 2 covers internal financial, human resources (SOC1) and cyber security controls. Type 2 means the audit period is the past 12 months of records demonstrating your compliance to the subject controls. Controls are cyber practices, HR screening, threat training, data protection and access to confidential information safeguards. I usually respond to the SOC2 phone question with a typical 200 Control questionnaire and ask the caller to self-assess.

This is where the story gets interesting. The next call usually starts with, “I don’t do any of this, I don’t have a Chief Security Information Officer.” If you’re the principle of the organization, you’re now the CSO. The next question usually is, “I outsource all my computing needs (i.e., hosted CRM, hosted AMS, hosted document management, etc.) so why do I need to do this?” Simple. The regulations make it clear that you can outsource your technology-but not your responsibility-to third parties. Outsourcing is good because your vendors can provide their SOC2 Type2 audit reports, which provide oversight requirements of all your vendors and can serve many answers to the control questions, leaving about 100 controls to go. Now the SOC2 audit focuses on how your organization interacts with the hosted solutions. Auditors will want to review your cyber security policies and procedures on how you manage, background checks, least privileged access, incident reporting, disaster recovery, social media conduct, hard drive destruction, email encryption and so on. Just because you outsource your technology does not relieve you of conducting a third party SOC2 Type 2 audit.

The cyber world and government regulators believe today that if everyone in a supply chain of confidential information conformed to cyber compliance, identity theft would be greatly reduced. Well now, what do I do and what’s it going to cost? Let’s start with, if you’re a home-grown solution, a third-party PEN test (about $15,000-$30,000). Next, find a law firm which provides breach services and internal SOC2 control consulting (about $25,000 to $50,000). This law firm serves two purposes-preparing your control (i.e., budgeting) remediation plan and they would be the first phone call to make if you have evidence of or suspect a breach. Remember, a breach is unauthorized access to confidential information (i.e., lost notebook with no disk encryption, unencrypted email traffic, terminations that walkout with their shadow files, not shredding paper files, etc.). When using penetration testing, you are basically sanctioning an authorized breach in order to identify areas of vulnerability in a network. When you’re ready, a SOC2 audit (about $20,000 – $50,000) every year. What makes it more expensive is the fact that, in the life insurance world, you’re subject to HIPAA and PCI audit requirements which are separate from SOC2 audits. I really think life insurance is the most expensive group when it comes to compliance cost because of the information you manage. Once you have your SOC2 audit complete, now you can get Cyber Insurance. Cyber insurance companies generally want a complete SOC2 audit so they can underwrite your risk. With a good report expect to pay around $10,000-$20,000 annually for $2 million to $3 million in coverage.

Independent agents should review their E&O insurance and expand coverage for the risk they have access to and engage in personal encryption solutions (i.e., encrypted notebooks/computing, communications archiving, email encryption and password management tools). Agents working from PC-based computing at home should consider virtualizing (e.g., VMware Desktop) their business computing, separating their work life from their family or personal life (around $2,000-$3,000). Accordingly, in case you were not already aware, VMware Workstation is a virtual machine software that is used to run multiple operating systems over a single host computer. Each virtual machine can run a single instance of any operating system, such as Microsoft or Linux, simultaneously. If you would like to learn more about VMware Workstation, you might want to consider completing some of the fantastic vmware certifications out there. Ultimately, getting an industry-approved certification from a vendor such as VMware demonstrates to employers that you can be trusted to work to a high standard.

Well there you have it. The train has left the station and the trends discussed above are coming soon to a BGA/agent near you. Some call it the cost of doing business…I think it’s just seat belts on an airplane. Welcome to the party, Hans.

Build

Build is one of the essential points of information in underwriting that go into a rating. Generally, height and weight are calculated into a measure called BMI, which is body mass index. Most companies make build tables available to their agents and brokers to allow a general idea of whether or not there will be debits on a case. However, more things go into an assessment than just absolute measures, so companies may vary on how they perceive build information.

BMI has been studied over hundreds of thousands of lives by reinsurers who provide ranges for what is underweight, average weight and overweight. Normal weight is a BMI of between five percent and 95 percent for age and sex, so it covers quite a lot of ground. Obesity for rating purposes generally is between the 95th and 99th percentile, and severe obesity in the upper one percent of weight and BMI. Likewise, underweight is calculated as a BMI less than the fifth percentile for age and sex. Most people fall into this mid-range for which no rating and no increased cost assessment is made. One further consideration is for preferred classes, where companies will choose a more narrowed rate of “normal” to allow better than average pricing when build is optimal and closer to the mean.

Complications from each deviation from the norm are well known. Obesity predisposes to many conditions that are hazardous to overall health. They include coronary artery disease, hypertension, stroke and Type 2 diabetes. Lipid disorders such as high cholesterol and high triglycerides may follow from overweight. Certain cancers such as prostate cancer in men and breast, colon and endometrial cancer in women have a higher incidence in overweight individuals. Sleep apnea and increased risk while undergoing surgery are also considerations to be accounted for. Most people’s weight increases as activity decreases between ages 50 and 65 but normalizes into older age.

Underweight likewise has complications which affect underwriting. Low BMI may be associated with underlying malignancy, intestinal problems and malabsorption of necessary nutrients, endocrine disorders, renal insufficiency and depression. In older persons, dementia and increased fracture risk from falls have to be considered. Alcohol abuse, arthritis and underlying connective tissue disease are often associated with underweight, as well as psychosocial diseases such as bulimia and anorexia.

Most build abnormalities that will require ratings are apparent during the submission of a case and present few surprises when they result in a rating other than as applied for. Overweight build tables are exceedingly generous, and generally one has to exceed a BMI of 35 before standard pricing is affected. It’s generally not a matter of wearing heavy clothing or being weighed after mealtime, although that can be a consideration in preferred pricing where weight cutoffs are strictly observed. There are a few more problems with evaluating underweight, which will be addressed shortly.

Weight is assumed to be relatively stable over time, so underwriters pay attention to large swings in BMI over short periods of time. When there is a history of recent weight loss that is intentional, most underwriters will add a minimum of 50 percent of the weight lost to the current weight in considering a rating, since the weight loss sadly is often temporary. A loss of weight that is unexplained or more than five to 10 percent may be an indicator of malignancy, and the case may be postponed for investigation or explanation in these circumstances.

Build becomes more of a factor when there is concomitant disease associated with the case. For instance, overweight becomes a markedly additive risk factor when an applicant already has significant cardiac disease or vascular disease. Likewise, diabetes and cholesterol problems become more difficult to control as BMI rises. Conversely, those with chronic disease who are losing weight and having BMI drop must be checked carefully for underlying cancer or failure to thrive. In these cases individual BMI differences may take on added significance, even more than a simple chart might indicate.

Two other considerations to mention are ethnicity and younger applicants. Often, many ethnic groups not raised here in the United States have slighter builds that are completely normal for them yet end up on the rateable end for underweight on the build tables. Similarly younger individuals, particularly females, have thin builds that also might be worrisome at age 65 for example but that are completely within the normal range for age 25. This includes consideration for preferred classes as well. In these cases it is important to show that these are stable builds and that the individual is healthy and has no other coexisting diseases that might contribute to underweight status. It may be as obvious as pointing out there are no malabsorption questions, no underlying illness, and even that an underweight by build tables female has normal menstrual cycles and exercises regularly. Build tables can’t take into consideration every instance, so showing that different people have different “normals” can result in the best underwriting classification.

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