I just left Syracuse I Day where Jim Kelly the Hall of Fame quarterback for the Buffalo Bills spoke. During his presentation he mentioned not having on any rings, neither his wedding ring or his Hall of Fame ring or any other. The reason for it he said was that his briefcase where he kept his jewelry along with his passport and a number of other important items was stolen. He said he learned a valuable lesson after the theft about the limitations of his coverage, or as he called it “the fine print in his policy.” He now knows that without specific jewelry coverage his homeowner’s policy only has a $5,000 limit for theft of jewelry. We all turned to each other and said I wonder who his agent is and I sure hope they’re not an independent agent.
This issue is not unique to Jim Kelly. I can’t tell you how many people I have talked to over the years that found out the very same way about the amount of coverage they had and the limitations of their policies. Many of those people were friends and they had their coverage with independent agents.
Why is it that so many agents don’t take the time to properly find out about a client’s needs and to offer them the protection necessary to keep these types of situations from arising? So many of us say what makes us different than our competitors is the level of service we provide our customers. I guess for some agents that level of service does not include gathering the necessary information from a client to properly assess the potential for loss and then offering them coverage to protect the things that are important to them. When coverage is limited or there is none provided we have a duty to bring that to our client’s attention so they know it before a loss occurs and they can find alternate ways to protect their property. Our failure to do this is one of the reasons that consumers distrust us and the insurance industry and believe we only want to sell them coverage and charge them a premium. They believe the coverage is designed in such a way to make sure we pay out as little in a loss as possible. It also is one of the issues that makes them believe that all insurance is a rip-off and so price is the only determinant when it comes to selecting who you should have handle your coverage. From their perspective you can understand why they feel that way.
The real value of doing business with an independent agent is the knowledge, advice and service that agent provides the insured in selecting insurance coverage and limits, addressing limitations within the policy and making sure that when a client has a loss he or she gets paid all they are due in a timely manner. Absent of that all policies and distribution methods would be pretty much the same and price would be the only differential.
Consumers have no desire to read and understand all the various coverage nuances related to the various policies they carry and they shouldn’t have to. They also are not interested or excited about haggling with an adjustor to get their claim handled properly and as quickly as possible. Because of this it makes total sense they would want an independent agent who can provide all these services from a choice of companies and at a competitive price. So you have to ask yourself why independent agents aren’t growing in leaps and bounds in the marketplace. I’ll give you two reasons. One is that many independent agents talk about providing the service we discussed but never really provide it. The other is too many independent agents have given up the battle on educating their prospects on the benefits of an independent agent. They’ve decided to become order takers and sell new clients based solely on price.
That is why you are seeing the aggressive marketing from the existing direct response carriers and you also are seeing new direct response carriers jumping into the competition. A recent report done by Bob Baxter at Dryden Mutual showed that State Farm gained back significant ground in writing personal auto in New York. I’ll bet they didn’t do it on price but instead made a conscious effort to market the benefits of having a State Farm agent. As independent agents we can offer all that State Farm can as well as a choice of carriers and better advocacy on a claim.
My point in all this is focus finding and writing new customers by offering the advantages that independent agents bring to the buying proposition. If you say you will offer advice and knowledge on coverage and advocate on a claim then really do it and be as consistent as possible in doing it. If you’re selling on price or acting like an order taker make the change and go back to being a professional who is committed to working with their client to properly protect and advise them and to assist them when they have a claim.
I believe if we all made a conscious effort to do this we would change consumer’s attitudes about buying insurance.
As I said earlier in this column, consumers don’t want to learn to read and understand their insurance contracts and they definitely don’t want to deal with getting an adjustor to pay them what they are entitled to and as quickly as possible. Let’s shift the paradigm with consumers and get them buying coverage for what we are best at and not purchasing it as though it is a commodity to be bought at the lowest price.