Agents put theory into practice at
Appalachian State University's Insurance Executive Program
By Elisabeth Boone, CPCU
As a licensed agent, you're familiar with your state's continuing education requirements. Each year you sign up for classes and seminars that you hope will enhance your knowledge while at the same time letting you earn enough credits to renew your license. If you play your cards right, you can combine business with pleasure: attending class in the morning and playing 18 holes of golf in the afternoon . . . enjoying a romantic getaway to an oceanside paradise ... treating the kids to the wonders of Disney World or Cape Canaveral. You come home with CE credits and a great tan, and that's it till next year.
If you opt for the Insurance Executive Program held on the Appalachian State University campus in Boone, North Carolina, you can count on breathtaking views of the Blue Ridge Mountains--but you'd better forget about the golf, the tan, and the umbrella drinks. Designed to teach management theory and practice specifically to independent agency leaders, the intensive week-long Insurance Executive Program features a rigorous curriculum taught by university-level instructors, with classes starting at 8:00 a.m. sharp and running till 5:00 p.m. each day. The schedule also includes evening activities, and attendance is mandatory at all sessions.
Fulfilling the mission
"The Insurance Executive Program will develop management skills for independent agents in an effort to perpetuate the American Agency System and to enhance the value of participating agencies." That is the mission of the Insurance Executive Program, and it's carried out in an academic environment that combines theory and practice to help independent agents master the concepts of effective management. Insurance companies sponsor the program and award scholarships to selected agents who attend classroom lectures, participate in hands-on computer activities, and take part in interactive exercises. Recognized industry experts are paired with business professors to give participants a comprehensive understanding of theory and proven management practices.
Professor Harry M. Davis, Ph.D., of the Department of Finance, Banking and Insurance at Appalachian State University, runs one of the financial management courses.
Offered each May, the Insurance Executive Program was launched in 1992 and enjoys strong support from both the agency and company sides of the insurance business. The program was developed by the faculty of the Richard S. Brantley Risk and Insurance Center, which was established in 1988 through an initial gift from the Independent Insurance Agents of North Carolina and authorized by the University of North Carolina Board of Governors. Housed in Appalachian State's John A. Walker College of Business, the Brantley Center provides an arena for insurance study and research and offers business students the opportunity to pursue a Risk and Insurance major. The Risk and Insurance Program, which Business Insurance ranks fourth in the nation among insurance academic programs, currently has 120 majors. Of these, an impressive 95% will pursue careers in the insurance business, based on the career choices of previous graduating classes.
The Brantley Center's first director was Dave Wood, DBA, CPCU, who headed up the center from 1988 until 1999 and now is Appalachian State's Joseph F. Freeman Distinguished Professor of Insurance. Wood, who joined the Appalachian State faculty in 1985 as an assistant professor, has been deeply involved in both the Brantley Center and the Insurance Executive Program since their inception. In addition to his academic credentials, Wood brings to his position several years' experience as an independent agent with the agency established by his father in 1941. Thanks to this background, he clearly understands the need for independent agency principals to be well versed in the principles and practices of management. Wood explains how a similar awareness on the part of some North Carolina independent agents spurred creation of the Insurance Executive Program.
"Back in the early 1990s, John Young and Bob Bird of the Independent Agents of North Carolina recognized the need for management education for independent agents," Wood says. "We gathered some of our best faculty members and asked them to take a topic that they teach at the upper undergraduate or graduate level, then modify it to focus on the aspects that are applicable to the independent agent. Our instructors spent a lot of time visiting agents, shadowing them, talking about their issues, and gaining a deep understanding of their educational needs in the areas of management and finance. We started out in 1992 as basically a North Carolina program, and it was phenomenally successful," Wood says with pride. "Today we draw students from across the country, and many of them attend with the aid of scholarships provided by their insurance carriers. The companies send the agents they believe will benefit most from being in the program."
Insurers that contribute grants to the Insurance Executive Program are called underwriting companies and are eligible to sponsor four participants. Each grant covers the entire cost of the program (currently $3,000) except transportation and incidentals. Underwriting companies are Amerisure Companies, Companion Property & Casualty Group, The Hartford, Penn National Insurance, Royal & SunAlliance, and Selective Insurance.
Challenging curriculum
As mentioned earlier, the Insurance Executive Program is rigorous and demanding, with absolutely no frills or "gut" courses. The curriculum is outlined below.
Strategic Planning
* Managers and Management. Why study management? Introduces the management model and sets the stage for the topics to follow
* Organizational Design. Classical concepts: Max Weber, Henri Fayol's Principles of Management, span of control, relationships, formal and informal organizations
* Management Tools and Techniques. Types of decisions: end-means, administrative-operational, programmable, non-programmable. Problem-solving process and model
* Managing Relationships. Ethics, law, leadership, motivation, communication, introducing change
* Strategic Planning Process. Planning defined, SWOT analysis, mechanics of the process.
* Implementation. Obstacles to effective strategic planning: (1) Never getting started on it; (2) never putting it into practice (turning it into strategic management)
Financial Management
* Financial Statements and Analysis. Identification, interrelationships, and uses of financial statements. Includes balance sheet, income statement, sources and uses statement, and statement of cash flows
* Ratio Analysis. Explains liquidity ratios, asset management ratios, debt ratios, and profitability ratios
* Financial Forecasting and the Cash Budget. Discusses methods used to project future financial statements based on implementation of the strategic plan
* Agency Cash Flow Analysis. Explains the impact of various events on an agency's cash balances and funding needs. Discusses investment and borrowing options
* Time Value of Money. Tools needed to make many financial decisions: future value of a single payment, present value of a single payment, future value of annuities, and present value of annuities
* Capital Budgeting. Capital budgeting tools and the capital budgeting decision process. Covers cash flow projects, net present value, and internal rate of return
Human Resources Management
* Recruitment and Selection: Standards and Procedures. Existing legislation, sources and methods of recruitment, job design, handling discrimination problems
* Staff Appraisal and Development. Dual roles of performance planning and reward determination, the conduct of performance reviews and coaching sessions, guidelines for performance reviews, role play exercises
* Compensation and Benefits. The pros and cons of various approaches to "total compensation" and discussion of merit, tenure, performance, and knowledge
* Coaching, Discipline, and Discharge. Behavioral contracting and progressive discipline, legal standards required to institute disciplinary actions, group activities
Marketing and Sales Management
* Marketing Management. Marketing strategies, growth strategies, segmentation, targeting, positioning, product/customer mixtures
* Sales Management. Performance/satisfaction, role perceptions, personal characteristics and aptitude, recruitment and selection, sales training, motivating the sales force, designing compensation and incentive plans, performance evaluation.
Agency Valuation
* Emphasizes practical application of the capital budgeting tools in the valuation of an agency. Includes agency cash flow estimation and agency valuation, an agency valuation example, and discussion of the example.
Group Presentations
* Participants are divided into groups to develop and present a business plan from hypothetical case studies.
"Since its inception in 1992, about 185 agents have gone through the program," Wood says. "Our emphasis is on value. We believe that everything an agency principal or manager does should enhance the agency's value. The Insurance Executive Program is not a sales program; it's not an insurance or technical program; it's a management development program." In line with its focus on value, the program is dynamic rather than static.
"Over the years, the session subjects have remained the same, but the topics within each of those areas have changed," Wood explains. "We're constantly trying to improve the program. Probably the area of greatest change has been human resources, which is affected by new federal legislation. We try to make all our course content very current and applicable to what's going to be taking place in the agent's office day to day. We strive to maintain a big-picture perspective with an emphasis on planning that adds value to the agency." The Insurance Executive Program Board of Advisors, comprised of industry leaders and program alumni, undertakes long-range planning for the program, including resource allocation, curriculum assessment, and formal evaluation.
Valerie Edson, SPHR, Visiting Lecturer from North Carolina State University, discusses compensation and benefits with those attending this year's Insurance Executive Program.
A strong foundation
With its emphasis on enhancing agency value through management education, the Insurance Executive Program at Appalachian State University helps the university fulfill its broader mission of providing a strong academic foundation for current and future insurance professionals. The Brantley Risk and Insurance Center's program for risk and insurance majors offers students a concentrated study of insurance and risk management principles, insurance coverages, and mechanics of the industry, integrated with fundamentals of finance, economics, accounting, financial management, and financial markets. Students also may choose to participate in professional designation programs such as Chartered Property Casualty Under-writer, Chartered Life Underwriter, and Certified Financial Planner, and in addition may become licensed North Carolina insurance agents.
The Risk and Insurance major requires 24 semester credit hours in addition to general education and business courses for the Bachelor of Science in Business Administration degree. Among the course offerings are:
* Principles of Risk & Insurance
* Personal Insurance
* Commercial Insurance
* Risk Management
* Insurance Internship
* Retirement and Employee Benefit Planning
* Estate Planning
* Financial Planning
* Financial Management
* Financial Markets & Intermediaries
* Survey of Investments
Between the junior and senior years, students are encouraged to participate in an insurance internship program that offers up to six hours of academic credit, practical applications, and insight into the workplace. Assisted by an adviser, the student visits the employer's workplace and is exposed to the firm's operations and activities. Successful completion of the internship opens the door for job offers after graduation with insurers, agencies, corporate risk management departments, and other entities.
Golf tournaments sponsored by trade associations serve as vehicles for professional development and promote networking between students and insurance practitioners. During Shadow Days, students spend time on the job with industry leaders in the areas of brokerage, claims, underwriting, financial planning, loss control, and risk management. At the Fall Career Fair, insurance professionals visit the campus, disseminate company information, and conduct workshops on career planning issues.
On Insurance Recruiting Day, students interview for summer internships or full-time positions. Additional opportunities for internship and employment are created by annual publication of the Resume Book, which is mailed to more than 500 prospective employers each year. Students test their knowledge and compete for prizes at the annual Insurance Jeopardy Bowl sponsored by the North Carolina Surplus Lines Association and Win the Agents Money sponsored by the Independent Agents of North Carolina. The monthly activities of the Rho Chapter of the Gamma Iota Sigma Insurance Fraternity allow students to interact with their classmates, insurance professionals, campus speakers, and national fraternity members. The Executive-in-Residence Program attracts industry leaders from both the agency and company ranks to serve as faculty members.
Real-world education
Whether it's a freshman in the College of Business contemplating a major in risk and insurance or an established agency owner weighing the merits of the Insurance Executive Program, the Brantley Risk and Insurance Center at Appalachian State University offers a compelling message: Today more than ever, the strength of the insurance industry depends on the knowledge of its practitioners. You'd go a long way to find an educator who's more committed to enhancing that knowledge than Professor Dave Wood. In evaluating applicants for the Insurance Executive Program, he says, "We try to attract participants who will learn not only from us but from each other the skills they need to enhance their agency's value. Whether an applicant already has management responsibilities or is moving into management, our program is a practical and effective way for participants to share information and experiences."
The Brantley Center for Risk and Insurance celebrates its 15th anniversary this year, and it boasts a record of outstanding achievement in insurance education for both traditional-age students and working professionals. For the agency leader who's more serious about studying than sunbathing, and who's willing to trade tee times for textbooks, the choice is clear: Appalachian State University's demanding Insurance Executive Program. *
For more information:
Appalachian State University
Contact: David D. Wood, D.B.A., CPCU
Phone: (828) 262-6234
E-mail: wood@appstate.edu
Web site: www.appstate.edu