Agency Management: Read the Policy

Did you know that in many states policyholders have NO legal obligations to read a purchased insurance policy?  Mississippi laws require insured’s to know terms of the policy which they rely on for protection regardless of whether or not the policy is read.  Mississippi also has documents required by law in order to purchase a policy.

q  Duty to Read Doctrine

q  Implied Knowledge Doctrine

If suit is brought after the purchase of an insurance policy the claimants cannot:     

1.   Cite negligence

2.   Claim Negligent misrepresentation

3.   Claim Failure to procure coverage against agent

If more states had similar laws, E&O claims would then likely be lessened and agents could actually be more confident in writing a policy instead of spending so much time documenting to ensure that an E&O case is not filed against them.  States should adapt criteria to reduce the chance of a lawsuit such as:

q  Statement that insured knows policy document, policy terms, & has read policy or will read when received.

q  Insured’s obligation to notify agent of mistakes.

Agents are in the business to help people, much of the work we do is to ensure the continued lifestyle of our client in the event of a loss.  That goal can’t be accomplished if we have to diligently protect our practice from fraudulent or frivolous lawsuits because an insured does not understand their purchased policy.  If both agent & insured educate themselves by knowing policy content then that practice should drastically reduce lawsuits.

Summer Update

I absolutely cannot believe that we are staring at the end of July already.  MMAIP typically takes a summer break from normal monthly meetings during July and August but as officers and members we are very aware that fall is just around the corner and have already begun planning for all the great events and classes that will be a part of MMAIP during the 2011 – 2012 year.

Security Outside the Box...

Here in the Mid Michigan region summer is in full swing and as we have begun to experience what some might call suffocating heat and humidity. I hope that everyone is staying safe and cool during this time. In addition to the heat the storms during this season have been fantastic, if you like storms, that is. Unfortunately the storms make me very aware of the amount of individuals, families, and business that find themselves without insurance or severely under insured.  When weather creates large paths of destruction it can turn a person’s world upside down.  This makes most people realize the necessary evil that they consider to be insurance.  

I recently had one of my customers tell me, as he was removing his check book from his wallet, that he was becoming insurance poor.  In the same breath he said ‘but the second I take the insurance off (my home) something is bound to happen’. I couldn’t agree with him more but he is not the typical insurance customer. The truth is that many people just want lower premiums and better coverage and if they could get it for free that would be even better!  When given the choice between groceries and insurance the consumer will probably choose groceries every time, and, with good reason. Even as an agent in the industry I can’t say that I wouldn’t make the same choice if given that option.  That is why, as an industry it is more important than ever to educate our customers on the security that insurance can give them, their families and businesses.

I am not a great salesperson, so believe me when I tell you that this is not a marketing tactic on my part. It is however, my new outlook on insurance and on the money that I invest in that direction. In many ways Insurance is a security measure against many things such as homelessness, law suites, unemployment and bankruptcy.  Insurance gives the peace of mind that if my house burns to the ground my family will have money to rebuild and in turn my family won’t be homeless.  A business owner who has a customer slip and fall in their establishment can try to ward off law suits by offering up his liability coverage for medical injury.  While in this case, it is still possible that the customer could still try to sue him but at that point he will have the backing of the company on his side in court. That is security to the business owner.  A business owner who has business income coverage can also know that should they have a fire they will have income while they work to become operational again. This can protect them from becoming unemployed, without income, and in some cases allow them to stay financially solvent.

While these examples may seem far fetched, I truly believe it has become our job as insurance professionals to think outside of the box for our customers. Look for what they need to help them understand the security and investment in managing their personal and business risk. It is no longer just ok to collect premium and hand over a policy. It amazes me how many people are starting to read through their policy, line by line, to try to save a penny. Maybe it’s the economy that has caused this issue; of course presently everyone wants to blame the economy for everything. In a society where so many people are struggling to make ends meat and make a profit, it is more important than ever to show them that our goal as an industry is to help protect them. So that when the unthinkable happens to them they can have security in the fact that they are protected and will have to pull less out their pocket to make themselves whole again. It really is a priceless commodity. 

Farewell to Groggy Communication...

While the rest of the world was peacefully sleeping this morning, I was stirring awake at 4:00 a.m., realizing that a data conversion strategy I agreed to yesterday could not possibly work.  The point is not whether you understand data conversion strategy or not.  What you should know is I have one of those insanely frustrating, but (some would call) blessed minds, that works throughout the wee hours - in my dreams and regardless of my body’s need for nightly dormancy. 

In my groggy moment of horror, realizing the error of our conversion strategy, my thoughts progressed to processing solutions, while silently pleading for some higher power to allow me the sleep my body craved.  It didn’t take long before my mind moved on to planning my communication of the deal-breaking issue to business managers and team workers who would have absolutely no idea what I’m trying to explain to them. Most likely they would view basic (to an insurance exposure conversion, anyhow) concepts such as table relationships, primary keys, article statuses, pro ration, and earning calculations as mumbo-jumbo designed to deny them what they need.  Herein lies the problem, when one’s business is something that is known and appreciated only to those crazy or passionate enough to work in that field of expertise.

If you think this same challenge doesn’t apply to you, it might be time for a reality check.  We insurance professionals, while sometimes astute and aware, more often unknowingly and unwittingly crash head-on into this issue every time we have a conversation with one of our customers about their insurance needs.  Is it any wonder that closing a sale with a new prospect is so difficult? When the potential customer is unlikely to understand what it is you’re trying to sell them or why they need it… when their heads are spinning and frustration is the only thing within grasp, as we talk about coinsurance, perils, conditions, causes of loss, included coverages, additional coverages, standard market, excess and surplus lines, reinsurance, and the list goes on?

Perhaps, like me, you’ve known a few sales people who capitalize on this ignorance of the buyer to wear them down, and the prospect gives a bind-order just because it’s a means to escape the jargon and frustration.  One might call that the ‘please go away and stop punishing me with things that make me crazy’ sales technique.  It’s much like the techno-weenie in your I.T. Department who talks you into circles with terms you don’t understand and never will just so you’ll go away because s/he is too busy to tackle your computer problem at that moment.

Which brings me back, full circle to my current challenge (now that I’m fully awake and have given up on sleeping this night… morning… whatever) of trying to communicate issues that are important to MY customer, the insurance business manager in a way that s/he will understand and appreciate, in order that s/he can make a sound business decision.   

While each person needs to approach communication in a way that works and is comfortable for them, there are a few approaches I always try to take, which have served me well in communicating complex and foreign concepts to an audience:

·         Avoid using jargon if another word will suffice.  People like to understand the words they’re hearing, and this will help them engage in the discussion and keep them from feeling defensive.

·         Instead of explaining what each foreign concept or term IS, explain its PURPOSE or IMPACT.  A business owner won’t care that a primary key links records from multiple tables, but they will care that it keeps their vehicle coverages and premiums from being whipped up, like a frozen margarita, with all the other vehicles’ coverages and premium.  A potential insured won’t care that coinsurance is a factor applied to loss dollars in the event of underinsured property. They will care that it’s a mechanism to ensure they adequately identify the value of their property which in turn reduces their loss coverage if they significantly underinsure.

·         Check with your audience frequently.  Confirm that they understood what you just explained, and offer them an opportunity to hear the message another way or with other examples.

·         Relate every concept to their specific business.  Use examples that they are likely to routinely confront.

The challenge of effective communication is one we all deal with, whenever we are communicating with a person who works outside our own specific discipline.  While it can be a significant problem and can inhibit business relationships, or can even kill a sale, it doesn’t need to be a deal-breaker if we remain conscious of our own communications.  A very wise person taught me, long ago, that the responsibility for communication lies with the speaker.  It is up to each of us to make ourselves understood.  Another way of looking at it is that we are all service (or product) PROVIDERS.  While we may OFFER our services or products to our customers, we are only effective if we are successful in DELIVERING, which suggests there is a willing recipient on the other end.  At the end of the day, our purpose in our work is to deliver the message, deliver the service, deliver the product, and to have the recipient be a willing one. 

So, my challenge is going to be finding the patience and the understanding to communicate a technical conversion issue to an audience that speaks another language and doesn’t understand the impact to their business.  Yours may be to communicate terms of coverage, exposure issues, and other critical insurance concepts to a policyholder that could make the difference whether they ever open their doors again or not following a major loss.  Whatever communication strategy you decide upon, my hope is that it will be one that allows your audience to receive the information, to relate to the points you’re making, and allows you to move forward with a successful service or product delivery.  If I can achieve that today, I just may find myself getting that much needed sleep TOMORROW morning!    For now, it’s going to take a lot of coffee…