Issue #226 - 9.28.2022

Arizona Supreme Court Rules on Depreciation of Labor

Yesterday, the Arizona Supreme Court answered two questions submitted by the Ninth Circuit Court of Appeals that has a significant impact on how property claims are handled under insurance policies in Arizona. In the case, Walker v. Auto Owners, the Arizona Supreme Court addressed the questions:

• When a homeowner’s insurance policy does not define the terms “actual cash value” or “depreciation,” can an insurer depreciate both the costs of materials and labor in determining the “actual cash value” of a covered loss?
• Is the broad evidence rule applicable in Arizona such that an insurer and/or fact finder may consider labor depreciation as a pertinent factor in determining actual cash value?

The answer was "NO" to both questions pursuant to the terms of the homeowner's policy before them. See Arizona Supreme Court's Opinion.

More details on the impact of the ruling will follow by IIABAZ shortly.  

2022 Best Practices Study Results Released 

Best Practices agencies achieved record highs in organic growth and profitability, according to the 2022 Best Practices Study by the Big “I” and Reagan Consulting.

The annual study, conducted jointly in a longstanding partnership between the Big “I” and Reagan Consulting, provides critical performance benchmarks in six agency revenue categories ranging from under $1.25 million to over $25 million in the categories of income and expense distribution; revenue and profitability growth; sales and service staff compensation and productivity; technology expenses; and property-casualty and life-health carrier representation.

Key findings from the update include:

• Organic growth breaks Best Practices Study record. At 9.2%, organic growth was up 2.5 times from last year’s results of 3.7%. Organic growth increased in all six revenue groups in this year’s study.
• Profitability remained at all-time highs. At 26.2%, Best Practices agency profitability went up slightly from last year’s 25.9% result.
• The Rule of 20 achieved a record high. The Rule of 20, calculated by adding 50% of profitability to organic growth, reached a record high in this year’s study of 24 versus 18 in last year’s study. The Rule of 20 is the best metric with which to gauge overall agency health. 
• Sales velocity gained ground from last year. While a hard market continued to provide much of the organic growth lift, new business improved materially in this year’s study. Sales velocity totaled 15.5% versus last year’s 13.2%.
• Mergers & acquisitions bolstered growth. In the 2022 study results, 22.3% of Best Practices agencies acquired business, up from 16.4% in last year’s study.
• Producer recruitment and development proves challenging. Net unvalidated producer payroll (NUPP), a measure of producer recruitment and development, remained at 1.1% of net revenues compared to 1.2% in last year’s study. A healthy NUPP investment would be 1.5%-2.0%, an indication that agencies should consider redirecting a portion of today’s record profits toward new producer investments.  
• Shareholder and producer ages hold steady. The weighted average shareholder age (WASA) was 53.2 years, and the weighted average producer age (WAPA) was 48.6. Agencies should manage these two metrics carefully as lower WASA and WAPA are critical to long-term agency perpetuation. 

For more information on the Best Practices program and to get your copy of the 2022 Study, visit the Big “I” Best Practices webpage. To attend a free 30-minute webinar covering highlights of this year’s study on Oct. 5 at 11am AZ, register now.

Congratulations to the Arizona Best Practices Agencies!

We salute the outstanding firms from Arizona who participated in the process and were determined as one of the top agencies in the United States.

          The Arizona Group, Mesa

          Farmer Woods Group, Phoenix

          INSURICA Southwest Insurance Services, Phoenix

          The Mahoney Group,Mesa

          Strong Tower Insurance Group, Gilbert

          Talanton Insurance Agency, Phoenix

National ABEN Day 2022

Navigating the New and Non-Traditional Workplace

October 27, 7am-1:30pm

5 hours of Free CE with breaks and lunch break

Access for 90 day(s) after program date.

We are so excited to offer our 2nd Annual National ABEN Day! The theme of this year's event is - Navigating the New and Non-Traditional Workplace. There are so many facets to that broad subject! With what all agents/and agencies have been through in the last few years, we all need to pivot to learn new ways to communicate and navigate. Here are a few touch points:

Gigs and Side Hustles - The Insurance Issues - 2 hrs - Rick Pitts

This seminar provides a fast-paced look at the personal and commercial lines insurance issues that have been created in the gig economy and its new players; Uber, Touro, Hertz, Avis, Airbnb and VRBO. The insurance ramifications are discussed. with an examination of the particulars with regard to both the personal auto policy form and homeowners form.

How to Thrive in a Ever Changing Work Environment - 1 hr - Terry Tadlock

This seminar will address the positive effects that Organizational Culture can have on your agency, which can actually eliminate many potential E&O issues before they arise.

To Be or Not to Airbnb- Sharing Exposure and Insurance - 2 hrs - Stuart Powell

This course addresses aspects of the emerging sharing economy’s use of personal autos and homes. It provides a discussion of the nature of these exposures and how Personal Auto policies and Homeowners policies respond.

Register Now!

Board of Directors Meetings

The Independent Insurance Agents and Brokers for Arizona’s Board of Directors Meeting dates and locations for the upcoming fiscal year are as follows:

• November 18, 2022 - Noon - IIABAZ Offices
• January 27, 2023 - Noon - IIABAZ Offices
• April 21, 2023 - Noon - IIABAZ Offices 
• July 14, 2023 - Noon - IIABAZ Offices

Members and Associate Members are invited to attend these meetings and require RSVPs to attend. If you would like to attend any of the Board Meetings, please email info@iiabaz.com.

The Annual Business Meeting will be held on August 9, 2023 at 11am at the Glendale Renaissance as part of the Convention.  

Big I Offers Support and Resources as Hurricane Ian Batters Florida

As Hurricane Ian attacks Florida’s southwest coast and is set to tear through much of the state, the Independent Insurance Agents and Brokers of America is offering support and resources through the Trusted Choice® Relief Fund for Big “I” members, their families and their clients who will be impacted by the massive storm this week.

The Trusted Choice® Relief Fund is a 501(c)(3) entity available to provide financial assistance to insurance industry personnel impacted by Hurricane Ian to cover costs not covered by their own insurance, other grants or funding sources. The Big “I” welcomes tax-deductible donations from members or the public to the fund. Big “I” members who would like to apply for funding can view the fund guidelines and download the Relief Fund application.

Helpful Links

• Insurance License Search
• Continuing Education Transcript Search
• Insurance License Application
• DIFI Enforcement Actions, Hearings and Reports
• NCCI Arizona State Advisory Resources Page