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

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.

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