Archive for July, 2011

My Mission… To help Independent Insurance Agents Understand their Value

I have been working on my business planning and I realize that my primary mission is to help Independent Insurance Agents understand the tremendous value they add to the insurance industry. It has been my experience that Independent Insurance Agents are very valuable.  The way our industry is structured, through independent distribution, we are unable to see our value due to the power if insurers. Insurance is an emotionally oriented sale rather than a functionally oriented sale. The “risk bearing” side of your industry (insurance companies) are constantly under pressure to cut expenses from many sources ( A M Best reinsurers, investors…). The insurance companies do not understand the value of agents. As a strategy, they are attempting to cut expenses by attempting to eliminate agency distribution.

They have been unsuccessful in doing so, although certain insurers are successful at attracting “uninformed” clients who do not understand that an insurance company is not an “altruistic” entity dedicated to “looking out for clients” Insurance companies are “profit oriented entities” who make their profits through “bearing risk”.

So… the insurance company’s  goal is NOT to hold the clients hand…  It is their goal to be profitable. It is the AGENTS job to be the facilitator of each and every contact an Insured has with the insurer.  View the insurance relationship as a long term series of events, participate in each of those events (even claims)  add value and become a valued asset to your clients and to your insurer’s clients.

The automobile industry has struggled with the same criticism of distribution and as David Lamarre pointed out in response to one of my last posts, “Case in point, when the auto industry needed the bailout, it wasn’t the dealer body that was falling  into insolvency; the manufacturer’s have long perceived their dealers as “point of sale distribution network”…In the end, the strength of their dealer network had every bit as much to do with their survival as did the bailout. The parallel in our industry glaring.”

We need to get above this paradigm, as agents, and realize, appreciate, showcase and execute added value for our clients. If Insurers could have gotten rid of agents they would have done so years ago.

Howard Candage, CPCU, CIC, CRM


Borders goes “OUT OF BUSINESS”…Like the Local Insurance Agent???

Another “Big Box” store bites the dust. They drive most of the local bookstores out of business and then they cannot survive themselves.

When are we going to realize the value of putting money back into the local economy?

When are we going to wake up to that fact in the Insurance industry?

As we continue to go to the internet for the “low price” we will be contributing to the demise of local business.

Your local insurance agent is there for you! If they do their job correctly (and I will admit, some do not) you will have a local source for trusted advice to help you when things don’t “go so well”, and sometimes they do not “go so well”.

I pointed out earlier, there is a great deal of conflict between the goals of an insurance company and an insured at the time of claim.

YOU, consumer, NEED someone to look after you when the claim happens! Appreciate this fact and realize the value your local insurance agent adds.

If we don’t realize the value of the local business/insurance agent, we will become victims of the same “Big Box” thinking that led to the demise of Borders.   We will have no local support and insurers will be able to do anything they wish to their customers!


Are Insurance Agents executing a Long-Term Strategy?

Insurance Agents are defined by the Insurance Company side of our Industry as the “sales and distribution” mechanism of their risk bearing operation. In my opinion this industry created, “point of sale” paradigm has created a mentality that the Insurance Customer relationship is a single “point of sale” event.

In truth, this is an extremely short term focus/strategy for both the Insurer and the agent. The Insurance Agent Customer relationship has to be viewed as a long term series of events rather than a point of sale relationship. This makes the strategic focus of the agent a long term strategy rather than a sort term strategy. This also forces the agent to focus on ALL the events in the life of the insurance customer relationship rather than just the “point of sale”. If view this way, the agent will be involved in all facets in the life of the relationship including at the time of claim. This is the way to add value and retain customers! Take a long term view, agents!

The conflict between the Insured and the Insurer

It is becoming increasingly evident to me that we, as agents, do not understand the inherent conflict between the goals of the Insured and the goals of an Insurer at the time of claim. It is our job as agents to effect clear and unambiguous communication between the parties at the time of claim.

While we cannot intervene in the Insurers contractual communication or the Insureds duties at time of claim, we certainly can make sure there is consistent communication, that it is clear and concise, and that neither party is impeding the process inadvertently or intentionally.

What do I mean?

Well, recently I heard an agent discuss going to a large home fire. There was a Homeowners Policy in place and clear coverage. The agent said the very first thing the adjuster did was to present the Insured with Non-Waiver Agreement. The Agent asked why. No reason, the adjuster said. I just like to get this signed on every claim to make sure I don’t lose my rights to deny it. Needless to say, the agent requested the adjuster NOT get the document signed until there was a reason to get it signed.

But what if the Agent had not been there? The Insured might have inadvertently and unnecessarily compromised their rights!

Lesson learned about showing up at the claim, and about show sometimes the Adjuster sets up a potential adversarial situation right from the outset of the claim! This is a reason there needs to be an agent involved in the entire insurance process!

Agents need to change it up to be prosperous…

It is getting tougher and tougher for independent agents to survive as income continues to decrease. Rates have been decreasing, premium bases have been decreasing and the number of customers has been decreasing.

In the recent trade press a reinsurance intermediary, Holborn, speculated in National Underwriter that it would take three catastrophes the size of Katrina to harden the US property market (Capacity Tightens With ‘Three Katrinas’ Hitting U.S. Property Cat Re Market).

They immediately followed this with the statement that the “three Katrina’s” have already occurred. It will be interesting to see how this plays out, but the hurricane season is predicted to be more active than average and with the tornadoes this spring… this will be “fun” if we have a hardening market with the economy in its current state.

Can you imagine being a business owner and having a hard market suddenly thrust on you? Plus we face many challenges in the changing climate as agents.

What is the answer, agents?

Sell more business… Run your business as a sales organization and give excellent service to your clients. Insurance agencies are great businesses and have a wonderful future. Capitalize on this fact and give it your all to make it grow and flourish! Here’s to helping our clients and ourselves to have a prosperous future!