IIC Rewards Update

Beginning in January IIC launched a new rewards program for agents who have commercial bonds issued via IIC’s online bond submission website.

In the first quarter IIC had 36 agents enrolled of which 13 qualified at the Green Level. In April IIC had our first Silver Level qualification.

If you have not already enrolled to be eligible to receive rewards for commercial bonds issued via IIC’s online submission system you can now do so. The enrollment period will close on May 31^st for the second quarter of 2014. To enroll simply click the link below:

Enroll Me To Earn Rewards

The video link below demonstrate the bond submission process so you can see how user friendly the system is:

How To Submit A Commercial Bond In Less Than Five Minutes Video

Once enrolled you can earn the following rewards for one calendar year (Jan – Dec) as you use IIC online bond submission website:

Reward Level	Qualification	Reward Amount
Green (Qualify for Program)	3 Bond Issues	$25 and $25 for every 10 Issues until you reach Silver
Silver	20 Bond Issues	$50 for every 10 Issues thereafter
Gold	50 Bond Issues	$75 for every 10 Issues thereafter
Platinum	100 Bond Issues	$100 for every 10 Issues thereafter

To explain, once the agency has 3 bonds issued you have qualified for the Rewards Program and will begin at the Green level and earn a $25 reward for getting started!

Thereafter, you will earn $25 after 10 Bonds have been issued.

Once you have 20 bonds issued you qualify you for the Silver level. Thereafter, you will earn $50 for every 10 bonds issued until you reach Gold level. For each 10 bonds issued you now earn $75.

Finally, once you have issued 100 bonds you are Platinum rewards member and will receive $100 for every 10 bonds issued thereafter for the remainder of the calendar year.

The faster you qualify and the more you use the system the greater your rewards will be as you progress the through reward levels.

For illustration purposes let’s say you issue 120 bonds over the course of one year using IIC’s online submission website. You would earn the following rewards:

Earned Rewards	Amount	Number of Cumulative Bond Issues
Green (Qualify for Rewards)	$25	3
Green Rewards	$25	10
Green Rewards	$25	10
Silver (Qualify for this level)	$50	20
Silver Reward	$50	30
Silver Reward	$50	40
Gold (Qualify for this level)	$75	50
Gold Reward	$75	60
Gold Reward	$75	70
Gold Reward	$75	80
Gold Reward	$75	90
Platinum (Qualify for this level	$100	100
Platinum Reward	$100	110
Platinum Reward	$100	120
Total Rewards	$900

By reaching the Platinum Rewards level you can rapidly accelerate your rewards.

In the illustration above your cumulative rewards would be $900. All rewards will be paid using a Visa gift card so you can spend them any way you want! Either an individual or the Agency may enroll and qualify for the rewards program.

Remember to click the link below and enroll before the 31st:

Enroll Me To Earn Rewards

Agent Profile - Clem and Eric Lesch - PCL Contract Bonding Agency

Eric, Melissa & Clem Lesch -
Award Winner for Outstanding Associate Member,
Subcontractors Association

Natives of Wisconsin, Clem and his wife Pauline headed to Texas on the 3^rd of January 1973, leaving the freezing 0° Wisconsin weather for a warm 60° in Dallas. Clem worked eight years as an underwriter for USF&G and Hartford and then a few years at a full lines insurance agency before he and Pauline started PCL in 1985.

In 2008, their son Eric joined the business as a producer, after working as a senior software engineer for Lockheed Martin for nine years. While at Lockheed Martin, Eric worked on a variety of missile systems.

Below are some excerpts from my interview with Clem and Eric:

Tell me a little bit about how you got started?

Clem: I had earned a degree in finance and replied to an ad in the paper for a bond underwriter trainee for USF&G. Initially, I thought they were looking for someone to underwrite investment bonds, but when I arrived for the interview, I realized they underwrote construction bonds. So I guess I got into the industry by accident.

What prompted me to start my own agency was getting laid off the Monday before Christmas. At the time, Pauline was working for a struggling real estate developer. We thought we would be better off running our own business. She agreed to run the office while I handled the selling side of the business.

We were very successful and soon rented an office in Lewisville. I can remember the first time driving to our new office and hearing on the radio that the Piggly Wiggly next door had caught fire. When I got there, to my relief the firemen had been able to contain the fire and it hadn’t spread to our office. It was really hard going in the early days, as we opened our doors in the middle of the saving and loan bust and there were construction companies across the state going under. We stuck with it, though, and decided we would just work twice as hard.

I felt that if we could make it through tough times, the good times should be that much easier. We worked 14 hour days and I remember Pauline typing out letters and bonds in the front seat on a portable typewriter while I drove. We did what we had to do to succeed and have seen the agency grow along with our clients over the years.

Eric:  I grew up wanting to be an electrical engineer which was largely influenced by a much older cousin who was one. After graduating from the University of Texas at Arlington in 1999 with a degree in electrical engineering I went to work for Lockheed Martin where he had already been working for many years.

Lockheed was very good to me; however, in 2008, I mentioned to my wife that if I was going to make a career change, now was the time to do it. She told my Mom and then I knew that I had to have the ‘talk’ with my Dad.  My Mom was not pleased with my great idea to work in the business because she was worried about it leading to problems in the family so just to be sure, my Dad had me go through two assessments before bringing me on. My first few years were particularly challenging as I started in the business right as the financial crisis began.

Now, having worked nearly six years in the business, I have developed a great relationship with our clients and sureties and enjoyed seeing them succeed.

Who had the most influence on you in terms of building PCL?

Clem: My wife who encouraged me and worked with me in starting the business. Also, our upbringing. We both grew up on dairy farms in Wisconsin. I came from a family of eleven siblings, and parents who didn’t have a high school education. Pauline came from a family of nine siblings. I learned how to work hard from an early age and lost my parents when I was relatively young. This, combined with being involved in sports, gave me a competitive drive as well as making me self-sufficient.

Eric: My cousin had a big impact on my childhood by introducing me to engineering which lead to my first career at Lockheed Martin. However, my parents had the strongest influence on my life. I can remember my mom helping me write computer programs and learning how to do this herself despite having no background in computer programming (she was a graphic artist). My Dad would make me go out and work on the farm in the evenings. I inherited a strong work ethic and positive attitude from them.

What do you think it takes for a producer to be successful?

Clem:  For a producer to be successful they have to be willing to put the effort in at the beginning until they see results.  I wore out my shoes from the bottom up. I got out there and met a lot of contractors before I got any business.

I have a quote on my desk that says, “The only way to be an above average organization is to employ above average people and have above average clients.” I have tried to build my business this way. I think successful agents measure their success by the success of their clients. I want to do the best that I can do, so I look for clients who want to do the best they can do and that way we both benefit.

Eric: I think that in order for a producer to be successful they have to be autonomous and persistent. There are a lot of good contractors who are already working with a bonding agent. If you are persistent, you may eventually catch them at a time when they are open to working with you.

I also think that good producers are capable of assessing prospects and maintaining market knowledge. For example, throughout the economic downturn PCL didn’t have a single claim. This is largely because of work we do to keep track of the market, as well as what is happening with our clients and providing training/seminars that are useful in helping them grow and run their businesses.

Where do think the greatest opportunity for growth will be in Bonding?

Clem: The basics of bonding haven’t changed but how surety is used as a tool to manage risk has. For example, the introduction of Subguard which is an insurance product has allowed more contractors to manage their performance and payment risks this way. At the same time, we are seeing an increase in the government contractors and as well as private contractors we are bonding as the economy continues to grow, especially in Texas.

Eric: We specialize in bonds for contractors. It is all we do and I don’t see diversification into other products in our future. There are opportunities to work with insurance agents that don’t have a thorough understanding of bonds. We can help them get bonding for their clients without the threat of losing the insurance to a competitor.

Finally, when you are not building PCL what personal interests do you have?

Clem: Our family has a small farm which we enjoy spending time at. Pauline and I have also done some travelling over the last ten years visiting all seven continents, including Antarctica. I also enjoy spending time with our grandchildren.

Eric: Outside of work I am involved in family activities with my wife Melissa and our daughter, Sophia (9) and son Evan (6). I also enjoy working on our family farm whether that is tackling different projects on the property, hunting dove and ducks with my Dad or fishing with the kids.

The Work In Progress Schedule (WIP)

A key piece to underwriting a contractor for surety is the Work In Progress schedule, or WIP. 

What does the WIP tell us?

First, it gives the underwriter an idea of how much work the contractor has going on, and if they them have the capacity to take on more work. This is seen in both the aggregate dollar figure that they have under contract and how many jobs they have going on.

Additionally, we can see profitability in jobs. What the average margins for all of the jobs on their WIP. Is the contractor holding those margins, or are they losing money on one or more jobs. If a job is not holding its margin, then we call that “profit fade.” However, if a job is making more money than estimated, that is “profit gain.”

Another piece of information taken from the WIP is to see the size jobs that the contractor undertakes, giving us some insight into their experience. If we have references for jobs of $500,000, but see a $1.2 million job on their WIP, the underwriter might call that job in progress, and count that towards the contractor’s experience. Where the job stands in terms of completion will be a major factor in that decision.

Finally, the WIP schedule allows us to calculate over and underbillings for a contractor. On a balance sheet that uses percentage of completion accounting (preferred by sureties), this is also called Billings in Excess of Costs (overbillings), a liability, and Costs in Excess of Billings (underbillings), an asset. This quick calculation will allow us to determine if working capital on a simple accrual balance sheet is being overvalued or undervalued.

What all this analysis does is to allow the underwriter to make a more informed decision relative to either a single bond request or a request for a surety line of credit.

Insurors Indemnity uses a WIP format in a simple excel spreadsheet that will automatically calculate over and underbillings as long as 4 components to a job are presented: 

1) Contract amount

2) Estimated total costs

3) Billings to date

4) Costs to date

If you would like a copy of our WIP spreadsheet, please feel free to contact Somers Goodman at sgoodman@insurors.com.

Three Lessons We Can Learn About Sales From a Girl Scout Who Sold 18,107 Boxes of Cookies

During the past seven weeks, twelve year old Girl Scout Katie Francis sold 18,107 boxes of cookies. That amounts to approximately $72,000 in overall sales with $6,303 of that going back to her troop. The old record of 18,000 boxes had held the sales record since 1986.

The Girl Scouts of America aims to give girls the opportunity to learn five life skills. These include goal setting, decision making, money management, people skills and business ethics. Without a doubt Katie exemplifies these and reminds all sales professionals that there are three basic ingredients needed to be successful.

Three Lessons from 12 Year Old Katie Francis:

1) Time

Time is money. Katie’s sales averaged 2,587 boxes of cookies a day – this was achieved while she was going to school which meant she not only had to be organized but also willing make sacrifices to achieve her goal. Being twelve years old means hanging out with your friends, going to movies or just goofing around. She was willing to give those things up for a short time to achieve a larger goal.

Likewise you have only so many hours in the day. Choosing to use them wisely means the difference between a little or a lot of progress toward your goals. For this twelve year old she crushed the record while having a full time job - school. She made every selling hour count to reach an extraordinary goal.

2) Commitment

Katie set a goal and then she did what she had to do to achieve it. This goal was bigger than just Katie. It was about making a contribution to her fellow Girl Scouts. It was about doing something extraordinary for an organization that is positively shaping her life. It was about raising money for a cause she cares about with the proceeds from her troop going toward breast cancer research.

Katie is one driven twelve year old. She first set the goal to be the best in her state. After accomplishing that goal she went on to beat the national record. She demonstrated her commitment and built a team around her to help make her dream a reality.

Most parents simply ask their circle of friends and coworkers to buy a few boxes of cookies. Katie was able to inspire her family to help her reach the broader community.   In the process they transformed their car into the cookie caravan, fully stocked and ready to sell on a moment’s notice.  She built, motivated and led an effective team who were as committed to her goal as she was.

3) She Asked

Katie said that her third ingredient for breaking the record was asking everyone she knew to buy cookies. The key here is she went for the ask. In return they not only bought cookies but also bought into her passion to reach a big goal referring other friends and family to her. Asking is one the most powerful life skills one can acquire. It is what enables you to gather resources and fuel your growth.

The challenge is that most people are uncomfortable going for the ask. They think it is about asking for money and that if someone says no it puts them in an awkward position. This is the wrong way to view it. Going for the ask is about creating value. It is giving someone the chance to buy into that value proposition. And everyone knows from the happy faces and the repeat buyers that Girls Scout’s cookies create tons of value. They give buyers a chance to empower life lessons for young girls and the bonus is a cookie.

Now it’s up to you

Katie demonstrates what can be accomplished applying these three simple lessons. How can you better align your time with your goals this week? What will you do to demonstrate your commitment to your goals? Who do you need to ask for the business?

“The quality of a person’s life is in direct proportion to their commitment to excellence, regardless of their chosen field of endeavor.” – Vince Lombardi

IIC Profile - Tom Chase, CEO

A native of Waco, Texas, Tom Chase graduated from Waco High School and went on to complete
a BA in History at Vanderbilt University. Tom then went on to enroll in law school at the University of Texas graduating with JD with Honors and going to work as an attorney for Naman, Howell, Smith & Lee in Waco prior to joining Insurors.

Below are some excerpts from my interview with Tom:

Tell me a little bit about how you got started?

I had decided I wasn’t interested in being an attorney and wanted to try my hand at business. My uncle was running an insurance agency and he asked if I would join him. At the time the agency was called Stribling, Woodward & Greig (SWG) and had been in business since the early 1900s. After several years working as a producer I offered to buy the agency from my uncle and his partner and it became Insurors of Texas. Running the agency, I saw a lot of inefficiencies in the carriers we used and with the encouragement of Clifton Robinson who had founded National Lloyds I started Insurors Indemnity Company (IIC) in 1984.

What I found out was that efficiency wasn’t as important as size and financial strength. This made getting started very challenging. However, with a conservative approach to growth focused on building financial strength, IIC was able to get Gen Re reinsurance as well as its current A- (Excellent) A.M. Best rating. This approach facilitated going into bonds in 1992 and later the commercial property & casualty business in 2001.

Who had the most influence on you in terms of building IIC?

Without a doubt Clifton Robinson who focused on being sure you built a strong company. National Lloyds was a carrier for the agency and this was how I got to know Clifton who ran it. When I first approached him with the idea of starting an insurance company he not only encouraged me to go for it but said he would help me. When I applied for the license, Clifton testified on my behalf at the Department of Insurance telling them, “If they (IIC) get in any trouble we’ll help them out.” His backing was crucial and he has remained a good friend for many years.

Are there any particular events or incidents you remember from when you were first getting started?

One that stands out in my mind is early on when a client got mad and called me up to tell I was the worst agent he knew and he was switching his business. About a week later he called me back and said, “I was wrong, you are the second worst agent because I met one that was worse than you and I want you to take all my business back.” He ended up becoming a good client and friend.

Another key event I remember is when IIC started its relationship with Gen Re. The fact that a sound company like that would back us affirmed the approach we had taken to grow the company as we focused on conservative growth and financial strength in our operations. This opened up a new world for us as their backing meant we were a good company to write business for from the agent’s perspective.

What do you think it takes for an agent to be successful?

It is the ability to go to a client and shoot straight with them and convince that client or prospect that you will take care of them. Not beating around the bush but rather being upfront with a customer – letting them know the good and the bad so they know you’re looking out for their best interests not just selling them something.

Finally, where do think the greatest opportunity for growth will be for agents?

It really depends on what the agent wants to do. For example if an agent wants to work more like a lawyer then there are huge opportunities in advising companies and individuals on their coverages and what to buy. At the same time there are huge opportunities in becoming a real marketing organization getting into several specialized niches and exploring multiple sales opportunities. Those are two totally different ways to go but both great opportunities. The main thing is being trusted your community and having a great reputation.

The other thing that will become important in the future is for an agent to include retirement planning as part of how they advise clients on their coverages because so many people who are in their 40s, 50s and 60s haven’t saved enough for retirement.

Outside of IIC what personal interests do you have?

Barnett's Building in late 1800s

Downtown urban redevelopment of Waco has been a major interest of mine. As part of that we moved our headquarters to the former Waco Drug Building, built in 1911, which we restored. I also bought another building downtown and opened an Irish Pub in it named after the original building, ‘Barnett’s’ which was built around 1883. As a side note the Barnett building at one time housed John Fall Undertaking Company and some people think it’s haunted.

Barnett's Building Today

My weekend interest is restoring the native prairie which I have been working on at my ranch for several years. This involves getting rid of cedar, cactus and other invasive vegetation that came after European settlement in the early 1800s and replanting native grasses and forbs. I was inspired by seeing the effects of overgrazing and the overgrowth of cedar and wanted to restore prairie back to how it was 200 years ago in the time of the buffalo and native Americans who inhabited central Texas.