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.

Low Premium Vs. Value… Which Is Better?

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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.

Customer Service Skills Your Agent Needs

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Insurance agents should always be considered a trusted advisor. As such, there are many unique skill sets an agent should possess. Without these skills you run the risk of having the wrong insurance program, being uninformed regarding your risks, and be frustrated whenever you call or meet with your agent.

Here are some of the skills of a trusted advisor:

  • Has under taken additional training in the field of risk management and insurance.
  • The trusted advisor puts clients’ interests in front of their own. Selling is dead, education is thriving. A trusted advisor will always put education over sales. If we stop trying to just make a sale and truly understand the customer needs, trust is formed.
  • A trusted advisor is genuinely interested in their client’s business success. By showing this level of interest their clients were more open with them and invariably opportunities were identified through discussion.
  • A trusted advisor has a team of experts working together to meet the client’s needs. You will receive personal attention and our team will even come to you. After you describe your personal situation, you will be presented with a custom-tailored insurance solution.
  • Seek to understand. As Steven Covey so succinctly puts it in the The Seven Habits of Highly Effective People – “Seek first to understand and then to be understood”.
  • Trusted advisors are genuine, real, individual people. People can sense when others are being insincere and the relationship never develops beyond the civil stage as the client mistrusts the sales person’s motives.

Insurance Myth Busters

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According to recent estimates by the Insurance Research Council (IRC), roughly one in seven drivers are uninsured.  A majority of drivers only carry the state minimum limits.

The Common Myth

If an uninsured or underinsured motorist hits you, many think, no worries, they have coverage, or my insurance will pay.

Myth Busted

Your coverage is limited to the amount of coverage you have on your policy.  Therefore, if you purchase minimum limits you would have little coverage if someone hit you carrying no insurance. Adding an endorsement to your personal umbrella policy will place higher limits of coverage over and above your auto policy uninsured motorist coverage.

Why Insurance Is More Than A Policy

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.

Your insurance policy is only as good as the agent who placed it. Your agent should be asking you questions and learning about your individual risks and provide options as to how to treat your risks. When your needs change or your situation complicates, you don’t want an automated phone tree or cold cyber-agent. You want to talk to compassionate, honest insurance experts – that’s our team

Why Selling Is Dead and Education Is Thriving

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You can read articles every day on the internet about how traditional selling is dead, and that we all need to embrace the new age of selling.  Here are some of the titles of articles on selling I found during an internet search this last month.

  • “Selling is Dead, Sales Live On”
  • “Social Media is the New Producer”
  • “Is Relationship Selling Dead?”
  • “How to Sell–New Age Terms”
  • “Sell with Intensity”
  • “Always Be Closing”
  • “Tell Your Story When Selling”

Now I am sure all these articles have good information, but many are missing the point.  If I had to re-title these I would start with; “EDUCATE, DON’T SELL.”  However, that may be easier said than done.  So I thought it might be fun to identify a number of steps we use to change a mindset from selling to educating. The result, hopefully, will be a new way of thinking about insurance sales, and customers who demand more from their agents.

How the best sales people can look and act like educators

  • We explain our mission of providing insurance education, with or without a sale.
  • It is important to develop risk solutions that do not involve insurance.
  • We will utilize other professionals to help create solutions and educate our clients.
  • There is real value in looking for problems, then create solutions.
  • We volunteer our advice upfront and suggest an alternate solution that will likely serve our clients better.

Selling is educating, so the more we teach clients about the solutions, value, and benefits we offer, the more educated our customers will be.

The Problems Many Businesses Have With Their Agents

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I talk to people regularly who tell me that they are not happy with their agent.  I hear statements like, “My agent does not understand my business”, “My insurance program is not matched to my business”, or “My agent always tries to sell me more insurance.”  These are common issues in the business community. I have found that the key issue with most of these concerns has less to do with the agent, and more to do with how the customer goes about selecting the agent.  What?–How can that be true?

Most agents are just trying to sell insurance and move on to the next account.  They are not bad people, but they have been trained to sell.  Our agents are different; first and foremost, we are trained to serve. 

Too often customers go about selecting their agent through bidding out their insurance and then selecting the lowest bidder.

Here is a great quote form the movie Armageddon, when the team of oil drillers are sitting in the space shuttle ready to lift off, and having second thoughts.  “You realize we’re sitting on 45,000 pounds of fuel, one nuclear warhead and a thing that has 270,000 moving parts built by the lowest bidder?  Makes you feel good doesn’t it?” Rockhound played by Owen Wilson.

My contention is that the process by which clients select their agent is flawed, and there is a better way.  By only looking at the lowest price, you are missing the most important part of the process; getting the best possible combination, of coverage, risk management, customer service, and price designed for your specific business.

If buyers were to select agents on something other than price, they would be much happier.  Here is what to look for in an agent:

  • A good agent will have access to many markets, making price consistent between most agents.
  • Experience.
  • Staff experience.
  • Special training and credentials.
  • Have conversations with prospective agents.  Simply asking questions does not mean you have to work with them.  This is a chance for you to get a feel for how they work and if you feel comfortable with them.
  • A good agent needs a high emotional IQ.  This includes the ability to listen and empathize with clients on a deeper level in order to discern what they really want and need.