How You, The Customer, Benefits From Hiring A Trusted Advisor

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Max Integrity Meaning Upper Limit And Virtue

Over the past year or so, we have been discussing the importance of looking at insurance as a service rather than a product.  One area we have not spent much time on is how this adds value and benefit to the customer.

It would seem to me that every family, business owner, or business manager would want to have the following benefits:

  • The complex becomes clear. When you have a relationship with the agent who is serving you, they will make the complex world of insurance understandable.  Only an agent who educates first will be able to help you understand your risk and how best to manage it.  The trusted advisor cuts through the clutter to find the right solution that will solve your problem.
  • Is Insurance the only option? Clients may not always understand that there may be other ways to handle a risk.  A trusted advisor is in the education business—not the selling insurance business.
  • Value-added benefits. With a trusted advisor, you the buyer will have all the resources and knowledge of the agent and his/her team.  You will have help in understanding the buying process, creating of solutions that are designed for you, and support in bringing recommendations to others in your organization.
  • You have access to other experts. Wouldn’t it be great if your agent brought to your team attorneys, accountants, claims experts, loss control professionals and more?  Well, a trusted advisor will do just that.

This is a different mindset for the buyer and agent, but when done correctly it can provide real benefits to your family, business, and life.

Is Insurance A Noble Profession?

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We believe without question that insurance is a noble profession. Our reason for this is that the purpose of insurance is to protect society, businesses, and individuals from financial loss and to help them recover when loss or damage occurs.

Google defines “noble” as having, or showing, fine personal qualities or high moral principles and ideals.

“The promotion of human rights was a noble aspiration.”  Synonyms for noble are righteous, virtuous, good, honorable, upright, decent, worthy, moral, ethical, and reputable.

How does this definition of Nobility translate into action? It can be seen in many ways by an agent with Noble attributes. They show up on time and in person to discuss your individual needs. A Noble agent will tell you not to purchase insurance if he believes you do not need it. Insurance Nobility involves education rather than selling.

Here Is How We Define Nobility

Nobility is taking the right course of action when there is an opportunity to take an easier course. In other words, our industry serves a Noble purpose that is to restore those affected back to the same state prior to the loss. Like all industries there are those who look to personally benefit rather than to serve. Since insurance is a transaction of trust and not price, then hiring a Noble agent who serves a Noble cause to serve their customers before themselves, creates a better value and outcome.    We should all strive to earn the respect and trust of our customers and insurance buyers should strive to hire agents that can live up to that trust and respect.

Nobility is something that can only be seen over time, through personal interaction between the agent and customer. The customer with a Noble agent will have an added confidence that their agent is looking out after their needs rather than just collecting a commission.

 

Let’s keep talking!

 

 

 

 

 

Insurance Myth Busters… All I Need Is Replacement Cost Coverage

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Most people think, “If my policy has replacement cost coverage I am ok, right?”  Well, maybe not.  The term “replacement cost” means “the cost to replace the property on the same premises with other property of comparable material and quality used for the same purpose.”

A Common Myth

“My policy has replacement cost coverage, so I am covered in the event of a loss.”

Myth Busted

Replacement cost coverage has limitations. The most important limitation is that it will only repair or replace up to the policy limit.  So, if your building has a replacement value of $500,000, but your policy has a limit of $450,000, you are underinsured by $50,000.

There may also be a need for functional or extended replacement cost coverage in certain situations.  A guaranteed replacement cost policy pays whatever it costs to rebuild your building as it was before the fire or other disaster–even if it exceeds the policy limit.

The example above is an excellent example of why it is important to have an agent who knows and understands insurance, and one who can communicate complex issues in “English”. This allows our customers to make intelligent choices regarding their insurance.

Why Insurance Is Not A Product

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No matter how hard television advertisements try to convince you that insurance is a product, it is a service. Some advertisers use animals, actors pretending to know insurance, or wild claim examples to convince you that all you need is a simple internet policy and your problems are solved. They claim that the lower the premium is, the better it is for you.

Low premiums do not equate to the right coverage for you. Do not be fooled by actors trying to convince you that insurance purchased online in ten minutes will respond to a serious accident or injury. These advertisements focus on cost rather than the value of the service purchased. What we should be focusing on is the value of a policy in relationship to a purpose.

The value of a policy in relationship to a purpose

  • Get away from the idea that consumers should primarily focus on the price they are willing to pay for coverage, rather than making sure they have the coverage they need.
  • You cannot cover your risk by arbitrarily choosing an amount you are willing to pay for a policy. You need to make sure that your risk is properly covered.
  • Beware of insurance companies who have brands that claim, “We are the cheapest so we must be the best!”, or “We cover that crazy football party claim (less than .00001% of all claims) so we must cover everything else.”
  • We want our clients to understand the purpose of insurance and the value of the many solutions available.

Insurance Is a Promise of Service

  • Agents should help their clients determine why they are buying insurance.
  • Insurance is designed to protect individuals and businesses from the unexpected. It is important to help clients understand possible implications of actions.
  • Agents need to educate clients on the difference between low cost and value. Office Depot aired an advertisement a few years ago that explains this concept.

Source for some of the information in this article; Timothy P. O’Brien

Client Education Trends

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We have been on a journey for over a year to educate both agents and buyers of insurance about the most effective way to secure insurance and risk management services. It appears our work may be paying off. We are seeing more and more articles related to the buying and selling insurance that include titles like:

  • “Educate Your Clients”
  • “Discover Solutions”
  • “Quality Relationships Matter”
  • “Buyers Value Partnerships”
  • “Sales People Can’t Wing It”

These are all good articles that directly relate to what we have been saying over the past twelve months. We have reviewed a number of these articles and picked out some of the best points for agents and insurance buyers to consider. These include:

  • See your buyer’s needs through their perspective. This involves active listening on the agent’s part. Agents should talk less, and listen 80% of the time.
  • Deliver your buyer a solution — not a product. Solutions are meant to address the client’s real needs, not sell an insurance product.
  • Focus on what’s important to the client. Determine what their true needs are.
  • Focusing only on your insurance product will cause you to miss what buyer’s value from you.

If insurance buyers demand these procedures of their agents, and agents practiced these guidelines, insurance coverage would be better designed, and overall cost of risk would be lower for businesses. Insurers would be happy because losses would be reduced, and businesses would be matched with the right insurer.

Sources: Jay Mitchell, Dive Inside the Mind of Your Buyer — and Discover a Solution to Serve Them. 2.28.17, Clayton Christensen, The 4 Disciplines of Execution, Deb Calvert, Research Reveals What Buyers Value…It’s Not What You Think, 3.2.17.

Do You Know Your Cost of Risk?

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As you consider your business insurance, we invite you to think about this subject in the much larger spectrum of “Total Cost of Risk”. Your insurance program is more the premiums you pay

Total Cost of Risk is the sum of the costs arising from all of the risks faced by an organization. Risks can generally be categorized into one of the following three classes:

Operational– Operational Risk includes the cost of products, protection of property, insurance, damage to or destruction of supply sources for key raw materials, components, or services, injuries to employees or outside parties, damage to the property of outside parties including resulting consequential loss, damage to the environment, and employment decisions.

Financial– Financial Risk includes risks associated with commodity price variability or commodity availability, costs of capital and borrowing, customer credits, business development, profit and banking costs.

Strategic– Strategic Risk includes issues of risk that can have a major impact on the overall viability of an organization. These include issues centering on reputation of the organization or its employees, loyalty to the organization of customers or clients, development of new products or services, meeting the demand for existing products or services, and pricing of the organization’s products or services.

When you consider all your risks, it is important to understand how a well-designed insurance program can impact all these areas.

Change your Thinking About Insurance

Most businesses only look at their premiums when they evaluate insurance costs. We would like to provide an alternative view. For example, by only considering insurance premiums you are eliminating many other factors in your total insurance costs. Here are factors that make up your total cost of risk.

Internal Risk Administration

Legal and Claims Expenses

Deductible Costs

Uninsured Loss Costs

Safety Program Costs

Insurance Premiums

Contracted costs

Filing A Claim Correctly Can Save You Time And Money

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We hope you never have an accident or loss.  But if you have a loss, knowing that your claim is covered by insurance will help.  That’s what insurance is all about.  And, if you understand the claim filing process, you will find that you will have fewer headaches and your claim will be resolved much faster.

Here are some tips to help you file your claim

Our agency is here to help you through the entire claim process.

  1. Always read your insurance policy so that you know what is covered and what is not covered.
  2. If you are unsure if your claim is covered, it is always good to call our office, or your agent. This is another good reason to have an independent agent to help you through the claim process. Don’t rely on the insurance company to interrupt coverage for you. Sometimes, just a conversation with the insurance company can be logged as a claim, even though no claim was filed.
  3. For auto accidents (depending on the damages), you will need to gather as much information as you can. Call your agent to obtain a check list to keep in your car. You can call our office for help, even right after the accident we are here to help. We offer a 24/7 client emergency number directly to our staff. It is ok to wake us up in the middle of the night; we may be in our pajamas, but we care about you.
  4. Document as much as you can. If you are involved in an auto accident, take photos with your smart phone. Get as many witnesses as possible.
  5. You have an obligation to prevent further damage. For example, if you have roof damage you will need to patch the roof with plastic or other material to prevent any further water damage.
  6. Understand that the claim process will involve working with a number of people. Our office can help take some of the work off your plate, but you will have to talk to the adjuster at some point to review the claim and settlement.
  7. Before accepting any settlement, make sure you are satisfied with the amount. Also make sure you read all the documents.
  8. Remember, all property losses may be subject to your deductible and deductibles may vary within the policy. This will help you understand the expectations of what is covered and what is not.

Use our agency as your resource; we are here to help you manage the claim process.

Insurance Vs. Risk

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When you secure or purchase insurance, do you think about your risk?  Most people think about one or two factors when buying insurance; premium and limits. Very little thought is given to the design of the insurance program or qualification of the agent.  The result often leads to frustrated consumers who sadly realize, “My claim is not covered, or not covered completely.”

If you could understand your risk, and then design an insurance program that addressed your individual risk, you might be a more satisfied insurance buyer.  That is why we recommend you develop a “total cost of risk” approach to insurance buying.  Total cost of risk is the sum of the costs arising from all of the risks faced by an organization.

Change Your Thinking About Insurance

Most businesses only look at their premiums when they evaluate insurance costs. We would like to provide an alternative view. For example, by only considering insurance premiums, you are eliminating many other factors of your total insurance costs.  Here are factors that make up your total cost of risk:

  • Internal Risk Administration
  • Legal and Claims Expenses
  • Deductible Costs
  • Uninsured Loss Costs
  • Safety Program Costs
  • Insurance Premiums
  • Contracted costs

Most insurance policies can be designed with specific coverage added or removed, depending on the needs of the client.  You might not have an exposure to a risk that is included in your insurance program, and by eliminating that, you might save money.  Alternatively, you might want to self-insure some risks, so why pay the premiums.

The key is to use an agent who can educate you on these items, and help you understand that insurance should be designed with your needs in mind, not the insurance company.

Think Differently In 2017

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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.

Redefine Success

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.

We Think of Insurance as a Promise

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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.