Do you work with the best insurance agent for your business? As your organization grows and diversifies, are you still using the same agent you used when you were a one-person operation? How do you know if your insurance agent, and your insurance coverage, is right for you? Two thirds of risk managers surveyed in 2008 by Greenwich Associates in their Global Large Corporate Insurance Research study reported they were considering changing either their brokers or their insurers.
I am no longer surprised when I chat up someone and learn he or she was once, “an insurance agent.” It seems like hordes of people over 40 were once “insurance agents.” Passing the licensing exam, administered on a state-by-state basis, is straightforward. Passing the test, however, is only the first small sum in the equation of professional development for an insurance agent. If you purchase coverage for your business, or hold substantial personal assets, it is critical that you utilize an agent who understands the complexity of insurance coverage.
Finding a good agent is not easy, and as a result, agent errors and omissions claims are on the rise, reports a recent article in Insurance Journal. According to that article, one in seven agents will experience an E&O claim this year. How do you protect yourself from an agent who does not possess the knowledge to adequately advise you on your insurance needs? What makes an outstanding agent?
First, look for an agent with a professional designation, like the Chartered Property Casualty Underwriter (CPCU), the gold standard for commercial property/casualty agents. The Certified Insurance Counselor (CIC) is right behind that, with both designations requiring ongoing training. But beyond designations, ask how long your agent has been in business, what professional organizations he or she belongs to, and check with his or her other clients.
Kevin Quinley, an expert witness and claims coach, owner of Quinley & Associates in Virginia, has this advice. “Pick an insurance agent that speaks English and not insurance-ese. You shouldn’t need English subtitles to understand the agent. Good agents can translate arcane insurance ideas into plain English. They should also check in with you periodically to assess your needs and degree of client satisfaction, not just at renewal time to sell you more products.” If you aren’t sure where to start, ask your competitors who they use. “Seek an agent who is familiar with your niche of business and really understands your business environment, challenges, and needs,” Quinley recommends.
Don’t be afraid to find an agent with a bit of gray hair, according to Scott M. LeMay, Managing Partner in Lemay-Lang, a risk management consulting firm in Tennessee. “Many Gen-X and -Y practitioners don’t do the traditional qualifying activities that prior generations did, routinely. Nor do they seem to support the idea of membership in professional associations. Many appear to want to be anointed as experts in their field simply by being hired to work in that field, without any real investment in their own human capital through training and study.”
Choosing an agent is not always easy. Larger organizations often use a process that is managed by a consultant, who reviews insurance proposals and provides advice on coverages. Smaller organizations should rely heavily on referrals from business associates. Your relationship with your agent is critical to your business success. Pick a professional.