Author: Al Diamond

I just received a rather large and heavy package from my independent insurance agent.

I have never met him, having placed my insurance with the agency under the agent who formerly owned the agency.

The package was my Commercial Package Policy Renewal - all 170 pages (double sided) with a two page cover letter from a CSR synopsizing the coverage's and deductibles for my property, liability and business auto. My wife's company's WC policy was included in the package in a separate folder.

At the bottom of the letter the following paragraph was added:

"Please refer to the policy for all coverage, terms and conditions. Higher limits are available. If you would like to increase any of your limits or purchase an Umbrella Policy, please contact our office."

Let me reiterate - I HAVE NEVER MET MY AGENT.

Now let me ask every agent reading this article a question, "Is this the level of service that should be expected from an agency to a long-time client?"

If the answer is "yes", we will likely see the demise of the independent agency system in our lifetime. If we accept that policy processing is the reason we hire an agent then we have little reason to avoid the direct writers who do the same at a relatively lower cost.

I've been in the insurance business for 50 years but I've been out of the technical coverage business for over 30 years. I looked at the package that was sent to me and was overwhelmed. Are the coverage's correct for my situation? Are the limits adequate, too high or insufficient? Are the deductibles correct for my company's financial situation? Are the prices competitive? Do I need an umbrella policy with underlying high limits or would it make sense to lower my primary limits in favor of an umbrella?

Am I, as a business owner, expected to "read" 170 double sided pages and understand my asset risk sufficiently to determine something as complex as the technical insurance coverage's required for my company's and family's safety? After all, almost every page tells me to "read carefully".

What should be the role of my insurance agent? What standards of care are reasonable to properly assure an insurance client that he is properly protected?

The best analogy to use is comparing the health care industry to the insurance industry.

I know a doctor who was recently terminated from a large practice because she wasn't seeing enough patients quickly enough. She sold her practice to the conglomerate and found that the quality of service she was used to giving was too high and, lacking sufficient billings required of her by the new, larger practice, she was terminated (without access to her patients for at least a year). Those agents who are tempted by merger potential should pay attention to this paragraph and make sure their concept of service and those of the host agency are similar.

My own doctor converted her practice into a Concierge Practice. She cut her patient load considerably and charges her remaining patients an annual fee to get the grade of service that she believes is appropriate for life saving and health maintenance. Her attitude was, "I want to treat every patient as if (s)he was my parent. If I don't then I'm risking their health and life for the sake of earning my living and paying my staff and expenses." So I now have a doctor who will spend two hours with me in a check-up if necessary, coordinates all of my specialists' care of me and makes house calls, if warranted. That's what she thought was appropriate to assure the well-being of her patients as we age and we support that level of service with a fee beyond what the insurance policies will reimburse her.

How is that different from what you are supposed to do every day?

You are responsible for the safety of your clients' assets. While it may not be their very lives that are imperiled, if you don't do your job their future and their financial security could be ruined.

I have no reason to believe that the nicely packaged tome delivered to me by my insurance agent isn't correct. But I have no way of determining that it is, either. I have not had my coverage reviewed for many years - it just keeps getting renewed. Under insured? Over insured? Insured properly? I simply don't know. Of course, I check the price against last year but that only addresses the affordability of the product, not the quality of it.

The reason I hire an insurance professional is to guide me through the complexity of insurance and what the insurance company will and won't cover. Neither Flo nor the Gecko will do that for me. But they WILL send me the same volume of paper and will extol me to "read my policy carefully."

Is it my responsibility as an insured to do so? Probably. What percentage of customers actually read their policies? Close to zero. The 170 pages of policy language and terms are made to specify and limit the risk to the Company, not to the insured. The policy terms limit the risks taken by the Company to those for which their actuaries have assessed their premiums. But the Company is not responsible for assessing the risk to the client and assuring him that he is protected to the level acceptable to him. That's the job of the professional Agent.

If agents are not willing, able or compensated sufficiently to analyze a client's risk then we may as well accept Flo's "box of insurance" and then "save 15% in 15 minutes" and hope for the best. We may be gambling with our assets, but we'll do so more economically. Right now, those of us who use independent agents seem to get the same products, but pay the agents for the simple clerical administration of the policies.

To change this trend we created The Asset Protection Model of Relationship Selling (APM) to train producers and staff into building relationships and away from price as the primary consideration of customer sales and service. We recommend this program to you if you intend to remain in the business against the direct writers who will never provide or offer this grade of service to their clients. It is an excellent point of differentiation and one of the few that you can demonstrate to your clients.

Meanwhile here are steps to assure that you don't shock your clients every year by dropping off the "big package" at renewal time and leaving them to fend for themselves or file it away.

• Visit with your clients personally at least once per year. Many clients deserve and should be visited more than once. If you want to know which to see and how often, Ask Them! Each client will be handled a little differently but I am convinced that most customers who value you as their agent will want the assurance that they have the right coverage at a fair price and your time is needed to accomplish this. If the client is too small for you to personally afford to accomplish this within your compensation, have another professional within your organization contact them for the same analysis and assurance (csr, account manager, or account executive).
  

• Tailor each client's product needs to their asset protection needs. That means you need to know about more than the specific product that you are providing them at the moment. The APM handles that with a multi-year rotating Asset Analysis. You can do the same.
  

• Remain involved in any claim occurring for your client. Frankly, that's what they are paying for! If you don't advocate and support them in the claim process AND you don't analyze and recommend coverages for them, for what are they paying you?
  

• COMMUNICATE with your clients - we're not talking about newsletters and fluff. Even if you're calling them a few times each year to check in with them, it should be concentrated on THEIR needs, not your strengths and general insurance news. The more you speak to your clients, the longer they will be your clients.
  

Call us (856 779 2430) if you are finally tired of saying your different and doing the same minimal things that your competitors do under the guise of excellent customer service.

And, if you are within the service reach of Cherry Hill, NJ we would enjoy establishing a relationship with an agent who lives the philosophy of personal service and relationship management instead of simple price quoting. Call me directly at the phone number above to talk about establishing a client relationship.

Reprinted from The PIPELINE, the national newsletter for agency principals. The PIPELINE is published by Agency Consulting Group, Inc., a leading consulting firm for independent agents in the U.S. for over 35 years. Call 800-779-2430, E-mail info@agencyconsulting.com, or visit www.agencyconsulting.com for information about the content of this article or PIPELINE subscription information. 

Last Updated: April 13, 2018

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