For many years insurance carriers have been asking, suggesting, and demanding that agents pass insureds directly to the carrier for effective and efficient claims handling. From a logical standpoint, agents are representatives of the carriers through which they are appointed. Eliminating a step in the process should speed the claims efforts; and allow the carriers to respond more quickly to the needs of their clients.
What the carriers fail to understand or acknowledge, is the role of the agents in the client relationship that either cements the clients to their independent agents or proves that, once sold, that the claims relationship is between the insured and the carrier.
Over a decade ago we conducted a series of focus groups throughout the U.S. with the single intent of determining why clients use independent agents. The results were telling because they were consistent at every location, and the results were somewhat surprising.
The top two reasons that consumers used independent agencies were claims, and an assortment of choices.
Participants suggested that captive and direct writers had a limited choice of products. The customers were being sold a product that might not quite suit them, but was the only offering of the carrier. Independent agents, on the other hand, were assumed to represent many carriers and had a greater variety of choices or products and coverages including price choices.
The greatest response achieved however, was with respect to claims handling. The majority of participants agreed that insurance companies were most concerned with controlling their cost, and this translated into paying as little as possible to settle claims. Consumers assumed that Independent Agents, by virtue of them representing many carriers would be more concerned over the well-being of the insureds and would participate and aid the insured in the claims process. The consumers assumed that their agents would be watching out for the best interest of the customer, and would assure proper treatment of the client in a claim. Conversely they equated captive and direct writing agents as employees of the insurance company and under the control of the carrier in the claims process.
So the lesson we learned from our focus group is that the clients of independent agents believed that their commission dollars were being used to market their insurance among many carriers and products each year to assure that they were placed in the best insurance company at competitive rates each year. And secondly, that “their” agents would ‘watch their back’ in the claims process to make sure they were handled properly, fairly, and equitably by the insurance company.
With that knowledge in mind, we are again reminded that insurance carriers have spent a great deal of time and effort instructing their agents to simply pass claims directly to the carrier. The company is concerned over the time and delays that may be caused by agent interventions but have not fully considered the public relations and the relationship aspect of claims on the client/agent relationship. The client is using the carrier, in part, because of the independent agent’s involvement and recommendation. The good will of the agent is transferred to the carrier when a policy is sold with the promise of fair handling in the event of a loss. The greatest proof of that however, only occurs when a claim is registered and the client is treated the way the agent had assured him he would be treated. The agent should be side-by-side with the insured telling him how the claim process will work, which includes following up to assure the client of the proper adjustment and a prompt settlement. Unfortunately, most intervention of agents occurs when the client is already upset by delays or perceived problems during the claims process. By omitting the agent from the claim follow-up process the carrier has virtually forced the client/agent relationship to be defined by the complaints and problems occurring in a claim rather than by the smooth claim handling occurring with the client’s agent at his side to assure him.
We strongly urge independent agents to listen to the words of the clients when they tell us that the care of the client by the agent in the course of the claim is a primary reason the customer uses independent agents and a real positive motivation to continue to be insured in the independent agency network of carriers.
Al Diamond is the President of Agency Consulting Group, Inc. a national consulting firm for independent agents in the U.S. and brokers in Canada and the author of the PIPELINE, a national newsletter of agency principals in continuous monthly publication since 1987. Al can be contacted at firstname.lastname@example.org and through www.agencyconsulting.com (800 779 2430).