In today’s complex business environment, having the right insurance agent is crucial for effectively managing risks and controlling costs. As outlined in The 10 Laws of Insurance Attraction, the traditional approach to insurance procurement often falls short in addressing a business’s specific risk profile. This article explores how to determine if your current insurance agent is truly meeting your needs and when it might be time to consider a change.
The Limitations of the Traditional Insurance Model
Many executives become frustrated with their insurance programs and feel the need to shop around for better options. However, the traditional insurance shopping process itself is often a source of frustration. The book points out that this process typically involves:
- Receiving numerous calls from agents 90-120 days before renewal
- Inviting several agents to quote
- Providing the same information to multiple agents
- Waiting for quotes
- Comparing quotes and selecting the lowest price
This approach has several fundamental flaws:
- It focuses solely on selling insurance products rather than comprehensive risk management.
- The 90-day timeframe is often insufficient for a thorough risk assessment.
- It may not address critical risk issues or may overlook them entirely.
- The emphasis on price often overshadows the importance of coverage quality and risk management services.
- It actually rewards your current agent over 90% of the time.
Signs You May Need a New Insurance Agent
- Lack of Proactive Communication
If your agent only contacts you near renewal time or when there’s a problem, they may not be providing the level of service you need.
- Limited Understanding of Your Business
Your agent should demonstrate a deep understanding of your industry, operations, and specific risk challenges.
- Focus on Price Over Coverage
While cost is important, an agent fixated solely on finding the lowest price may be neglecting crucial coverage needs.
- Inadequate Risk Assessment
If your agent hasn’t conducted a thorough on-site risk assessment or doesn’t regularly update their understanding of your risk profile, they may be missing critical exposures.
- Lack of Tailored Solutions
Generic, one-size-fits-all recommendations suggest a lack of understanding of your unique risk profile.
- Poor Claims Handling
An effective agent should be actively involved in managing and advocating for you during the claims process.
- Limited Access to Markets
If your agent consistently presents options from only a handful of insurers, they may not have the market access needed to find the best solutions for your business.
Evaluating Your Current Agent
To determine if your current agent is meeting your needs, consider the following:
- Risk Management Approach
Does your agent take a proactive approach to identifying and mitigating risks, or do they simply react to issues as they arise?
- Industry Expertise
Can your agent demonstrate specific knowledge about your industry’s unique challenges and regulatory requirements?
- Customized Service
Does your agent tailor their services to your specific needs, or do they offer a generic package of services?
- Transparency
Is your agent transparent about their processes, including how they market your business to insurers?
- Technology Utilization
Does your agent leverage modern technology and data analytics to enhance their risk management and insurance placement strategies?
- Ongoing Education
Does your agent stay current with industry trends and emerging risks that could affect your business? Do they educate themselves more than the required CE to maintain their license? Do they have meaningful Professional Designations such as CPCU (Chartered Property Casualty Underwriter), CIC (Certified Insurance Counselor), or CRM (Certified Risk Manager)?
The Importance of a Comprehensive Approach
The book emphasizes that effective insurance and risk management should follow a process similar to making any significant purchase. This process includes:
- Identification: Thoroughly assessing potential risks and exposures
- Analysis: Evaluating the likelihood and potential impact of identified risks
- Control: Developing strategies to mitigate or manage risks
- Financing: Determining the most appropriate methods to finance residual risks, including insurance
- Implementation: Putting risk management and insurance strategies into action
- Ongoing Management: Continuously monitoring and adjusting the program as needed
An agent who follows this comprehensive approach is more likely to provide value beyond simply quoting policies.
Questions to Ask When Evaluating an Agent
When considering a new agent or evaluating your current one, ask the following:
- “What is your process for engaging with our company?”
- “How do you gather the information needed to provide a quote?”
- “What experience do you and your team have in our industry?”
- “How do you stay informed about emerging risks in our sector?”
- “Can you provide examples of how you’ve helped similar businesses improve their risk profiles?”
- “What resources do you have for ongoing risk management support?”
- “How do you approach claims management and advocacy?”
The book offers two pages of questions and follow-up questions a business leader can ask on its Free Resources page of the book’s website:
https://www.premiumreductioncenter.com/learning-center.
You do not buy a car without taking a test drive, so why would you not take a prospective agent for one? This can help you determine if they talk a good game, but cannot deliver in the end. The book refers to it as People vs. PDFs. In other words, there are a lot of 3rd party companies that provide insurance agents with a ton of PDF informational resources that can make them look knowledgeable, but in the end, they do not have the skill, experience, or processes to be able to deliver on it.
The Role of Deep Experience
In today’s complex business environment, working with an agent who specializes in your industry or has the deep experience to be able to understand your operations can provide significant advantages. Specialized agents are more likely to:
- Understand the nuances of your industry’s risks
- Have established relationships with insurers who specialize in your sector
- Provide industry-specific risk management guidance
- Stay informed about regulatory changes affecting your business
The Importance of Submission Quality
One often overlooked aspect of the insurance process is the quality of the submission your agent presents to insurers. The book suggests asking to see the submission before it’s sent to insurers. A high-quality submission should:
- Provide a clear narrative about your business operations
- Highlight your risk management efforts and improvements
- Include detailed information about your loss prevention strategies
- Present your claims history with context and explanations for any significant losses
A well-prepared submission can significantly influence an underwriter’s perception of your business and potentially lead to better terms and pricing.
The Value of a Long-term Partnership
While it may be tempting to switch agents frequently in search of better pricing, there’s value in building a long-term relationship with a knowledgeable agent. A long-term partner can:
- Develop a deeper understanding of your business over time
- Provide consistent, ongoing risk management support
- Build stronger relationships with insurers on your behalf
- Offer more strategic, forward-looking advice
Conclusion: Making an Informed Decision
Choosing the right insurance agent is a critical decision that can significantly impact your business’s risk management strategy and bottom line. While the traditional model of simply obtaining quotes may seem straightforward, it often falls short in addressing the complex risk landscape modern businesses face.
By evaluating your current agent against the criteria outlined in this article and asking probing questions about their approach, you can determine whether they’re truly meeting your needs. If you find that your current agent is falling short, don’t hesitate to explore other options. Remember, the goal is not just to find the cheapest insurance policy, but to partner with an agent who can help you develop a comprehensive risk management strategy that protects your business and supports its long-term success.
In today’s complex business environment, your insurance agent should be more than just a policy provider – they should be a strategic partner in your risk management efforts. By choosing the right agent, you can transform your approach to risk and insurance from a necessary expense into a valuable tool for business resilience and growth.