Archive for May, 2012

The Value of Choosing Professionals who Specialize in Reducing your Cost, Risk and Improving your Mental Wellbeing

May 4, 2012

How does the purchase of real estate have anything to do with the above headline and why, as a Property/Casualty Insurance Broker would I wish to write about this topic?

I attended a very informative and interesting function last week where a commercial realtor, home inspector, financial planner, mortgage broker and real estate lawyer spoke.  They knew they had a topic that should generate questions, good attendance and did extremely well in their presentations.  In fact, I even learned (maybe “relearned”) some information that is useful to someone in my own specialized field.  But how does this relate to choosing a Professional?  Let’s answer that as you understand better what is happening with insurance companies.

This week, for example, I see that Intact Insurance is acquiring Jevco Insurance.  What does this mean to the insurance brokerage business and to the consuming public?  A recent new contact commented to me that he hates even thinking about insurance – who doesn’t?  Every time he has contemplated shopping his business insurance, he is told by various brokers that they are not able to assist him because, in our industry, an insurance company will “block” (restrict) another broker from quoting when they have already been approached by one broker (giving a quote or declining to quote) and this is something his present brokerage does. 

Many brokers shop a renewal to all their insurance companies under contract to their brokerage, trying to get the best renewal terms (usually) so they retain the client’s policies.  The commission for one year is never enough to compensate a brokerage for their expenses so it is incumbent on the salesman to ensure he/she doesn’t lose the client to a competitor.  As we see fewer and fewer insurance companies operating due to mergers and acquisitions, this equates into most large brokerages having all the same insurance companies under contract and this could then make any individual dissatisfied due to a lack of understanding.

The business I spoke with is a retailer so that his comment was what one might expect – “If I want to sell Panasonic or Sony to someone and they don’t wish to buy from me but go elsewhere then they could not buy from another outlet?  Does this appear reasonable?” 

Unfortunately, the insurance industry is not as reasonable as other industries because everyone assumes that the commission rate will be identical and their pricing has to, also, be the same when a broker offers terms to the client.  When consulting, it is easier to manage this shopping process but one must be prepared to pay a fee for the consultant’s expertise.  If you are not prepared to pay a fee for this service (only recommended for extremely large premium policies) then you should not permit the broker to operate in such a fashion.  As a consultant, the means of ensuring that any 2 brokerages are being fair and finding the best terms can be established easier, especially since most insurance buyers really don’t understand the differences between quotes and policies.  For smaller premiums (sure we all think we pay high costs for insurance but this is really a matter of opinion) this is not feasible.

My reply to the above retail business was not what I like to say but is what insurance companies feel – that the buying individual or company has chosen the insurance broker as opposed to another broker for the professionalism displayed.  Now this is the one difference of opinion many people will share because they really do buy on price since it is impossible for many people to determine how professional an insurance broker/agent might be, correct?  Unless you can see some distinct evidence – Blogging, Twitter, seminars, newsletters, something concrete – or unless the broker is obviously helping your business in other ways, your dilemma is understood by this writer. 

You can and should ask any insurance broker for what companies have been approached and what the responses are.  As well, you should ask to see a copy of what is being sent to various underwriters in order to determine the accuracy of information being provided.  I have seen where an underwriter quoted a risk, only to withdraw after another broker had explained what the occupancy was.  There is nothing worse than your business description being inaccurate to the point of a claim being denied for the reason that an insurance company would not insure the class of business in which you operate, is there?

The job of a professional is not just to sell but to educate and inform.  For anyone to have mental wellbeing with insurance – remember that an insurance policy is a contract, a “promise to indemnify” – you must rely on a professional to provide you with the best terms and conditions, not just the lowest priced insurance!

If you wish for further assistance, please ensure your comments are added here.

Addressing Reputation Risk, Handling Media and What If?

May 2, 2012

Recently, something came to my attention that I just wanted, desperately, to write about – media and reputation. 

This is an issue that could easily be headlined differently – something really catchy but…I won’t be drawn into what I remember once as media’s goal of shocking its audience to draw attention to an article (yes, I know that a larger audience and readership equates to greater profitability, even with blogging) but I’m not a reporter or editor – only an insurance broker/risk management consultant.  Because my purpose is to educate, however, I will better explain my choice of titles and topics below.

Gay Pornography – does that now catch your attention?  I didn’t wish to headline this article as such but could have easily included in my title since that is how this article came about.  I’m sorry for my version of shock tactics but there was an incident that took place where gay pornography was being broadcast, errantly, in place of regular television programming.  I don’t know if 3 minutes is an accurate amount of time but some media reported it as such – during a cable company’s daytime broadcast schedule (apparently, this was not the fault of the television station but that is still to be determined).  Now that I have explained, let’s commence with my purpose.

Why do I wish to write about this topic or, for that matter, reputation?  Well, I know how difficult it may be to avoid any and every risk in life – it is not reasonable or practical (though I did have a client who, for many years, described himself as “risk averse” and I still continue to wonder how his business remains profitable and expanding, if he truly is reluctant to assume any risk in business). 

What I want to highlight is how reputation and media risk can be handled differently by various individuals or businesses.  The incident that came to my attention did pique my Risk Management curiosity, especially when I read where a similar event like the above recently occurred, in another locale, and was curtailed in a very short timeframe (I read 30 seconds!). 

Did someone, as we say, fall asleep at the switch?  Was the system hacked into?  How could this have taken so long for anyone, working, to notice?  Was there negligence by an employee and/or management?  How will broadcast authorities now respond?  What about the audience?  What feedback will be caused and will there be financial losses due to advertiser(s) being upset and choosing other forms of marketing?  Will the advertiser(s) see adverse feedback from their own customers and, if so, will they seek recourse for financial and reputation claims from the cable broadcaster and/or television station?  You will now see that Risk Management entails a lot of questions – not all have simple responses but require considerable thought, contemplation and planning for what we all hope will never occur.

Let’s imagine any business facing a catastrophe of any kind and then how one is to address the media onslaught (did I forget to mention that the above happening was reported almost instantaneously, online?).  This should be the single most important lesson to be learned by my writing about this.  In somewhat recent local history that I recall, a manufacturer had a disgruntled employee enter the work premises, armed, and subsequently shot some co-workers, injuring and killing people.  Immediately, there occurred bedlam, media frenzy, with the police and emergency personnel responding.  Have you heard of Twitter and Google +?  Imagine your company’s name being mentioned negatively hundreds of thousands of times in a matter of minutes on Social Media! 

By having a plan of action, you could be prepared for the adverse publicity created by such an event and neutralize or maybe even generate positive attention by being pro-active in your management of such an unlikely but potential calamity.

Another incident a number of years ago was the situation with Tylenol.  The manner in which they addressed it – let me remind you that there will always be significant costs associated with any choice in your plan of action – was unique at that time and may now form the template for proactively handling similar events.  Your reputation should be the most important issue when deciding how your company will appear, following the public’s scrutiny and review, and Tylenol did exactly that – they considered their Brand and the value it had.  This will determine your overall future profitability!  You will need to assess the financial and non-financial damage which could impact lender lines of credit, regulatory agencies, sales by competitors, etc.  If you don’t agree that your reputation is of paramount importance in any decision you make or don’t choose to make then why not brand yourself generically?

By planning for the unknown (and, hopefully, what won’t ever take place), one must decide who the best professionals will be and take the necessary steps to devise a plan of action, in conjunction with your senior management personnel, accounting and legal professionals, PR experts, insurance providers, etc.  Why not let me assist you in determining who is best suited to assist your business?  I work with many key professionals who I gladly recommend in the fields of expertise they operate and I work in conjunction with them.