Archive for November, 2010

Insurance Client’s are in DENIAL! Installment 1

I held a Risk Management 101 class recently and the conversation quickly went to how to focus an Insured on Managing Risk rather than just Buying Insurance. The conversation was all about how to help a client trust you when the client has not experienced a claim. As this is an interesting conversation, I will focus on it in the next few entries.

It is important to understand first that a client is in denial when they approach you to make an insurance purchase. They have been compelled to you by some outside source (a bank or a finance company) and they are simply thinking of getting the insurance to satisfy the insurance requirement for the loan or to comply with some other sort of rule that says they must carry insurance. They simply are not thinking about having a claim and you need to focus them on the adverse consequences they could face if an incident does occur, especially if they do not have proper coverage!

Fundamentally I feel, we are attempting to make them think long term rather than short term and to thus get into a mental position to think about the value of what they are buying rather than just the price. This, as a longer term focus, requires a different set of skills and a different approach. In my next entry I will talk about our usual methodology to attempt fairness and how we try to give an “apples to apples” comparison. Why this may not be the best approach and how we can build trust with the client very quickly and avoid this trap.

Transparency Dictates Appropriate EMPLOYEE and CORPORATE BEHAVIOR!!!

If you own a business, you  no longer control the message…

Imagine the horror to have this on the internet if you are the employer of these PEOPLE!! Everyone MUST be accountable for their behavior as not everyone out there loves us in the insurance business.  NOW they have a way to express their contempt for us!     9,553,762 Hits as of tonight!

My HORROR at the Selling your Agency Paradigm…

I recently went to a trade show where we were an exhibitor. The booth across from us was an internet company that does internet marketing. I inquired if they did work with all kinds of companies or just insurance agencies. They answered they work exclusively with insurance agents. He asked what I do and I told him I help people buy and sell insurance agencies. He said, “Oh yeah… Our agents approach other agents all the time and we show them how we are set up on the internet and then we scare the daylights out of them and beat their price right down and our guy buys ’em. Then we put them on our platform and our agent can either flip it and make a lot of money or can keep it and make a lot of money that way.” I was HORRIFIED!… So many agents sell for so much less than they should as they are unwilling to get objective advice. Agents just do not understand that there are really people out there like this! BEWARE!

Insurance Compliance Tip!

The Bureau of Insurance is stepping up compliance of certain AGENCY issues!   This happened in Maine but could happen in any state due to the NAIC definitions of Insurance Fraud!

Agents should be aware that the Bureau of Insurance is conducting “compliance audits” on agent’s books of business.

They are checking cars on in force policies against valid registrations to determine that the vehicle is titled to the policyholder and registered to that owner. They compare the State Registry records to see if cars are being insured that are not owned, but are being used to artificially lower premiums through a multi-car discount that should not be on the policy. They are being increasingly aggressive about enforcement of agency compliance issues.

While you should not become alarmed, this would be a good time to review the accuracy of all your policies and procedures relative to compliance with State Insurance Law. Your agency policies should state that no agent is allowed to distort any underwriting or rating information to an insurer. Penalties can include fines, reprimand, censure and possible loss of license as well as other elective enforcement options..

Some of the compliance issues that they are checking include:

Receipts, as used in rating of a policy (Commercial Lines)- Artificial suppression or inflation of receipts to lower or inflate premiums:

A “ghost vehicle” left on a policy to retain a multi car discount:

Drivers: Failure to disclose and rate for drivers:

Rating: Failure to rate vehicles properly for the exposure:

And… many, many other similar situations.

Agents need to have written policies and procedures to assure compliance and those policies must be enforced by the agency.

Just a word to the wise… Howard