Insurance agents are some of the most important people that you will ever do business with. They can help you protect your assets, your finances and your property. An insurance agent can help you avoid financial ruin.
An attorney may not be necessary for you to live your entire life. An accountant is not necessary for you to live or die. Insurance agents are essential to your existence in the “real world”.
It’s your responsibility to determine which coverages work for you.
Do you remember hearing a story about a relative or friend who filed an insurance claim only to discover that their agent did not provide the coverage they promised? These stories are all too common, and they happen at the worst time possible…at CLAIMS TIME!
In 1973, I started my insurance career in the role of an agent. My agent licenses remained active until 1992, when I became an adjuster. I sold almost every type of insurance during that time. This gave me extensive experience in the insurance industry. All of my experience didn’t make me an expert in the insurance industry. I was able to learn about risk analysis and how to sell insurance. However, I don’t believe I had any training on how to handle a claims. I gave my clients the number of the company and instructed them to call it. An Acord form is a standard industry form to file a claim. We sometimes filled it out. We did that all.
A person who has spent time studying insurance is the best agent, and not someone who is an expert in selling. Insurance agents of any type are dominated by salespeople, not insurance professionals. Your agent might not be an expert on insurance. It is best to ask your agent about his education.
Today, there are many colleges and universities offering degrees in insurance. The University of Georgia has degrees in Insurance and Risk Management. It is a well-respected program.
Agents can also learn how to become insurance experts by continuing education programs such as the Certified Property Casualty Underwriter education program. Life insurance agents can attain the Certified Life Underwriter professional designation. Agents can also obtain other educational designations, but these two are the most popular.
In order to keep their insurance licenses, agents in most states must also complete the required number of continuing education hours. The state can cancel their licenses if they fail to complete the hours.
The “fiduciary obligation” is a duty an agent has to you. This means that an agent must put your financial well-being before all else. An agent selling you insurance because it pays more commission than other policies is a breach of his fiduciary duty.
Agents are usually covered by “Errors & Omissions” insurance. Agents usually have a type of liability insurance called “Errors and Omissions” that covers their company or individual. This covers the agent in the event that a client holds them responsible for services he provided or failed to deliver. Agents and their staff are protected from any liability arising out of negligent acts, errors or omissions in the course of their business. This will protect the agent against problems such as the following:
1. Loss of client data. Your file is either lost physically or electronically by the agent.
2. System or software failure. All data are lost when the computer in the agent’s office crashes.
3. negligent oversell. 3. Negligent overselling.
4. Non-performance claims. This is a broad category, but it must be. This could be due to charges that the agent failed to sell the correct policy or provide the right amount of coverage.
Agents are most likely to be exposed to the number 4. Here’s why.
Today, people have many insurance options.
Auto physical damage
auto liability
Exposures of uninsured and underinsured motorists
Homeowners are at risk of physical injury
homeowner liability
Excess liability
Businessowners are at risk of physical injury
businessowner liability
Home-based businesses
Life insurance requirements
Needs for health insurance
Disability insurance requirements
Any of the above exposures can affect any other. Each of them are intricately interwoven in our daily lives.
Agents in modern times should conduct an insurance analysis on prospects to determine their current insurance coverage and future needs. Failure to do so could lead to a lawsuit.
What does mean?
First, if your agent promises coverage to you, and you are denied your claim, you can file a claim against his Errors & Omissions Liability policy. Although you may need to involve an attorney, this only increases the likelihood that your denied claim will be paid.
Next: I believe that all agents selling any type of insurance should conduct an Insurance Needs Analysis on the prospect before they sell the policy. A prospect should be fully informed by an agent about the results of the Insurance Needs Analysis before they sell the policy. After the explanation has been completed, the agent should ask the prospect to sign off for the policies being sold and the coverages not yet sold. Signing off simply means the prospect declares that the agent has fully explained all coverages and that he accepts or rejects any coverage.
Both parties..the agent and the policyholder…benefit in this transaction. The policyholder receives a detailed explanation of the policy and how it relates to his other insurance. The agent will sell the correct coverage and reduce the chance of a claim against his E&O coverage.
Here are some guidelines for how an insurance analysis should look.
1. Personal Information Collection: Get as much information as you can about the insured and his relatives.
2. Copy Existing Policies: The agent should be able to read the policies.
3. Analyze your insurance needs: Determine the right coverages and policy limits.
4. Recommendations: What should be bought and what prices.
5. Application and Sign-off Analysis : Fill out the application form and have your insured sign off on it.
6. Delivery of the Policy: The agent should personally deliver the policy and explain it to you again, not just sending you a paper copy.
Even with all the education and training that an insurance agent receives, they are still not experts in handling an insurance claim. Many people have told me they wanted their agent to assist them with their claim. They discovered that the agent did not know as much about the claims process as they did. Agents can become experts but their expertise is usually in the areas of sales and analysis, not claims. Most agents would not spend their time learning about claims because many agents aren’t licensed to handle them.
Yes, some agents will be granted small claims settlement authority by their company. Agents will be allowed to settle claims upto $5,000.00. However, this authority is limited to the property side of the claim (e.g. theft or water loss). The insurance company focuses on claims handling with its claims adjusters and employees.
These are the most important strategies that you can take away from this article:
1. To find out the level of expertise, interview every insurance agent. Only work with experienced, qualified and educated agents. Don’t let inexperienced agents practice on people who aren’t concerned about their safety.
2. Do not always try to get the lowest premium. You get what your pay for. If you have a qualified agent taking care of your insurance, it would be a better decision to pay a higher premium. Do you really want to drive the most expensive car?
3. If you are having problems with an agent, don’t hesitate to contact the Department of Insurance in your state. Agents are licensed for a reason.
We would love to hear about bad experiences you have had with insurance agents.
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