Pulling back the curtain on the insurance industry to help you select the right agent!
I’ll come right out and say it: For your sake and mine, I’d rather you choose to work with another agent than ask me to compete in a field of multiple agents. Don’t get me wrong: It’s not because I don’t want to earn your business. I do. It’s simply that I want to see you have the best chance of success in the relationship-centric, competitive environment that exists in the insurance industry.
There is a common misconception among insurance consumers that they create their best and broadest opportunity to receive a competitive and comprehensive insurance program with value-added services by inviting multiple agents to quote their coverages. It’s not true. There is a quirk in the property & casualty insurance industry that does not exist in other industries that makes a crowded field of hopeful insurance agents a disadvantage to you. To help paint the picture of how this quirk works, I’ll compare it to the contracting industry.
Let’s say you are planning a kitchen renovation and you invite three general contractors into your home at the same time to explain the project and have them submit a quote to you to do the work. At the conclusion of your walkthrough and after they have all asked their questions, you thank them and ask them for their proposals in one week. The three GC’s walk calmly and quietly to your front door to leave. What happens next is quite peculiar. As each steps foot past the threshold, they sprint to their trucks and peel away from your front yard with terrifying speed. GC-A and GC-B head straight to Lowes, while GC-C makes his way to Home Depot. GC-A and B roar through the parking lot and look for a spot as close to the front entrance as possible. It’s still neck and neck. They each throw their trucks in park, scramble out and race to the front of Lowes. Just as GC-B looks like he’s going to make it in first, his calf cramps up. GC-A runs past B with a smirk and makes it into Lowes first. GC-B hobbles to the front entrance and just before he can go in is stopped by a Lowes employee. “Sorry, GC-B. You can’t come in. GC-A beat you. You’ll have to get your supplies somewhere else.”
And that’s what happens (without the running and speeding) in insurance between agents and carriers: agents play a speed-to-market game. Operating in that fashion does not improve your opportunity as the consumer. Allow me to pull back the insurance industry curtain and explain.
In the world of Property & Casualty Insurance, only one agent can access any given insurer. Insurance carriers are assigned to agents on a “first come, first served” basis. Once an insurance carrier receives a submission, no other agents are permitted to negotiate with that carrier. If multiple agents are used, you run the risk of ending up with the right carrier and the wrong agent. You may not match the agent with the best solutions with the insurance carrier capable of providing the best pricing & coverage terms.
One agent representing you in the market enhances your market leverage, for the following reasons:
- The use of one agent to negotiate with the markets allows the agent to leverage one carrier against the others to obtain the best possible terms and conditions for you.
- Underwriters receive numerous submissions. The underwriter will move your submission to the “top of the pile” if he or she believes they have a good chance of writing your account. One of the most powerful ways to demonstrate to an underwriter that they have a great chance of success is to show that the agent controls the account, and that it is not a blind bid process.
- When using multiple agents, the underwriters know that none of the agents have the client’s unqualified commitment. As a result, underwriters are less likely to invest their best efforts in preparing their proposal.
- When one agent is used, that agent has the ability and the opportunity to provide you with an objective and unbiased evaluation of the various coverage terms, conditions, and exclusions that the marketplace offers.
Your agent has many responsibilities beyond the initial negotiations and placement, which include loss control, claims management, information management, and transaction processing.
The use of one agent can also ensure that your story is told to the market in a consistent manner. The use of multiple agents can result in conflicting information being disseminated in the marketplace, which can negatively impact coverage, pricing, terms and conditions.
Insurance is a business of trust. Every insurance agent’s product (the policy, the coverage, the underwriting process) is trust. I like to put it this way: We are setting you up with a financial security product that you hope you never have to use, but when you do, it better do exactly what your agent told you it would.
I’ll conclude as I started: I may be disappointed if you don’t choose me, but I’ll be alright. I can do my best work for you when you trust me, and I am most interested in doing my best work all the time. Select your agent first and give them full freedom to do their best work for you. You’ll be the long-term beneficiary as a result.
Todd Collins
Commercial Insurance Advisor
