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Monetary Threshold Definition

The threshold in No-Fault Auto insurance that's based on a person's degree of injury, which is determined by the medical costs expended, that must be attained prior to being able to file a suit against a negligent party. Please see Verbal Threshold.


Insurance news courtesy of Program Business. Originally Published 11/04/2009

Converting to the ASSET PROTECTION MODEL (APM)©: It’s All About the Relationship

As part of an ongoing interview series with Al Diamond, President of Agency Consulting Group (ACG), this week we are featuring our discussion with him on the Asset Protection Model (APM)©, designed to re-educate customers to view the insurance agent as a trusted consultant who is responsible for knowing which client assets need protection and will re-organize insurance policies and implement non-insurable devices to protect those assets. It is a radical change in an agency’s operation and the way in which it establishes relationships with both existing and prospective clients.

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Al is a 40-plus-year veteran of the insurance industry, and has been intimately involved in all facets of insurance agency operations including mergers, acquisitions and divestitures, perpetuation and strategic planning, organizational development, compensation programs, administrative and financial operations and marketing and automation planning, and much more.


Annie George (AG): Al, let’s begin by talking about what an Asset Protection Model agency is and how it’s different from the traditional agency.

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Al Diamond (AD): “APM converts agencies from price-driven quote machines to relationship-driven businesses, serving as true consultants for clients, regardless of whether the agency ends up writing the insurance or not.

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“APM is the insurance definition of relationship-selling, relationship acquisition. The model is designed to get us into the mode of establishing long-lasting relationships with prospects and clients instead of selling product based on price. In fact, when we work with an agency we get into this mindset so vigorously that we refuse to sell based on price. In essence, APM is founded on the fact that insurance products are basically the same, fairly generic, with a few dollars separating each competitor’s program. And, while it’s important to get a fair price, it’s not the end all in hiring an insurance agent – an insurance counselor. The real reason a client hires an insurance agent is to make sure that all his/her assets are properly protected. No one is forcing a client to buy insurance or to buy enough coverage or to buy the right kind. Our job as an insurance agent should be to analyze a client’s assets – each and every one of them – and identify where he/she is properly insured (without trying to change the insurance) and where gaps exist in order to reinforce them. It’s the client’s choice under APM as to whether to remain with his/her existing agent or change.“

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Al explains that the goal is to prove over a period of time that the APM agency is more valuable to the client than the firm currently providing insurance. “Once one proves that value to the prospective client, then you can make it clear that you’d love to become the agent for all the client’s insurance lines and to help with everything involving asset protection. This is the intent of the Asset Protection Model.”

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AG: How does the APM work?AD: “We train each producer and every employee in the agency on relationship- building instead of price selling. Relationship selling is established with every customer and prospect through a long series of multiple contacts during which the agency proves something different and improves upon the relationship at every point of contact. As long as the agency is improving the relationship, APM works.”
Al underscores that the relationship-selling approach under APM is a long process. It requires about 15 contacts to be made with the client/prospect over three years. There is a significant investment in time and effort. “It’s not a quoting system,” says Al. “We steer away from quoting. Every time producers -- we call them Relationship Managers – visit a prospect, they have an agenda. They know what they want to accomplish. This agenda involves a statement of value providing some means of worth that was not provided previously. As long as you do that and the client or prospect is aware that you are doing that, you will build a relationship based on trust and will end up with a long-standing, permanent agency relationship.”
In fact, when APM is implemented in an agency, the closing ratio is above 90%; the retention with clients is above 95%. “But it takes a number of years to get there,” emphasizes Al.
AG: Does this model work for all types of accounts?
AD: “It can be done with everyone… if you can make friends, it doesn’t matter if the person spends a hundred dollars. But having said this, you have to generate enough revenue from the prospect to make that long process worthwhile. You need a long tail of revenue…you have to approach customers who will generate a few thousand dollars of commission a year. For example, APM certainly works well for accounts that generate between $5,000 and $10,000 in commission. Visiting clients four or five times a year who spend this kind of money is well worth it if you keep those customers for the next five, 10, 15 years, and not only insure their business risks but everything around them as well.In a nutshell, Al explains that there are three legs to the Asset Protection Model:
1. Making friends – building relationships, not selling on price.
2. Implementing a total cross-selling mandate. You must introduce every customer/prospect to every product/service you have that fits his/her needs on a continuous basis.
3. Establishing an active referral system. Everyone espouses the need to get referrals but most don’t actively go after them. One of the things that makes APM a real success story is that an agency will generate a referral from about 50% of its clients every year, resulting in self-generating more and more prospects for producers/relationship managers. “This is not just with existing clients, but also with prospects,” says Al. “A prospect that has been visited four to five times a year under APM for two years is very likely to give you a referral even though you don’t write his/her insurance yet. If your relationship and advice is valued, then he/she will become your friend… and the bottom line is that friends help other friends.“
AG: How does one go about converting his/her agency to the Asset Protection Model?
AD: “It all starts with agency management. It cannot be done from the bottom up. We sell the APM concept to owners of the agency first. But we don’t offer it to all agents, because we know that only about 10% of agencies across the country have the mindset to accept relationship selling; it’s only these agencies that will evolve from quote-driven to one based on establishing relationships.”
AG: How do you determine which agencies will be open to APM?
AD: “We do what’s called a GPP (Growth, Product, Profitability) Analysis. We go into the agency for anywhere from two to four days, roll up our sleeves, talk to all the all owners and employees, look at financials, look at its books of business, at the systems and procedures in place – basically everything that goes on within the agency. We’ll have deep discussions with the owners to make sure they are truly committed, not only to an idea, but to embracing it wholeheartedly. And only if we see that all the indicators are positive, will we begin to implement the program. If the APM doesn’t fit we have many traditional methods for agency growth and retention. We avoid implementing this system in agencies who are not likely to succeed because of the excessive cost of failure.“APM requires retraining people and monitoring and tracking producers for one to two years so they don’t fall back into quote mode. If it’s working you have to be able to sponsor your producers as long as they are keeping their activity level where it should be for up to three years.
Al says that results are not typically seen during the first year. Some successes will occur, but the primary results come in years two and three…that’s when you begin to see the biggest bang for your buck, when producers start closing several key accounts every single month. And most of the accounts garnered are not based on quotes but are converted through Broker of Record letters that assume ALL forms of insurance that the business and owners have in their portfolio.
“Once the prospective client understands that you’re there to protect his/her assets, not to sell product, they will say ‘I want you to be my agent. I don’t care if it’s with the same company or a different one. Just make sure I’m not paying more money for insurance.’ This gives you the option of keeping your new client with an existing carrier or moving the program to another insurer, whichever is best for the client. By then, you know the client intimately because you have seen him/her five or ten times over the course of one to two years. The client’s incumbent agent may have visited him/her once or twice, if at all…which is why it’s easy to evolve into the APM. Most agencies simply don’t pay enough attention to their clients, unfortunately.”Part of the APM model according to Al involves in-house training for personnel and producers. There are two sets of follow-up training in three- to six-month intervals to determine how everyone is progressing, to troubleshoot the problems the staff may be having, and to conduct second- and third-level training. The total time involved for ACG to implement its Asset Protection Model is three to six days, with a cost of between $10,000-$15,000 to get the program underway based on the number of people being trained.
As part of the program, ACG will help the agency draft its entire three-year marketing program. “It’s all laid out before they begin, and the process is all automated,” explains Al. “Every prospect goes through the program from Stage 1 all the way through to Stage 15. Every visit is personal, not a telephone call. Included in the process is sending out letters, bulletins, e-mails, Alerts and posting reminders for management to assess whether producers are living up to expectations in terms of the number of contacts being made. In fact, this is the biggest change for agencies…the number of contacts. Some think they are having a successful year when they go out and see prospects twice a week. They are shocked when we tell them they have to go out 10-15 times a week. I tell them if your job is to bring business into the agency, how can you do that from inside the agency? You have to be where the prospects are; they won’t come to see you.”Many of the old-time producers resist this new mindset so ACG trains the younger producers who aren’t set in their ways. “One of our best agent’s main producer was previously a manager for a car rental company,” says Al. “He never quoted an insurance policy before. He is now generating $1.5 million in commission.”To find out more about the Asset Management Protection Model and if it’s right for your agency, please contact Al at 800-779-2430 or email him at: al@agencyconsulting.com. Also you can visit: www.agencyconsulting.com.
About Al Diamond
Al has been president of the American Association of Insurance Management Consultants (AAIMCO) and belongs to the American Arbitration Association. He was a charter member of the Quality Insurance Congress. Al also serves as an independent moderator for disputes arising from insurance agency operations, and as a facilitator for mergers, acquisitions, divestitures and internal perpetuation plans.He is a qualified instructor for the Best Practices of Insurance Agencies programs of the Independent Insurance Agents of America. He has been named Business Skills Department Head for the Independent Insurance Agents of America’s Virtual University. Al is an identified Expert on business management issues for the AllExperts Website and serves as an Expert Witness in both federal and state courts on all subjects related to insurance agency values, compensation and operations.
Al is the author of THE PIPELINE, a national newsletter for insurance agency principals and insurance industry executives. THE PIPELINE has been in continuous monthly distribution to agents, associations and carriers throughout the United States since 1987.

Insurance news courtesy of Program Business. Originally Published 11/04/2009