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.

 

Why Low Price and High Value Can Be a Contraction in Terms

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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.

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.

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.

Does Your Agent Have The Experience and Knowledge To Determine the Right Insurance Policy For You?

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Most people would think that having a standard insurance policy written from a reputable insurer is the most important thing you need to protect yourself.  Let us consider a different way of thinking.  We use a phrase around our office that describes how we think; “An insurance policy is only as good as the agent who provides it.”  Let us define this in detail.

 

First, you must understand that insurance policies are not a “one size fits all” product.  Insurance coverage is designed to match your individual risk.  It is not the insurer’s responsibility to provide a product that meets your needs; they rely on the agent to determine that.  For example, if you need a truck to haul your trailer, you would not select a Honda Civic.  No, you might even select a truck with a towing package, and large capacity transmission and braking systems.  These would be designed specifically to your needs.

 

To put this in insurance terms, a company that manufacturers auto parts need different coverage than a restaurant.  A restaurant needs coverage like food spoilage, liquor liability and food poisoning coverage.  A manufacture will need product liability insurance, special coverage on equipment, and possibly foreign products liability coverage.

 

An Experienced Agent Will Understand Your Needs

Coverage does not just vary from state to state; it varies from company to company within the same state.  Many companies use what are known as ‘manuscript’ policy forms. These forms do not necessarily use industry-standard wording, and may contain altered provisions that materially affect coverage in some way.

Your agent should identify your risks and help you understand what you should insure, design a coverage plan, then go to the market to negotiate the best possible combination of coverage, pricing and service. The agent must understand the tax and legal aspects of the products he or she sells and how they are designed to fit into a client’s overall financial situation.