To Advise or Not to Advise?
The insurance distribution industry has been slowly evolving away from coverage knowledge for a long time. Education seems to have taken a slow road to a long death but coverage knowledge relative to premium in personal lines and SME is at a low point. I'm finding many new distributers, distributers with large books, place zero emphasis on education (and I don't count most CE as education because agents can easily obtain all their CE hours and learn absolutely nothing but how useless it is). I know some direct writers are abstaining from all coverage education for their distributors to limit their liability exposure.
Customers are frustrated though. They recognize, after filing a claim, they don't have the right coverage. With many direct writers hiding behind Sergeant Schulz's philosophy of "I see nothing, I hear nothing, I know nothing" they get their protection even if their insureds don't. With independent agents hiding behind the order taker E&O mantra of "Don't be a professional. Don't be an expert. Don't do anything but give the customers the insurance they ordered and be sure to add the disclaimer that it is their duty to read and understand their policy” (who has the insurance license?), consumers are on their own.
I read an article recently about how carriers are bypassing agents to encourage them to work with risk consultants. In today's age, issuing policies and offering quotes is not worth 13% commission. If that is all an agency is going to do and if you are retiring relatively soon, you'll be fine. For those making careers, you'll have a short career. I've worked with quite a few carrier executives who have stated they will either cut commissions for order takers and/or would like to see agents actually taking care of the insureds because failure to do so is impairing the carrier's reputation and brand.
I recently saw some interesting and preliminary information that insureds, on their own, have decided they want high quality insurance education because they don't trust their agents. Obviously, most insureds won't do this because they don't have the time, education, or knowledge this is possible. But if high quality consumers take this route, we will have adverse selection for all others.
If consumers don't trust order taker agents and carriers don't want to pay 13% for order takers, the future for order taker agents is bleak unless they severely cut their expenses, i.e. compensation.
The reality is that distributers using sophisticated technology who also admit to themselves they are nothing more than order takers have a competitive advantage because they'll strip enough expense to do well at lower commissions. The future is actually good for them. It's all the pretenders that pose as being something more than order takers who are in danger of eradication.
A different perspective is for you to determine who you are. When I graduated college, I researched a life carrier known to hire dozens and dozens of new salespeople. The goal, from my perspective at the time was that they just wanted meat to sell insurance and that the people hired pursued sales of any kind without regard to people's needs. Sell to sell was the goal.
Is this you?
Even after I'd been in the industry a few years, I did not really appreciate how insurance can make all the difference in a person's life. I was used to all the sales consultants teaching people to sell without ever addressing helping the client to a better, safer life. Sell to sell.
Then I read the book, "How I Raised Myself from Failure to Success by Selling." It was written a long time ago by Frank Bettger, who if I recall correctly, was the #1 life salesperson in the country for several years. After reading the book, I bought my first life insurance because he helped me see the true value. As I've told audiences for years, it took a dead man to explain the value proposition because all the live life salespeople failed. They just were selling to sell.
Do you want to make your clients' lives and businesses safer? Do you want to help them truly manage risk? Do you want to build for them a robust insurance program so that if they suffer a horrible loss, you will have mitigated the financial damage to a great extent, a far greater extent than order takers ever will?
Is this you? If so, knowing deeply what your clients' exposures are and then how to best cover those exposures is key to you achieving your heartfelt goals.
I am in the business of helping people achieve these heartfelt goals.
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.