Next Time You Interview your Insurance Broker, Try Asking “What is Your System for Analyzing My Coverage Needs?”

A Good Insurance Agent Should have A System for Making this Analysis.

Here's the number one thing that you're trying to get at with this question:

Is the broker making this up as they go?  Or do they have a plan of attack?

Because if they're making it up as they go, they're going to be more likely to make mistakes.  I’m sure you have people inside of your industry that are the same way.

I stole this whole idea from Charlie Munger.  Charlie Munger was Warren Buffett's business partner, and they built Berkshire Hathaway together.  Charlie was famous for his words of wisdom, his tremendous insight into the nature of investing, and the nature of humanity.  I recommend to everyone that they read Poor Charlie’s Almanack: The Wisdom of Charles T Munger. 

Charlie was one of the best investors in the history of the world and incredibly smart guy. 

“One also needs checklist routines.  They prevent a lot of errors, and not just for pilots.”  Charlie Munger, Poor Charlie’s Almanack p. 300. 

They prevent errors for Insurance Agents too.

What should be in the checklists?

I’ve seen insurance checklists breakdown well in two different ways:

First, every class of business is going to have a list of basic coverage names.  For example, an electrician might look like this

Liability

Errors and Omissions

Pollution Liability

Workers Compensation

Umbrella

Property and Tools

Employment Practices liability

Cyber Insurance

That gives a basic list.  Within each of those coverages, there should be a list inspecting the nuances of each coverage.

For Example:

Property Insurance:

Building limit at each location?

Is this limit appropriate?

Contents Limit?

Is this limit appropriate?

Deductible?

Any Wind/Hail Deductible?

Basic, Broad, or Special Perils?

Replacement Cost or Actual Cash value?

Roof Surfacing limitation endorsement?

Each line of coverage should have a line of questioning to help create a consistent and thorough experience.

I’ll speak from experience.  I’ve been working as an insurance agent since 2009.  If I don’t have a list in front of me, I’ll forget details.  But when I have a list, I know exactly what I’m going to say.

What if they don’t have a checklist?

This type of structure is painful for some personality types.  It’s not impossible for a person to do the job, and to do it quite effectively without a written strategy.  Some of the best insurance agents I know don’t have a written checklist.  They memorized everything that they needed to examine and can recite it at will. 

Those individuals are industry veterans with decades of experience.  They also typically focus on one thing.

That leaves a large number of insurance agents that will probably not have a system for doing a coverage analysis.  Here’s what you ask from there:

“If you’re not doing the coverage analysis, who will be doing it?  What are their qualifications, and what do their systems look like?”

You might find that there is a customer service agent that assists with this part of the process.

But you also might find that there is no backup to the agent at all.  Further reason for concern.

Conclusion:

The most successful agents have a method to their madness.  They do their job the same way every time.  No one is identical in how they approach the job.  The important thing is to understand how they will manage your account that delivers consistent outcomes without coverage gaps.

If you’re a Frederick businessowner, the Director of a Social Service organization or Addiction Treatment Program, or a Contractor, and you want to talk about how you program is being managed, reach out to me by email, phone, or my LinkedIn page.

insuranceforentrepreneursdh@gmail.com

301-526-2046

www.linkedin.com/in/daryl-henry