April/May 2014

In This Edition

A Thank You Card
Sometimes a simple recognition can put hectic schedules into perspective

Leading Your Business to Success
Making or breaking your business can come down to the use of three key concepts

Distracted Driving: Get the Message to Stick
One woman’s journey to put perspective to and curb the distracted-driving epidemic

When it Comes to Corporate Minutes, Saying Less is More
Advice on making the most out of your board’s meeting minutes without saying too much

What Drives Your Business?
Keeping an eye toward your goals helps you not lose sight of your business’ final destination

A Thank You Card

By Lawrence Johnson

Work environments are often quite hectic, some would argue chaotic. Lack of time management, unavoidable interruptions, and ill-advised or time-consuming projects can quickly zap our focus without us ever realizing it. How many days have you shut the lights off at the end of the day and thought that you lost ground on the day’s efforts but, maybe more importantly, believe you didn’t know where you were headed before the day started? May I suggest a universal solution that may not solve every interruption in our daily lives but will at least provide a purpose for our efforts?

No, my suggestion will not include a simple “DO NOT DISTRUB” sign on the door. But it is similar in the fact that it is simple. It is a Thank You card.

When was the last time you received a Thank You card? I would bet that not only do you remember when, where, and who was tied to that message, but you remember how your attitude blossomed after being noticed for your effort. Did that note not give you an appreciation of the person who sent it? Did it not directly impact your attitude with that individual on your next encounter? I already know your answer, and that is what makes the simple Thank You card so potent.

Turn that process around and recall the last time you sent a Thank You card, when you gave pause to your surroundings and took the effort to write your expression of gratitude with obvious sincerity. I bet that not only did you enjoy the pride in producing the note, you had a good idea of how the message would be received.

Now, back to your hectic work environment. Recall one or two of those productive days when you hit the bull’s eye every time you threw a dart. What was so different about those experiences? It may have had everything to do with the positive reinforcement you received. You may not have initially noticed your renewed focus on your goals, but the encouragement likely strengthened your drive to complete the current task list with less frustration. The tasks no longer present themselves as negative hurdles, instead they are as positive stepping stones to your defined goals.

Routines have a way of draining our purpose. I challenge you to send a Thank You card at least once a week. You will quickly realize the reason that I chose to capitalize those two words.

Lawrence Johnson is vice president of agency services for North Star Mutual Insurance Company. He holds the CPCU, AIC, AIM, AAI, and AIS designations.

Leading Your Business to Success, Three Ideas That Should Not Be Ignored

By Aaron Pearce

The mutual insurance community provides a vital service to key segments of the United States insurance market and creates millions of dollars of prosperity in communities across the country annually. Our market has a strong history and a unique story.

Regardless of the talented leaders who have helped perpetuate the industry’s success, the companies that make up the mutual insurance market can, and sometimes do, fail. Oftentimes, at least part of the reason behind the downfall is a lack of implementation of certain “key” management ideas or philosophies that can make or break a business if neglected over the long run. But there are three basic management concepts that could make a positive difference in your operation. Adopting these ideas into your management philosophy does not assure future success, but they will put you in a position to make it more possible.

Key Concept One: Embrace and Make Use of Analytics

Analytics is a term that has become a significant buzzword in 21st century business lingo. The use of the word can conjure mental images of rooms filled with servers or cubicles packed with data reviewers surrounded by piles of reports. Analytics at its most complicated level can be reflective of these types of images; however, analytics as a tool for your business does not need to be complicated or imposing. At its core application, analytics is really about using the technology and resources – the people – around you to learn as much about your business as possible and using that data to make informed decisions about how to best manage your business.

Translation: The more you know about your business, the greater the chances you will reach new levels of success.

This is a seemingly obvious statement. But the real question is: Are you diving in deeply enough into the data to really know your business?

Most insurance companies can report their loss ratios, policy counts, or surplus levels – these basic types of numbers are a given – but to truly embrace and make use of analytics, a business has to go beyond the obvious. Management could consider asking: What else can I know about this organization? Or, where can I find more information that we, perhaps, overlook? Another question could be: Can I find a new trend or relationship that illuminates more of what to look for in a profitable writing territory?

This type of data-curiosity renaissance happened at Farmers Mutual Hail Insurance Company of Iowa recently while working though changes to a segment of the workforce. During the course of the project, common discussion topics were performance tracking and work product completion. As conversations unfolded, it was realized that a deeper dive into these issues than had been initially realized could be done. Upon diving deeper, the benefits of challenging the knowledgebase yielded substantial positive results – better planning, decision making, and execution. By challenging ourselves to learn more and use this new data in meaningful ways, we began to truly embrace and make use of analytics.

Remember, real success is not an accident. It is the result of a deliberate effort by management. When you embrace and make use of analytics in your business, your success suddenly becomes more likely … all because you know where you are heading.

Key Concept Two: Lead Your People to be the Best

It has been said repeatedly that a team is only as strong as its weakest link. The personnel that make up a business are, as a rule, the most vital and most expensive component to any organization. As a result, when a business fails to maintain high standards for its staff, its most expensive asset will not be able, or ready, to serve in the way market conditions are likely to require. Furthermore, the employees who are truly inclined toward excellence will not remain with the business for a long period of time because “A” players don’t tolerate mediocrity. They don’t have to. An “A” player can get a job elsewhere.

Translation: Your best employees want to be around other people who are going to strive for the same level of success they are interested in attaining.

This subject can be a difficult one for some people to entertain. Those who might disagree with this point could offer the following justifications:

  1. • Our business has gotten by with these people, obviously they aren’t that bad;

  2. • If we let them go, they may not be able to get a job somewhere else; or

  3. • They mean well.

The reality is, however, that while all of these justifications for retaining less-than-excellent employees feel good, they don’t align with the actual purpose of any business, which is to keep the organization open for business and flourishing.

Do not be afraid to set high expectations and to enforce them through accountability.. Your company will not only benefit in the long term, employees may surprise you with how much they appreciate the challenge and respect indicated through those expectations.

Key Concept Three: Lead Your Business to be the Best

The final concept is more than anything about attitude. Survival in any business requires a competitive mindset and a commitment to pursue excellence. The cost of growing and retaining a customer base is only getting more expensive. Furthermore, with the constant introduction of competitive forces in the market, companies desiring to remain in existence 50 years from now cannot assume that they will remain the best because they were once the best or that being a middle-of-the-pack organization is okay forever. Striving to be the best in your market – whatever size or type of market that may be – is the only way to stay vital and in operation. This means senior leadership needs to lead its company to be the best.

While the mutual insurance industry enjoys a strong presence of collegiality between companies, the reality remains that we are all competing against someone. Every business should have profitability as one of its goals. To have a better market share than others competing in its same space should be another. Your company may or may not become the No. 1 leader in profitability or market share; however, setting those kinds of goals and communicating them to your entire organization gives your employees something good and exciting to work toward. Rarely has anyone ever woken up in the morning and declared, “I look forward to being average today!”

Translation: Lead at the front and bring your people with you. Do not fear pushing your business. Striving to be No. 1 will keep your business relevant and vital. Your people will thank you.

Running a successful business takes a number of different things happening at once on a perpetual basis. The ideas discussed above are only a part of what is really a constantly changing formula for success, which can, at times, be a daunting reality for a company. However, with sound fundamentals, any organization seeking to succeed can rise to the occasion and enjoy new levels of success on a regular basis.

Aaron Pearce is the associate general counsel for Farmers Mutual Hail Insurance Company of Iowa.

Distracted Driving: Get the Message to Stick

By Jacy Good

Last year, an AT&T/USA Today poll revealed that 49 percent of adults and 43 percent of teenagers admit to texting while driving “even though they know it’s unsafe.” These are disheartening statistics. The poll left me wondering what the results would be if is asked about talking as well as texting. I suspect many more people would answer that they don’t think it is dangerous if they use a hands-free device. But it’s a common misconception. The ubiquitous “It Can Wait” campaign is great in theory, but it may do as much harm as good. Is its sole focus on texting sending the inferred message that talking is fine? Regardless, when nearly half of our neighbors are getting but ignoring the message, it’s clear that awareness only goes so far.

On May 18, 2008, I was left permanently disabled and lost both my parents because of a driver who was more interested in his cell phone conversation than the road. In 2009, I began campaigning for stiffer distracted driving laws in my home state of Pennsylvania. In the five years since, I’ve repeatedly been astounded by lawmakers’ unwillingness to heed the science and the statistics to enact the strict legislation that is really needed. Then again, most of the states with cell phone-related laws don’t do a particularly good job of enforcement. It’s clear that the fear of a ticket only goes so far.

So what, then, makes a real difference in driving habits?

Even in the early stages of the recovery from my brain injury, I knew I had to make the death of my parents count for something. In 2010, I developed the “Hang Up and Drive” program as a way to take my story and the distracted driving topic to high schools. I thought that if I could put an actual face in front of them and make a real connection with people it would be harder for those young people to ignore the stats, the science, and the laws when they’re behind the wheel.

Since the beginning of 2011, I’ve spoken at nearly 350 school, community, and corporate events in 27 states, and everywhere I go …and I do mean everywhere … the same couple of things happen: One is that at least one audience member will tell me his or her own heartbreaking story of a friend or family member and the devastating impact a car wreck – to me the word “accident” doesn’t apply to the vast majority of crashes because they are borne of human error – has had on his or her life. It speaks to the horrifying prevalence of deadly crashes on our roads and how these affected people have already adjusted their driving habits. The other thing that happens is that people admit to me that they are “guilty” of talking or texting but vow never to do it again. Usually, they fall into that group who already knew the danger yet ignored it.

In the fall, I received a Facebook message from a college freshman whose high school I had spoken at two years earlier. She wanted to share a story. A few days before sending me the message, she had been a passenger in a car whose driver began texting. She “freaked out” and told my story to the other girls in the car. Right then and there they all promised each other never to use their phones while driving again.

Think back on some of the choices you’ve made in your life – the bad ones and the good ones. Where do your values – the pieces that define you as a person – come from? I’m willing to bet you’ve relied much more heavily on emotions than statistics and laws. Whether it was peer pressure in grade school or the world you want your babies to grow up in, we become who we are because of the things we care about.

If we want to make our roads safer, we need to make people care. At any given time, 660,000 Americans are using phones or manipulating electronic devices behind the wheel, according to And the National Highway Transportation Safety Association reports that those devices are a chief contributor to the more than 3,000 deaths and 400,000 injuries caused by distraction every year. All of this is preventable, and every crash creates ripples that touch far more lives than you’d ever expect.

Find a way for those ripples to reach your community and use them to change the culture locally. Every new person committing to drive cell free is another potential life saved.

There are speakers just like me in every state who are willing to share their pain so that others might be lucky enough to live free of it. Awareness is great. Laws are great. But it won’t be until we reach the tipping point of emotionally invested citizens that we’ll finally see the shift in driving habits that this world desperately needs. Facts hit the brain, but stories hit the heart. The heart is far stickier, I promise.

Jacy Good is a national public speaker and an advocate of cell-free roads. Jacy and her husband, Steve Johnson, are founders of Hang Up and Drive. Jacy handles the traveling and speaking and Steve runs the back-end logistics from the organization’s home base in White Plains, New York. Jacy has spoken at multiple NAMIC education events.

When it Comes to Corporate Minutes, Saying Less is More

By Kevin M. Kinross

Today’s business climate places heightened scrutiny on corporate governance and the actions of board members. Therefore, what is captured in your company’s minutes is a potential script for the plaintiffs’ bar. Remember that minutes have two purposes: to inform and to protect. In order to keep the courtroom from invading the boardroom, saying less is more.

Preparing Minutes

To accomplish this purpose, consider three questions when preparing minutes.

Who is the intended audience for these minutes?
Minutes should meet the information needs of the audience without creating undue liability. With meetings of a board of directors or other governing body, the intended audience is the directors and members. With a meeting of a committee of the board or other governing body, the intended audience is the board or governing body itself – or whoever may rely upon the committee or to whom the committee is responsible.

Who may rely on these minutes for purposes of protection of the business judgment rule?
The business judgment rule protects not only the body whose proceedings are reflected by the minutes but also any other bodies or persons who may rely on decisions of that body. In many jurisdictions, protection of the business judgment rule requires a decision with a duty of care and a duty of loyalty in making that decision.

Who else may review these minutes?
For almost every organization, “who else” includes state insurance departments, government investigators who may be furthering an investigation, and plaintiffs’ lawyers.

What Should be Reflected

An important element of minutes is that they provide an opportunity for the organization to create a record of compliance with its legal obligations.

This, then, begs the question: What should be reflected? There are eight key things.

Compliance with certain procedural matters
For protective purposes, minutes should state, typically in an introductory paragraph, the date, time, and place of the meeting and who was in attendance to reflect compliance with notice and compliance with quorum requirements.

Some meetings – such as special meetings of a corporation’s members – require notice of purpose as well as time, date, and place. Reflecting that purpose in the minutes is evidence of compliance with notice requirements, and the minutes can do so simply by identifying the matters considered.

For evidentiary purposes, it is helpful to reflect who presided over the meeting and who was responsible for the minutes. This can be done in the introductory paragraph or through the signatures at the end of the minutes. A person other than an officer who has authority under the organization’s governing documents may preside or take minutes at a meeting in which the officer is not present. If this is the case, the minutes should reflect this by using a simple declaratory statement: “X served as acting chair to preside at the meeting” or “Y served as acting secretary to take minutes of the meeting.”

Identification of general matters considered
For protective purposes, especially when a meeting is called for specified purposes or with an agenda, the minutes should identify in general terms the matters considered. For example, “The directors considered the various documents presented for consummating the merger of X into Y.” However, it is generally not advisable for minutes to reflect detail regarding the considerations or the discussions involved.

Decisions made
For both informative and protective purposes, the decisions made are the most important content of the minutes. A record of the decisions made is not only the information needed by most audiences, it is also necessary in many jurisdictions to invoke protection of the business judgment rule.

Decisions may be:

  1. • To take or to authorize the taking of some action; or

  2. • To not take or to not authorize the taking of some action.

Minutes should reflect either type of decision. A decision to take or authorize some action typically takes the form of a “Resolved” clause, such as:

“RESOLVED, that each of the following merger documents . . . is hereby approved and adopted in the form presented together with such changes as may be approved by the officer executing the same on behalf of this Corporation, which approval shall be conclusively evidenced by the execution and delivery of the same by such officer.”

A decision not to take or authorize some action is often less formal than a “Resolved” clause, such as:

“The directors considered and decided to decline approval and adoption of the merger documents presented.”

Recording of votes
Generally, minutes are not legally required to reflect who voted and how they voted on any particular decision. Except for abstentions and minority votes, a simple statement to the effect of “the directors adopted the following resolution” or “the directors decided to decline” should suffice.

  1. What if I abstain from voting?
    The laws of many jurisdictions require disclosure of any financial or personal conflicts of interest of any member of a body in any matter being considered by that body. Further, many jurisdictions require that the interested member abstain from voting in any decision with respect to that matter. For protective purposes, the minutes should reflect an abstention when it is because of a conflict as a result of a financial or personal interest. However, the minutes should reflect only the abstention, not the underlying particular financial or personal interest. A simple statement will suffice: “Mr. X abstained for reasons stated at the meeting.”

  2. What if I vote “no” on an issue?
    Courts of many jurisdictions hold that members voting on the non-prevailing side of an issue considered by a body may request his or her vote be reflected. If so, minutes should reflect that requested minority vote. Many statutes require negative votes on the non-prevailing side of an issue be reflected in the minutes. For example, Delaware’s corporation law gives a director the right to “cause” his or her dissenting vote to be “entered” in the minutes.

Under some state laws, a director is presumed to have voted for any action taken, unless he or she votes “no” or that director’s written dissent from the action is filed with the secretary of the corporation during the meeting or within a reasonable time after the adjournment. Therefore, you will want to have a negative vote reflected in the minutes.

Courts generally have not required the minutes to reflect the member’s reasons for his or her vote, even if requested. As with the abstention for compliance with the duty of loyalty, a simple statement to the effect of the following will suffice: “Mr. X requested his negative vote be reflected in the minutes.”

Factors considered in making decisions
Minutes should reflect factors considered in making decisions only if needed by the intended audience or, if advisable, for showing compliance with the duty of care. For example, minutes should reflect any factors that the intended audience wants to have considered. An example of minutes recording the discussion of an item on the agenda could be: “The board next considered the design department’s recommendation of ‘X’ over ‘Y.’ Following a presentation of the issue by Mr. Smith, there was a general discussion and the board voted unanimously to accept the proposal.”

In certain situations, legal counsel for the body may advise that minutes list certain factors considered in decisions, if appropriate, to reflect exercise of due care. The laws of most jurisdictions allow a body to consider general categories of factors such as interests of the organization’s employees, suppliers, creditors, and customers; the community and society; and the economy of the jurisdiction and nation. Any statement of such considered factors should be no more detailed than necessary to identify those general factors.

Minutes should reflect a board’s reliance upon the advice, opinion, or report of other advisors, including legal counsel, a committee, or an officer. At times, directors are faced with decisions that require special knowledge or expertise that the directors themselves do not possess. Because members of a governing board may not have the time or resources to personally investigate every matter that comes before the board during the decision-making process, many governing statutes permit the board to rely reasonably upon information presented by officers, employees, board committees, and independent professional advisors. In such cases, the minutes should reflect such reliance with a simple statement: “The board took such action in reliance upon the advice of . . . .

Privileged discussions
At times, discussions at a meeting, especially those conversations with legal counsel regarding legal rights or obligations, are privileged and take place in executive sessions. Those discussions should not be memorialized in minutes. The following simple sentence will suffice: “The board participated in a privileged discussion on the subject matter with counsel.” The minutes should reflect counsel’s presence in any such session because discussions between board members and counsel are not discoverable, and saying less will protect directors against charges of misconduct.

Minutes should be the only record
Under the laws of most jurisdictions, the minutes of a proceeding are the official record of that proceeding. In such cases, minutes should be the exclusive recording of the proceeding. The members of a body who take notes at a meeting should, as a routine practice, destroy those notes after satisfying themselves that the minutes accurately reflect the proceedings. Many organizations collect all written material, including notes, at the conclusion of the meeting. As a routine or customary practice, this has been accepted by courts of most jurisdictions.

The minutes of the corporation are considered the best evidence of what transpired at the meeting. Under the best evidence rule, other evidence, such as someone’s notes or memory, is generally not admissible to prove what happened at the meeting, unless it can be shown that the minutes have been lost, destroyed, or are otherwise unavailable.

However, personal notes or memory can be used to impeach the competence or integrity of a witness. An experienced trial attorney can effectively call into question competence or integrity by asking a witness to explain differences between his or someone else’s notes and the minutes or the witness’s memory.

Prior to approving the minutes, read them carefully
Minutes can not only inform the board but can make the board more or less vulnerable to potential claims from shareholders and others.

When certified to be true by the secretary, minutes constitute prima facie evidence of the facts stated. All actions recited as having been taken and all elections and appointments are deemed valid until proved otherwise. Further, a person who is not a shareholder but who acts in reliance on certified minutes is deemed to have acted in good faith, regardless of whether the minutes’ recital turns out to be accurate. So, ensuring the accuracy of the minutes before the secretary certifies them is critical.

Kevin Kinross is a partner in the business, tax, and estates group with the law firm Bricker & Eckler. He represents companies in corporate governance, merger and acquisition, securities, capital-raising, and formation issues. He is a frequent speaker at NAMIC events.

What Drives Your Business?

By Joshua Bewlay

I am told that driverless cars are a future certainty. While this may give me some comfort, considering my 14-year old daughter is already asking for driving lessons, it does nothing for me from a driver’s perspective. I prefer choosing the destination, charting the course and setting out on the journey. I like knowing that I may stop off for a side trip, respond to an unavoidable detour or, perhaps, even abandon the initial destination for a brighter spot farther down the road. I think this approach is similar to the way most businesses look strategically toward their own destinations.

Leaders of companies need to drive their own businesses. Dynamic leaders know that simply punching in the destination won’t necessarily get the company to where it wants to be. This is especially true of property/casualty insurance companies. Property/casualty insurance is an ever-changing business landscape that must constantly be monitored. While we all want to keep pushing toward the end goal, we must take the time to focus on the current realities that will either facilitate or impede our travel, and we must be flexible to handle them.

There are the long-term goals, such as providing coverage at a competitive price and being responsive – and viable – to pay claims when they occur, that companies and policyholders share. However, in order to achieve these long-term goals, companies must not lose sight of the short-term milestones, such as keeping abreast of operational performance, regulation, litigation, and other outside forces, that will shape how the business is underwritten, sold, and ultimately settled.

What drives your business?

What are the long- and short-term goals that your business has identified to help your policyholders, employees, and community benefit as stakeholders of the company?

Mutual insurance companies are well qualified to answer this question. The median age of a United States-based mutual insurance company is 120 years. That’s more than a century’s worth of vision and strategy at more than half of the country’s mutual insurance companies. Clearly, most carriers have their own performance drivers baked into the culture of their organizations.

How does your business compare?

Measuring progress toward your strategic destination – and your goals – takes data gathering and measurement. Comparing results against your plan is a good start, but it’s only as good as the plan was when you first identified your goals. Because the property/casualty insurance industry is a dynamic marketplace, influenced by competitors, regulation, and natural disasters, companies, at some point, companies need to look outside the organization to compare their performance to others in the industry.

Property/casualty insurance companies need to:

  1. • Identify the performance drivers that are most relevant to the company;

  2. • Closely monitor company performance, both against their own plans and that relative to industry peers;

  3. • Align business leaders’ rewards with company goals to add “fuel in the tank” that will drive performance; and

  4. • Have the courage to react to benchmarking results by adding a stop and/or taking a detour while constantly monitoring progress toward the company’s ultimate destination.

Insurance carriers are hungry for this data. According a recent study conducted by Ward Group, more than 83 percent of commercial lines and personal lines carriers seek comparative data on operational performance at least annually.

So, if you have identified the performance drivers that are critical to your company’s success and then collected comparative data from peers in the industry, there are some final questions to ponder.

What are you going to do with this data, now that you have it?

Does management recognize this information as a mile marker along the journey toward the company’s long-term objectives? Do the benchmarking results warrant taking a detour to avoid a product line or coverage that could impede progress toward the long-term goal? What operational changes can be made to address underperforming business units or divisions within the organization? Are the results of performance benchmarking applied to annual and/or long-term incentive plans to further reinforce the company’s strategic goals and align pay with performance … thus putting “fuel in the tank” to keep driving toward company objectives?

If your company does nothing with the benchmarking results of your performance drivers, the return on investment is virtually zero. Top-performing insurers make operational decisions based on benchmarking outcomes. “If there is one trait that is most common among the Ward’s 50, it would have to be managements’ commitment to seek constant improvement in their organizations,” said Jeffrey Rieder, partner and head of Ward Group. According to Rieder, that commitment breaks down into three components parts: the desire, the ability, and the courage to make operational changes based on performance drivers.

So while it is clearly important to have a long-term destination marked on the map, as my daughter will soon learn, the journey can be just as rewarding as the destination.

Joshua Bewlay is an associate partner with the Ward Group and oversees the organizations’ executive compensation practice that focuses on the insurance industry. He has more than 15 years of experience in the insurance industry. He was a speaker at NAMIC’s HR & Finance Summit in 2013.