The Cost of a Law License
Per the book, The Club, by Leo Damrosch, in order to join the law bar in London around 1770, a gentleman had to prove residence at The Honourable Society of the Inner Temple by eating X meals there. The author does not say how many meals.
I cannot find out how much a good meal would cost in 1770 London. Although the clubs frequented by gentlemen seeking admittance to the bar were not low class, I was able to discover a proxy. The closest I came to 1770 London was an 1860 menu for a five-course meal at the Oxford Music Hall. The price was 2 shillings and 6 pence. According to currency translators this equals approximately £7.50 or a little more than $10 today. I am guessing this is a significant underestimate of the meals at the Inner Temple, but even if the price is $30 today, then the price to join the bar was to prove that one could afford many good meals.
The lawyer jokes could start right here.
But before becoming too self-indulgent, what does obtaining an insurance license require? In one state I looked up, I found that a resident producer license is $144. You must take an exam and exam preparation packages run around $150 to $250 for 50 hours of training each. So let's set the cost at $500.
What do insurance agents sell? Legal contracts. Agents sell contracts written by attorneys working for insurance companies. It is kind of a weird profession to sell legal contracts without being an attorney. Of course, lipstick is applied all over these legal contracts. The base layer is that insurance is being sold. A legal contract is being sold between an insurance company and a consumer that promises to pay the consumer specific amounts of money in the event they incur an unexpected loss not excluded by the contract. The contract is what is being sold though. The insurance provided is between the carrier and the insured. Which is an important point in this COVID-19 era given how in multiple instances carriers seem to have forgotten that the contract is between them and the insured and therefore, they instructed their agents to tell insureds they have no coverage or reduced coverage rather than the carrier reviewing the claim in the former and sending proper notices in the latter. You know a lot of lipstick has been applied when the carriers do not understand their contractual relationship.
A little brighter color of lipstick is used by saying protection is being sold. The carriers advise they are selling the consumer protection and, in a sense they are, because a well-crafted insurance contract is protection. However, the sale is still that of an insurance contract.
A really popular lipstick color today is to paint these legal contracts as some bizarre form of risk management. Insurance contracts, other than a few exceptions whereby the contract requires certain risk management tasks for coverage to be effective, such as with many cyber forms, have zero to do with risk management. This is why calling yourself a "risk manager" when you are really just selling insurance contracts is a massive E&O trap. It is a misrepresentation of what is being sold and it is usually a misrepresentation of the agent's true skills.
Risk management is a completely separate service, and may not unilaterally be given to clients due to rebating rules. Additionally, most agencies that provide true risk management initially lose money because they cannot afford to provide real risk management -- they give their advice away even if they are not allowed to give it away. They do not know how to legally sell risk management fees and even if they figure out how to sell the fees legally, their producers are incompetent as evidenced by their fear of disclosing their commissions. Producers providing tangible value do not fear disclosing their commissions.
The fact is that when the barriers to entry to sell something so complex (contracts) are so low, an industry will have lots of pigs with a lot of lipstick. I was once advised not to write anything about the low barriers to obtain an insurance license because a certain insurance department would become really upset to have this out in the public domain. The tragedy, especially with the current "pick the coverage that fits you" sales line along with Insurtechs added to the mix, is that those professionals who work incredibly hard to know their coverages and to match the right coverages to their clients' specific needs have tremendous difficulty rising above all the noise. Consumers have an extremely difficult time distinguishing the amateur from the professional.
If you are thinking this problem only exists in personal lines and small commercial, think again. I have seen some of the least knowledgeable agents selling extremely large commercial policies and winning against agents who were selling much more important coverages and price was not the deciding factor either. It was the noise that muted the sounds of the professional.
Think of it this way. In a noisy bar, a band does not have to hit all the right notes. Combine that with liquor and they can sound good and even better than a precision player trained at Berkeley School of Musicology. To stand out among all the pigs in lipstick, there needs to be some silence. The professional and the amateur are both selling the same basic product, a legal contract and neither will likely possess a license to practice law. Both will possess the same cheap insurance license. Usually both will represent the same carriers or have access to the same carriers. Only a handful of carriers possess special value today and that results in an awful lot of similarity of product.
How does a true professional stand out then? How does a true professional stand out in wonderful Chiaroscuro light from all the darkness when an amateur, either oblivious or full of baseless hubris and claims that they do all these wonderful things for clients when they do not, and the client does not know the difference?
For every agency, and even every single individual agent, the answer is going to vary based on their location, their target clients, and their competition. I enjoy nothing more than helping agencies and individuals achieve that differentiation. Each journey is unique.
A few commonalities generally exist. One definite factor is learning insurance contracts deeply. Another is not being a jack of all trades. A jack of all trades usually is nothing other than a master of none. Professionals are usually professionals in a specific field. A third common trait is that professionals live up to their promises. If they advertise they are a risk manager, they have a true risk management degree/designation and approach that is distinct from the insurance sale approach and includes the processes and procedures to prove they are actually providing the promised services and expertise.
Rather than being dragged down to a cheap license and lots of bad lipstick, rise up and distinguish yourself. Be that light for the public. Even bots can sell insurance contracts. Only true professional agents can guide clients to the coverages and risk management they really need.
NOTE: The information provided herein is intended for educational and informational purposes only and it represents only the views of the authors. It is not a recommendation that a particular course of action be followed. Burand Insurance Education, Burand & Associates, LLC and Chris Burand assume, and will have, no responsibility for liability or damage which may result from the use of any of this information.
None of the materials in this article should be construed as offering legal advice, and the specific advice of legal counsel is recommended before acting on any matter discussed in this article. Regulated individuals/entities should also ensure that they comply with all applicable laws, rules, and regulations.