The definition of incorrect thinking is to repeatedly take the same action and expect a different outcome. As you think about your insurance program for 2017, it is time to expect a different outcome. This will cause you to consider different actions. To accomplish this, two things need to happen. First, redefine how you define success in your risk and insurance program, and second, create a new set of actions that correspond to your new thinking.
Under the old definition, most insurance buyers define success as a lower premium. Therefore, the action corresponding is to get as many agents involved to create competition to lower the price. Consequently, insurance buyers are happy if they get a 10% lower premium. The problem with this thinking is that buyers generally do not know what they are getting for the lower premium. They may have created a big risk management issue once an un-insured loss occurs.
A New Way of Thinking
A new definition of success is to have an insurance and risk program that address the risks you have, and choose to have, insured. Some risk you may desire to self-insure and others you may want to transfer to an insurance company. This way, you understand what you are insuring and what you are not.
Now that I have redefined your thinking, you need to create a new set of actions. Just bidding out your insurance to get the lowest price will not work anymore. You need to select an experienced and qualified agent that has the experience to educate you on your risks. The second action is to select an insurer that understands your industry. For example, some insurers are better at underwriting the hospitality industry, and others are better at manufacturing, and so on.
Call a few agents, interview them, get their qualifications, and ask them how they would design a program for your business. Start to think differently and you may get different and more effective results.
Many people look at insurance as a commodity, like buying car or a piece of furniture. Consequently, they become caught up in searching for the lowest price for the “product of insurance.” Insurance is less of a commodity, and more of a promise or service.
Promise vs. Product
Insurance is a promise from the insurer to cover your claim or loss per the terms of the policy. What many people fail to understand is that policies or “promises” differ from company to company. If you never have a claim, then you do not know if the insurer will live up to the promise you think they have made. However, if you do have a claim you want the promises kept.
That is where we come in. As an agent, we help you understand the promises made, and work with you to make sure the insurer fulfills all promises. We can also help you design a policy that fits your needs.
Here Are Few Things To Remember About Insurance Promises
- Getting the right coverage is not the insurer’s responsibility – it is yours. You need to determine what limits, deductibles, and coverage you will need to cover your risk. As an agent, we can help you through that process.
- You may need special or unique coverage like flood, employment liability, or umbrella coverage. We are here to help you evaluate your risk.
- Insurance companies differ. We can show you how insurers differ in regards to product and services.
Shoppers are always looking for that next big sale or deal. When it comes to purchasing a 46” HDTV, it is easy to identify all the features you want, and then shop for the best price. In fact, many retailers might even negotiate with you to get your business. When selecting your insurance, you cannot think the same way. Why?
- Insurance can never go on sale, it is highly regulated.
- Consumers rarely have complete information about various insurance products.
- Consumers may believe that “popular” or advertised products are high in quality.
Let me make it clear that high priced insurance does not always equate to a better value. However, if you purchase the low-priced insurance policy are you satisfied that all the coverage terms are consistent with a higher priced policy? A better way to look at this is to consider the value of what you are buying. Here are some of the value added advantages you will find in insurance if you do a little searching.
What makes up a high value insurance program?
- An insurance policy that will respond to your risks when a loss occurs.
- The extra services offered by the insurer at no cost to you.
- The knowledge and expertise of the agent. The agent is your key to a high value advantage. The agent is the one who helps you identity your risks and designs a policy specifically for you. The agent will be there to help you manage through a claim and to educate you.
- Your agent increases your insurance value by helping you understand why the premiums are different.
Value is more than price
There are also non-price variables that every insurance purchaser should consider.
- The agent’s experience in your industry. Do you want an agent who primarily only insures homes, to insure your restaurant? These risks are different and should be treated as such.
- Insurance companies have customer satisfaction ratings for claims, premium processing, and other services. Do you want to use an insurer with a below average claims handling rating?
In conclusion, only an experienced agent can help you understand and define the true value of your insurance purchase.
Many people think the best way to select an insurance agent is to hire the one that offers the lowest possible price. Lower price can mean inferior coverage and that’s fine until you experience a loss that isn’t covered. My goal is to help you understand that there is more to insurance then getting the lowest price. I use concepts like value, cost benefit and service as a foundation for the agent/customer relationship.
Here are a few ideas to help you along your path
Independent agents offer more options. Independent agents represent many different insurers. You want an agent who represents many insurers; especially an insurer who have experience in your specific industry, and who is willing to take the time to get to know you. Allow the agent to market your risk with many different insurers, this is a good way to bring vale to the process. You want a relationship, not a policy.
What can your agent offer? If you own a business and are looking for an agent to write your commercial insurance, you want to make sure they have experience in your industry. If your agent only has experience with personal lines, do they really have the experience and knowledge you need?
Know your agent’s credentials and experience. Ask your agent about their experience and qualifications. Are they investing in extra training and or do they have accreditations, like ARM or CIC. Also ask about their staff, is the account manager also seeking additional designations.
Does the agents personality fit with yours? Your agent can become trusted advisor and help you with many areas of your business. This involves building a relationship of trust. You will want to have a comfortable, professional relationship with your agent, so you can ask questions and get the straightforward responses you deserve.
Your agent can build an insurance program that provides sound insurance and risk management that adds value. And in the long run value is much better than low price.