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Posts Tagged ‘Insurance Agent Duty’

The practical need to visit a client.

As time goes on, it is clearer and clearer to me that there is a need for an Agent to visit a client at the time of sale and a need for an Adjuster to visit a client at the time of claim (as well as the  Agent). I am fighting my way through a half million dollar liability claim (as an expert witness) attempting to get the Insurer to reverse a denial from three years ago.   The claim was wrongfully denied and the Agent did not step into it until now!   The only reason for a denial was that the Insurance Company Adjuster chose to do no investigation at all.   Even a conversation with the Insured would have uncovered facts rendering some insurance coverage. This is absurd.   It does not even meet the basic obligations of the Insurance Company upon notification!   They simply did not have adequate information to make an informed decision.   We simply cannot handle these complicated transactions totally over the phone or on the internet!    WE NEED TO GET BETTER!

CGL Discontinued Operations

If you discontinue the purchase of General Liability Policies due to retirement or going out of business, among other reasons, be cautious if the insured still has products in the marketplace.    Canceling the General Liability will terminate coverage for occurrences that happen in the future due to your insured’s products.

At termination you need to have your client purchase discontinued operations coverage.   The coverage is no longer even in the ISO manual, and I think I must be one of the few who still remembers how it was rated.   Insurance Agents…  Plug this potential E & O Gap by offering the coverage and documenting the offer in your insurance file!

 

Is Insurance a Commodity? (5)

This discussion of Commodities centers on recent attempts by insurers to circumvent agents and sell insurance products over the internet.    I am convinced that insurance is not a commodity as it is not a product that can be sold in an unmodified state and be used properly.   It would be like purchasing an unassembled, complicated piece of equipment and having no directions for assembly.  It appears to me that is the case with “unbundled” “risk bearing” or to put it another way, the thing Insurance companies sell is a “risk finance” mechanism.    Agents add value to this product by showing purchasers how to use it and by adding their own body of knowledge to the process!

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So, in conclusion, I do not think insurance is a commodity.   It needs the advice and service from a competent agent to protect both the insurer and the insured.   Insurance without risk management advice is likely not a good investment for an uninformed insured.  Risk without a first hand, on the ground, rational, informed view of what the exposures present to the insurer is not a good investment for an insurer.

An insurance agent brings a lot to the table IF they are properly educated.   Insurance agents need to put forth a more professional and educated front to deal with clients AND to deal with insurers. Knowledge is the key to being a successful agent.   This is not a point of sale, transaction based business.    That is one of the reasons other types of financial service firms have trouble with it.   The value of an agent is about the added value of knowledge in addition to the SERVICE of bearing risk provided by an insurer.

Is Insurance a “Commodity”? (3)

This discussion of Commodities centers on recent attempts by insurers to circumvent agents and sell insurance products over the internet.    I am convinced that insurance is not a commodity as it is not a product that can be sold in an unmodified state and be used properly.   It would be like purchasing an unassembled, complicated piece of equipment and having no directions for assembly.  It appears to me that is the case with “unbundled” “risk bearing” or to put it another way, the thing Insurance companies sell is a “risk finance” mechanism.    Agents add value to this product by showing purchasers how to use it and by adding their own body of knowledge to the process!

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Agents add value for insurers as well as for consumers as agents are the “front line underwriters” for the insurer. Living locally, the agent can actually interview the insured and get a “feel” of the risk.    This is a necessary element of an insurance transaction.   It is necessary for someone with a “trained eye” toward risk management to actually “visit” a risk.   As much as we would like to say that is not necessary, it is, and the need for the visit can even be obscured from the agent until the actual visit.  This visit needs to occur at the time of exposure identification and at the time of claim.  Please allow me to illustrate:

When I was first an agent, too many years ago than I care to think about, I was given a home insurance lead by a local real estate broker who was selling a property to a Boston consultant who was moving to Maine to retire.   Long story short, I wrote their home and arranged for a visit to meet them and go over the insurance in a few days.   When I arrived they were in the process of moving in.  The Insured, his wife and I visited over coffee and then the Insured asked me if I would like to “see” the house. (Meaning an interior tour).

Being the “Young” insurance producer I was, my first reaction was “I don’t need to take the time to “see” the inside of this house“.  BUT… One of the tenets I teach beginning insurance students comes from a Zig Ziglar quote that I love.  “People don’t care how much you know until they know how much you care”.   I was viewing my job purely from a technical perspective and thinking there was no need for a tour of the house.  That was such an obtuse attitude!

However, I simply said “Sure”, as he wanted to show me his new home.  When I entered the living room, what do you suppose I noticed?  Two oil paintings hanging on the wall. I looked more closely and being the art expert I am (not), I asked him “Do you know anything about the paintings”?

He replied, “No, They belonged to my Grand Dad and he gave them to my Dad.   My Dad gave them to me.”

I said, “You should have them appraised.”

He asked, “Why?”

I said, “Because who knows what they might be worth?   They are obviously original oil paintings and they may be worth nothing or they may be worth a lot.   The time to find that out is BEFORE the fire!”

He questioned me, “Where would I get them appraised?”

Wanting to recommend a reputable appraiser, I replied, “Take them to F. O. Bailey in Portland. If they do not have the expertise to appraise them I suspect they will know who does.”

We ended our meeting with my expecting he would ignore my advice, as most people tend to do.

Approximately a month later he called me and we talked for a few moments. He then said to me, “I took your advice.”

Being the astute young insurance practitioner I was, I asked, “What advice…?”   I had even forgotten what I had told him.

“I took my paintings down to Bailey’s,” he said.

I responded, “Oh, really?”

“Yes”, he said, “The first thing they told me is that they are not experts in “Hartley’s”, but they gave me a letter and said the little one may be worth $ 125,000.00 and the big one may be worth $ 175,000.00. So, I guess we should get some insurance on them.  I am taking them to the Portland Museum of Art where they have a collection of them and they will give me an estimate of value.”

Link to Marsden Hartley history

He did take them to the art museum and it turned out that the little one was worth $225,000.00 and the big one was worth $275,000.00!   There were a half million dollars worth of paintings hanging in this guy’s living room and he did not even know it!   And I was not even thinking it necessary to walk through the house!

He said to me in a subsequent meeting, “Howard, because of our conversation, those have gone from just being two paintings my Grand Dad owned, to being a significant portion of my estate!  Thank You!”

So even when we think it is not important to inspect a risk, it is!  And an insurance company will not expend the resources to protect your client like you will!

“People don’t care how much you know, until they know how much you care.” Zig Ziglar

In the next post I will illustrate the added value of an agent showing up at the time of the claim and by “showing up” was able to cover a claim we all thought was not covered!

Insurance is not a “Commodity”!

This discussion of Commodities centers around recent attempts by insurers to circumvent agents and sell insurance products over the internet.    I am convinced that insurance is not a commodity as it is not a product that can be sold in an unmodified state and be used properly.   It would be like purchasing an unassembled, complicated piece of equipment and having no directions for assembly.  It appears to me that is the case with “unbundled” “risk bearing” or to put it another way, the thing Insurance companies sell is a “risk finance” mechanism.    Agents add value to this product by showing purchasers how to use it and by adding their own body of knowledge to the process!

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We will explore what is a “Commodity”, why I think insurance is NOT a commodity, and what agents can do to more effectively distriblute the risk bearing product more effectively and more to the advantage of their customers!