Five Questions Every Client Should Ask Their Insurance Agent
Questions to be asked to make sure you are saving the most money on your insurance and getting the service you need
- This question might well be the most important question of all five
- This questions gets to the heart of how you will be treated as a client and how decisions that you are not aware of will be made
- Almost all insurance agencies have mission and vision statements that talk about what they do and how they do things; this in my mind misses the mark because for most of these agencies, the things they state are expected and required of every client
- Ideally, your agent should exist for reasons that make you believe that you and your interests will always be first. Protection is what insurance is but I recommend choosing only insurance professionals that can demonstrate the “why” behind their sale of this important product.
- Please consider our existence statement: “We exist to help people and businesses be the very best they can be.” This singular focus means our clients will always get our best and we will always do what is right for the client.
- You should resonate and connect with your agents personal mission/existence statement
- It is of primary importance to learn of an individual agent’s loss ratio on his or her personal book of business. If your agent works within an agency with several account executives/producers, you should ask this question of the agency as well.
- Most agents have never been asked this question and sadly, most are unprepared to answer it
- This question is vitally important though for several reasons:
- In order to retain an insurance contract with an insurance company, the agency must consistently write “profitable” insurance business. What this means is that any agency who cannot write profitable business is in danger of losing their contract – making it impossible for you to do business with what otherwise might be the best fit for you. So you know, most insurance companies are profitable when agencies have a loss ratio of about 48%.
- Agencies and more specifically agents who consistently write profitable business are able to negotiate better terms for their clients. Please see the “feeding frenzy” section of this website for more information on this and why it is so important. Basically, those agents who can continually generate a larger profit for the insurance company get the best service and the best pricing because all insurance companies are primarily concerned with making a profit. FYI, over the last 5 years, when grouped together, Gion Insurance Unit clients have generated never more than a 28% loss ratio for the insurance companies we represent. How do you think gaining an extra 20% profit for the insurance company impacts their desire to work with our clients? How do you think it impacts the service and pricing my clients receive?
- If your agent doesn’t track his or her own loss ratio or doesn’t know the answer to this question, it is an indicator that you are probably not working with a professional and certainly that the agent is not leveraging his success to gain you the best pricing. Furthermore, agents with a sub-par track record will NOT get the best pricing and service for their clients; guaranteed.
- While bigger is not always better, it usually is
- Keep in mind that a big agency that writes a lot of “unprofitable” business will not get the best pricing and service from the insurance company – see question 2
- One thing most insurance customers don’t know is that most insurance companies are selective about who they will work with. It costs money for an agency to be appointed and the insurance company is looking for value in the partnership/relationship. As such, certain demands are common of agencies including: minimum premium volume, minimum yearly growth, and minimum number of new business opportunities. If these minimums are not hit, an agency ultimately will either lose commission income or lose their ability to do business with that insurance company. Here’s the result that is often sadly very common (especially of smaller agencies):
- Agents may choose one insurer over another simply to reach internal agency goals – rather than what is really in the best interest of their client
- Agents may market insurance accounts to insurers just to hit goals rather than actually provide an opportunity – this hurts the agents ability to get insurance companies excited about working on his or her business (see “feeding frenzy”)
- Agents may select one insurer over another because of commission consideration over what is really in the best interest of their client
- Please looking for specific examples and not generalities – consider asking about the last time the agent personally was involved in helping a client, maybe when a claim was initially denied or the adjuster didn’t agree with their clients point of view.
- Many agents are really nice and really good people. Most are also good salespeople.
- However, what you are really buying is knowledge and experience on the front end and ultimately, help in the event of a claim
- Most agents have little or no training into what they can do to assist a client a claims time and very, very few have resources they can bring to the table to assist a client
- At The Gion Insurance Unit, we have access to Crane’s Risk Management and Loss Control department to assist our clients at claims time.
- Don Hennen (Crane Director of Risk Management & Claims) is available to any client to help navigate claims. This means at times he works as a “go between” or “advocate” for our clients – speaking directly to insurance adjusters on behalf of our clients. Every year, we see claims that were originally denied, paid and loss settlements against our insureds reduced because of Don and his team’s work.
- An agency should be able to do more to assist you at claims time than hold your hand and pass along information – although those are both minimums to be expected of any agent
- One of the advantages of dealing with an independent agent that represents multiple insurance companies is the leverage that can be applied at claims time – this leverage does not exist for agents who work for only one insurer
- For example, most Direct Writer agents (eg. State Farm, American Family, GEICO, Federated, etc.) cannot tell their insurance company that if they don’t handle claims correctly, they will simply move the business to another insurance company – not true for independent agents
- This leverage becomes even greater when an agent consistently writes profitable business because that insurance company doesn’t want to lose that business by not handling a claim correctly – see question 2
- All agents are required to do continuing education to keep their license, many do little to nothing more
- There are valuable insurance designations that good agents can attain. These designations require extensive class work and the passing of exams. In addition, the maintenance of the designations requires ongoing classwork. There are multiple benefits of obtaining and keeping specialized designations including:
- Knowledge of the insurance business that can be applied to tailoring products that meet the needs of clients
- Education and training related to changes in insurance coverages and terms (yes policy language changes all the time)
- Connection with other like-minded insurance professionals where an agent can learn from his or her peers
- Credibility with insurance underwriters who determine pricing for an agent’s clients (see “feeding frenzy”)
- Here are a few of the designations we highly value of insurance agents or brokers:
- Certified Insurance Counselor – CIC (only 2% of agents in the US hold this)
- Certified Risk Manager – CRM (very few agents have this designation as it deals with many area of risk outside of insurance)
- Certified Insurance Service Representative – CISR (this is a great designation for those who are in the day to day business of servicing accounts)