If the replacement bugs stings you, do you sit and mope? That's what I used to do before I realized that the key to dealing with the replacements of life insurance-specifically, replacements caused by insurance agents who specialize in churning business-is to tackle the situation immediately.

Back in the eighties, I was getting hammered so much by a popular replacement organization, which was headed up by a former high school football coach turned insurance guru. It got so bad that I let "the Coach" and his organization try to recruit me into their fold.

I figured I needed to scout "the Coach" and his team to find out how they were training their "termites" to eat away at my so-called "trash-value" life insurance policies. I actually went to one of their rallies in Atlanta, Georgia just to hear firsthand the propaganda they were spewing.

I came away from the experience stunned at both the absence of ethics and the abundance of shortcuts being suggested by "the Coach" and his "termites." I took meticulous notes and studied their process thoroughly. I figured if they had created this ethical epidemic, I needed to reverse the process to find a cure.

Interestingly, I wrote an article that appeared in the A.M. Best Magazine about my experience with "the Coach" and his "termites." The next week several of his team members dropped by my office in Lexington, SC for a copy of the article. I suggested that they actually subscribe to A.M. Best Magazine. Needless to say, they didn't bother.

TIMING AND TRUST ARE THE KEYS

The problem with most replacements is one of timing. Your competition doesn't necessarily have a better product than you do. The one thing the replacement artist will attempt to do every time is to undermine you. Trust is essential in the agent/client relationship, and once that is violated, the relationship quickly deteriorates.

Suddenly, you are no longer the decent fellow who sold the client a product he or she wanted. Instead, you are perceived as a thief who ripped them off. What's worse, you seldom can defend yourself because the client doesn't want you back in their home or office. That is the image an aggressive replacement agent will paint of you and your company.

Naturally, this is a frightening experience for an agent, particularly when he or she has done their best to provide for the client's needs. But as my grandfather told me years ago, "fear is nothing but the absence of knowledge, a lack of information." If we confront some of the facts about the replacement, we can come to understand it and take action to prevent it from happening.

YOU'RE ALREADY TOO LATE

The first fact to recognize is that when a replacement notice hits your desk, you're already too late. Generally, the replacement agent will have preceded you by several days or, in some cases, by several weeks. When your business goes down, rarely does the client call you. Instead, they send their surrender request to the home office, that great bureaucratic institution in another state that manages to play "paper volleyball" with it for several days or weeks before forwarding it to you two weeks later.

DOUBTS CONFIRMED

The notice sits on your desk for another two weeks until you finally decided to call the client. By then, the client's doubts about your service are confirmed because it took you a whole month to get back to them.

Worse yet, suppose the client gave the replacement some thought before surrendering the policy. Add that period of time to the other delays and you're looking at a delay of almost two months. Now they're really angry! What do you do?

RULE NUMBER ONE- CALL IMMEDIATELY

Obviously, you cannot control what happens in the home office, the US Mail or the amount of lead-time the policyholder gives you before he or she drops the axe. You can, however, control the amount of time it takes you to call the client to conserve the policy. So rule number one is to call the client immediately. Drop whatever you're doing and make the contact.

The replacement agent is betting that you won't call the policyholder at all, or that if you do, you won't be able to get an appointment to see them. You should insist on such an appointment immediately-with or without the replacement agent present. Delay only allows the problem to compound further.

THE SIX P FORMULA

Remember, the replacement agent probably has used the old smokescreen tactics, comparing eggs to apples in order to confuse the client. So another rule is to find out everything you can about the replacement before the appointment. Remember the Six P Formula: Proper Preparation Prevents Pitifully Poor Performance.

Let's assume that the client does grant you the interview, if for no other reason than to complete the paperwork necessary to facilitate the policy surrender. There are several things you must do in every replacement interview:

1. Insist that the other agent be present during the interview process so that you can confront them face-to-face with any allegations they have made about you and your products.

2. Take a tape recorder to the interview with the client and invite the replacing agent. Get a good unit that will pick up the entire conversation. This way, if something is said that's not entirely correct, you'll have it on tape. It's a lot easier to disprove misinformation if it has been recorded on tape.

3. Take charge of the interview process by asking questions that have been carefully written out in a logical progression. Always remember, the person who is asking the questions in the interview process is in control of the interview.

4. Never ask a question for which you do not already know the answer. Every question should have a purpose.

5. Never raise your voice or lose your temper during the interview. Remember, part of the damage the replacement agent has done is to make you look unprofessional. They have undermined your trust with the client, and it's up to you to regain that trust. Keep your head and don't get drawn into a fight.

6. Establish some ground rules for your "discussion." You might suggest to your client that each of you pose an opening argument after which questions can be asked by either side. Insist on fair play and no interruptions. Let the client referee the process and ask questions of his or her own.

7. Let the replacement agent go to bat first. Remember, the home team bats last. There's another, more important reason for letting him or her take the lead. In most cases, he will spill his whole argument in the opening statement, allowing you to gain vital information on how he was able to sell your client in the first place.

8. Take meticulous notes as the replacement agent speaks. By having your notes in front of you, you can rebut much of his argument point-by-point.

9. Always show up early for the interview, 45 minutes to one hour in advance. The replacement agent has been taught to get there early to do a little "agent bashing" before you get there. They will look for subtle ways to show you that they are in control of the situation. In one of my first replacement interviews, the agent kept referring to my client by a nickname, implying a more intimate relationship. In another interview, the agent proceeded to get up and go to the kitchen cabinet and help himself to a glass of water. Neither tactic worked. We conserved both cases.

ASK OPEN-ENDED QUESTIONS

The questioning process is very delicate, and it's important to ask open-ended questions that start with the words who, what, when, where, why, and how. You must avoid asking close-ended questions that begin with words like did, do, can, will, are, won't, can't, could, may, and so forth. These questions elicit a "yes-no" response. They require you to immediately pose a follow-up question, and, if this is unfamiliar ground for you, you could get into trouble.

The open-ended question demands a substantive response and either leaves the respondent blurting out the answer or something like "I don't know." More important, it puts the replacement agent on the defensive for perhaps the first time since he approached your client. Now the ball is in his court. Let's see how well he responds on his feet.

It's almost like a courtroom drama with you playing the part of Perry Mason. Knowingly or not, you take the role of the prosecutor when you ask the questions. Usually the first few questions I ask are an adequate nail for the coffin. Here are just a few that I pose:

• For my benefit and for the cassette tape, would you please tell us how long have you been in the life insurance business? The replacement agent usually will blurt out something like "I just entered the field." Most agents affiliated with twisting organizations come and go in three months.
• Surely, then, you must come out of the insurance or financial services field? Would you please tell us about your background? Again, the replacement agent usually will embarrass himself by saying that he works as a mechanic or a clerk or a government worker, or whatever. There's no disgrace to any of these fields of endeavor, except that they have little to do with the life insurance industry. Another nail in the coffin.

All through this process, I describe what my own background is. I point out that I've been in the insurance business since 1974 all with the same company, the Knights of Columbus. I mention my own professional designations and educational background-never bragging, only stating it into the microphone for the record.

• Tell us; are you a member of the National Association of Insurance and Financial Advisors or other professional societies like the National Association of Fraternal Insurance Counselors? If not, why not? The replacement agent is beginning to get a little riled up now. He knows that life underwriter associations stand for everything he is against.

I politely point out that the medical profession has the American Medical Association and the legal profession has the American Bar Association. Why, then, should it be unusual for a professional life insurance agent to belong to his or her professional association? Logic suggests that if one is a professional, he or she should belong. Another nail.

I continue this relentless process of questioning until I feel the replacement agent is sufficiently self-indicted. Who are you? What is your background? When did you get into business? Where did you work before you became an insurance agent? Why did you suggest this particular plan for my client? How do you expect to provide for my client if you are not a professional in this field? What professional courses have you taken to insure my client that you are giving them correct advice? Another nail-bang, bang, bang.

I follow the same line of questioning concerning the product itself, but frankly, we rarely get that far. If the agent cannot answer questions about himself, he usually will feel even less knowledgeable about a product on which he is poorly versed at best.

During this entire question process, the client is witness to the incriminating facts as they unfold. Most reasonable people will begin to see the light. Doubts will be raised in their minds about who is fooling whom. Bang, bang. Another nail.

IT'S ABOUT TRUST

The goal of the professional life underwriter caught in a replacement situation should be a simple one: you must undo the mistrust between you and your client. Nothing more and nothing less will do. This battle is not about types of plans. It's not about return on investment. It's not about cost per thousand or about "buy term and invest the rest." It's all about trust. And trust, once violated, negates a relationship. It takes a mighty loving person to forgive you if you violate his trust.

I'm no expert on replacement, and I won't pretend that I save every case that comes across my desk. Some business will be lost, regardless of what you do. Today, I'm more concerned about the unethical life underwriter than I am about the agent who makes a career out of twisting business. There will always be misguided people who think they can become wealthy by climbing aboard another pyramid, but they will find that there's precious little room at the top of a pyramid.

If someone says to you "give me an apple seed and I'll give you an orchard" chances are it's too good to be true.

In fact, in one sense the existence of aggressive replacement organizations may have even been good for the life of the insurance industry. It has forced us to go back and cultivate strong relationships. It has forced us to eliminate the words "orphan policyholder" from our vocabulary and to become more professional. For that, all of us-and especially our clients-should be grateful.