Posts Tagged ‘Insurance’

Have you recommended earthquake coverage to your insureds?

Have you recommended earthquake coverage to your clients?    Today we even felt a slight tremor right here on the dear old Portland Fish Pier!     Earthquakes happen, they happen on fault lines, and WE ARE ON A FAULT LINE!

We need to point out to our clients that they need to at least think about buying earthquake coverage.    When they are trying to hang you out to dry for NOT RECOMMENDING earthquake coverage, they are going to call me and ask me, as an expert witness, “Mr. Candage, do you consider it “state of the art insurance practice” to recommend earthquake insurance?”

Before today I would have had to say “yes, we are on a known fault line.”    After today I am patting myself on the back because I am correct!    Put earthquake on your checklists, on your renewal questionnaires, put earthquake on the big screen for everyone in your agency!  It is important for you NOT to deprive the client of the knowledge they could buy it FROM YOU!

A Definition of “Commodities”. Is Insurance a “Commodity” (2)

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!


To decide if insurance is a commodity, it is necessary to determine the definition of a “Commodity”.

Source:   Black’s Law Dictionary:


“Those things that are useful or serviceable, particularly articles of merchandise movable in trade.

Goods, wares, and merchandise of any kind; movables; articles of trade or commerce.  Movable articles of value; things that are bought and sold.   This word is a broader term than merchandise, and, in referring to commerce may include almost any article of of movable or personal property.

Staples such as wool, cotton, etc. which are traded on a Commodity Exchange and on which there is a trading in futures.”

Blacks Law Dictionary end of definition.

My beginning comments to this discussion:

“Rick Bearing” or “Risk Finance” may possibly meet the definition of a Commodity.   But that commodity product is has little value unless accompanied by knowledge of risk management.   Thus, insurance without advice is a recipe for post loss disaster.  Our “value” or “power”, as an insurance agent, rests in the asymmetry of knowledge between the client and the agent.

There will be more to follow this post, but we need to realize the reason we exist is that there are certain things a client does not know about how to USE insurance that WE DO know.

The raw product of risk finance may be “somewhat” of a commodity.   “Risk Bearing” or “Risk Finance” as a product may be able to be traded on a futures exchange (like commodities), but the added value of the “body of knowledge” of risk management” and the “body of knowledge of risk finance” as a “tool” of risk management is the added value a quality insurance agent, broker or consultant brings to the table.

This reminds me of what I have discussed with many of my consulting clients:

“What you know, likely won’t hurt you”

“What you don’t know, likely won’t hurt you, if you know you don’t know it.”

“What you don’t know, and you don’t know you don’t know, will hurt you every time!”

So our Value to our clients lies in what know that our client does not know… The “asymmetry” (our knowledge of risk management v. our clients’ lack of knowledge of risk management) is our value to the client.

We will discuss this “commodity” mentality more extensively in the next few days…

Howard Candage, CPCU, CIC, CRM


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!

Personal Insurance and Foreign Travel

This time of year Insurance Agents get calls, “I am going to “St. John” (or other locale) on vacation. Am I (the client) insured for THIS foreign travel?” If this happens in your agency, the ISO Homeowners territory is worldwide, YOU NEED TO CHECK THE UMBRELLA OR EXCESS COVERAGE TERRITORY, and the ISO auto policy insures in the “US, Territories, possessions and Canada. What ARE the US Possessions? Here is a quick, unverified, list for reference purposes.

The Commonwealth of Puerto Rico


The U.S. Virgin Islands

American Samoa

The Commonwealth of the Northern Mariana
Islands (CNMI)

The Midway Islands

Wake Island

Kingman Reef

Navassa Island

Johnston Atoll (an atoll is a coral island)

Palmyra Atoll

Baker, Howland and Jarvis Islands

end of list

If you use Insurers who use non ISO forms you will need to check the company’s form.