One of my favorite TV shows is AMC’s Mad Men, that paeon to the advertising industry of the early 1960s, when (mostly) men smoked and drank and came up with concepts to brand businesses and sell products. Last season, several episodes revolved around Sterling Cooper’s launch of a television department. At first, they’re not sure what to do with it. The department head is overworked, underpaid and disrespected. When he can’t keep up the pace, agency brass tries to fob off script reviews to the curvaceous office manager. And top dog Don Draper sometimes has a tough sell persuading clients of the importance of adding television to their media mix. Sterling Cooper even makes a point of hiring a couple of young guys to keep up with the new cool medium.

This sounds familiar, if you replace “television department” with “social media.”

Throw away everything you know about customer outreach, time management and building a brand. Over the past year, social media (SM) has changed the landscape of all these areas of property-casualty insurance agency operation, from how you manage your employees to staying in touch with your customers.

And the dust hasn’t settled yet. Even the experts are unsure about how social media will shake out in the business world. One thing is certain, however: Ignoring it is not an option.

That much was evident at the first Aartrijk Brand Camp, held this week at the snazzy Hotel Sax in downtown Chicago. The day-and-a-half meeting, attended by a cross-section of agents, carriers and media types, is the premier event hosted by insurance branding guru Peter van Aartrijk (who I knew long before his guru days). Speakers and subjects ranged from the macro view (Brad Keown of Facebook) to the practical (Marcia Hansen of Allstate), and everything in between.

Some of the findings were startling.

• 29% of consumer consumption is digital, and that number is growing
• Facebook has 90 million U.S. users, and plenty of your customers are there
• When it comes to sheer number of users, “Social media is the new porn,” according to Daniel Honigman, digital communicatio9ns supervisor at Weber Shandwick
• 91% of B-to-B decisionmakers participate in social media, 69% for business purposes
• 70 million retiring baby boomers around the globe are being replaced with only 15 million Gen Xers, with 55 million Gen Yers waiting in the wings, according to Deloitte.

This adds up to nothing less than a quantum shift in how we do business. Statistically, the future face of business will be increasingly female, Hispanic, and very comfortable with all forms of Web 2.o technology. This is the demographic we need to attract and understand, both as employees and customers. Much of our communication with them boils down to authenticity, transparency and trust — words not typically associated with insurance.

Take employees, for example. Because much of social media blur the lines between the personal and professional, your employees can be your company’s goodwill ambassadors everywhere in the virtual world. The Brand Camp speakers agreed that instead of building firewalls between your employees and this online world, you should be training them on its use. The thinking is that they’re going to be popping onto Facebook and YouTube on company time, anyway; you might as well make sure they’re doing it right when it comes to representing your business.  Bottom line: If you hired them, you should be able to trust them to do right by you — radical thinking from what most of us are used to!

Social medial also mean instant and constant accessibility.  Not too long ago, I would have “covered” this event by writing up the proceedings for publication in a magazine, which readers would get more than a month later. Reporters covering the Brand Camp tweeted their comments for instant delivery throughout the event, updated their Facebook or LinkedIn pages, or blogged about it, with plenty of room for others to comment (feeedback is a key element of social media).

This doesn’t mean the “old” communication methods are dead. Press releases are alive and well as a way to stay on a publication’s radar, and in spite of the growth of “unofficial” sites, there is still plenty of cachet in being written about in a recognized publication (whew! Good news for us formerly ink-stained wretches!). But social media needs to be part of your branding arsenal, and like any other branding effort, must be thoughtfully integrated into the mix.

What is your agency doing with social media to promote your business?

Businesses give plenty of lip service to ethics, but you have to wonder how many really take it seriously. Corporations are awash in sensitivity training, sexual harassment prevention workshops and other endless efforts to promote ethics. Yet many of these same businesses have also contributed to the financial mess we’re in today — by promoting salary and bonus policies that emphasize profit over common sense.

The issue of ethics, or lack thereof, is exacerbated in tough economic times. It’s no surprise that insurance fraud is up across the board for the first half of 2009, according to the NICB, or that crimes like burglaries and break-ins are on the rise in even the safest communities.  I currently serve on the national ethics committee of the American Society of Business Publication Editors (ASBPE), where the convergence of print and online content have blurred the line between editorial and advertisement – at a crucial time when advertising dollars are growing ever scarcer. When businesses are fighting for survival, the concept of ethics can seem like a quaint anachronism from a more profitable past.

Ironically, as times get tougher, ethics become more important — or should.  AA&B ran a “Last Word” editorial in April by a programs insurance broker who blamed the seemingly endless soft market for the cutthroat competition that was trumping professionalism and in-depth customer knowledge. She complained that unethical newcomers were passing themselves off as experts and using discount rates to entice formerly loyal clients, who, financially squeezed themselves, were seduced by cheaper premiums. Think of the E&O claims that await an agent or broker who doesn’t really understand a client’s risk!

On a larger scale, the lack of ethics in the financial services industry has not only put us into a global recession, but now has the Feds breathing down the industry’s neck for tighter regulation. Based on the industry’s past irresponsibility, this should neither be surprising nor unwarranted.

That’s why the CPCU Society‘s recent unveiling of “A Guide to Organizational Ethics Policy” couldn’t come at a better time.  The Society’s ethics committee collected 75 ethical codes of conduct from different insurance organizations and compiled a list of 12 steps an insurance business can take to ensure it is operating ethically.

Not surprisingly, the first and most impotant step is to “create an ethical mission of the organization,” a single sentence that broadly describes the organization’s goal. Sample statements include “Treat customers, vendors, employees, owners and regulators as we would wish to be treated,” or “Place the interests of those with whom we have business relationships above our own interests.” The other 11 steps boil down to communicating and enforcing this statement.

Does your agency have an ethics policy? Tell us about it, and why it was adopted.

Twitter and the blogosphere were ablaze this week with the buzz surrounding an Accenture study that found three-quarters of U.S. consumers prefer to buy insurance products through agents and other trusted sources rather than online.

The study of more than a thousand Americans at least 18 years old who own one or more insurance products showed that 73 percent preferred to buy auto and home insurance products from an agent, and 75 percent preferred to buy life products from an agent or trusted source, such as an employer or financial advisor. (The exception is “younger and more affluent” customers, who preferred to buy products over the Web: 39 percent of consumers aged 18 to 24 and 28 percent of buyers with incomes above $60,000 said they preferred online purchases, especially for auto and home products.)

This is a bit of welcome news for independent agents, especially the smaller Main Street guys who are struggling right along with their customers in this tough economy. Am I surprised? Not really, considering that some of the biggest players in the business world are the doing the worst right now.

For years, smaller agents have been bludgeoned with predictions that they’re headed the way of the dinosaur. Ironically, these are the types of businesses that are poised to succeed in the worst economy in decades, probably because they’ve always practiced the ”doing more with less” philosophy that big corporations have just recently been forced to adopt.

The National Federation of Independent Business’s index of small business optimism hit 86.6 last month, breaking a 4-month pattern of declines. And the American Express Open small business monitor of firms with fewer than 100 employees shows that 77 percent think that managing their firms over the last several hard months has made them better at managing their businesses in general.

NPR recently aired a segment on how half the current home foreclosures could be avoided through loan modification. Banks take a massive hit on foreclosed property, so it’s in their best interest to work with troubled mortgage holders to keep them in their homes. Yet amazingly, megabanks like Wells Fargo and Citibank are literally ”not set up” to deal with the problem, even though they saw it coming ages ago–and the bigger the bank, the bigger the problem.

It got me to thinking that the bailout mantra of “too big to fail” could have just as well been applied to the dinosaurs.

Small is beautiful!

Although word from the Greenwich Prime Meridian insists that it’s required to hang around a a little longer via a “leap second” (http://www.chicagotribune.com/business/sns-ap-eu-britain-time-to-change,0,6973696.story), 2008 is almost gone.

And good riddance. Although there’s been no lack of stuff to write about this year, from Eliot Spitzer to AIG, 2008 for the most part has been the kind of year most of us would like to forget.

And early signals seem to indicate that 2009 could be shaping up to be just as “interesting,” in the Chinese curse sense. Last week while decompressing with my kids in San Antonio, I sneaked a peek at the Crackberry to learn that the FTC was sniffing around nine insurers about their use of credit-based insurance scores for home insurance, citing concern about bias against minorities.

In the January issue of AA&B, NAMIC’s Paul Tetrault presciently discusses just that subject, and the need to educate legislators on the beneficial side of credit scoring. I’ve written about credit scoring on this blog site, and personally have mixed feelings about its use.

But whether or not you’re a fan of credit scoring, the FTC’s action seems to suggest a taste of things to come in 2009. In the wake of the economic meltdown, all regulatory eyes are on the financial services sector, and plenty of that limelight will be spilling on insurance.

Part of that focus is likely to come in an increase in M&A activity — something that’s already well under way, with Munich Re snapping up Hartford Steam Boiler from AIG and Zurich publicly announcing its intention to increase its acquisitions in 2009. No surprise, then, that Watson Wyatt just announced that it expects the insurance industry to see more M&A activity in 2009 (http://www.watsonwyatt.com/news/press.asp?ID=20287).  And although I predicted earlier this year that more foreign investors would be looking to buy U.S.-based insurance entities, the current global recession may make that impending fire sale a little less intense.

So what’s in store for 2009? I’ll leave the predictions to the wiser heads in the industry, but I do have a wish list:

1.  Stock market stability. Come on, guys, put on your big boy panties and start doing some business, along with all those bailed-out banks that aren’t makeing any loans. A little of the uncertainty has eased due to the financial sector rescue and Big 3 auto handouts, so let’s all stop standing on chairs and screaming at imaginary mice.

2. Bailout accountability. When you or I get a personal or business loan from a bank, they give us something called a “payment schedule” to ultimately get their investment back. But when the Treasury throws billions at banks in a bailout, the money seems to disappear into a black hole. Check out this interesting site to try and follow the money: http://www.propublica.org/feature/bailout-bucks-to-banks-1028. Meanwhile, we should be holding each TARP recipient’s feet to the fire for accountability. And the banks getting this bailout gravy should be doing what banks do — you know, lending money to creditworthy citizens.

3. Peace on earth, good will toward all. Corny, yeah, but we need nothing less to get through what 2009 and beyond will have to offer. That means Dems working with Repubs, conservatives with liberals, federal regulation supporters with state regulation supporters (gasp!).

Oh, and be nice to your friendly neighborhood editor, too — 2008 wasn’t really nice to the publishing industry, either!

God knows our economy and the property-casualty industry are engulfed by what seems like an endless bank of dark clouds. But the Big I’s new “Agency Universe Study” suggests that there may be a silver lining in there somewhere (or as the optimistic kid said on finding a pile of horse manure under the Christmas tree, “There must be a pony somewhere!”).

First off, the number of independent agencies has stabilized since the 2006 study. Although down from an estimated 44,000 agencies in 1996, this year’s 37,500 is roughly the same as 2006, suggesting that many of the dire predictions about the demise of the small to midsized independent agent may be premature — and that the M&A boom of recent years is bottoming out.

But the real surprise is not the slowdown in M&A activity, but the increase of small (revenues of $150,00 and under),  start-up agencies — 11 percent of survey respondents were founded in 2004 or later (including 4 percent that launched in 2007 and 2008).

Another interesting point that quantifies what I’ve been hearing from agents is that a lot of this growth is around personal lines, especially in the South Atlantic and West South Central coastal areas where direct writers are reluctant to tread (we’ll tackle the personal lines issue in the February AA&B). These new agencies are deriving 48 percent of their insurance revenue from personal lines commissions.

The survey’s other major findings include:

• Declining revenues due to the soft market and shifting premiums, more common among medium-small and medium agencies (with $150,000 to $1.2 million in revenues), with 23 percent reporting average decreases of 10 percent
• More efficient operation through use of technology with fewer employees, with agencies employing 9 full-time employees in 2008 versus 11.2 in 2006
• Improved satisfaction with carriers, with more than one-third finding business planning with their No. 1 carrier very valuable
• Reduced usage of customer service centers, with only 24 percent of agencies using them
• More carrier representation for personal lines, with an average of 6.2 carriers
• Increased concern about controlling expenses and reinvesting

It seems to me that the really good news in these varied findings is that agents are finding creative ways to get around the problems of the economy and the soft market by providing consumers with a viable alternative to the ducks and the cavemen through more efficient service, increased personalization, and a choice of carriers. And that indeed means a pony is in the wings.

To hear a more in-depth perspective of the Agency Universe Study findings, listen to our interview with  Madelyn Flannagan, Big I’s vice president, education and research, at the podcast portion of the AA&B Web site at http://www.agentandbroker.com/Media/PodcastItems/FlannaganFinal.mp3.