Manage risk, manage insurance

There are a lot of dynamic people out
there selling insurance policies. But
placing insurance is not just about selling a piece of paper.

“You need to know every single little in
and out of a company,” says Grant Connor
Mehlich, producer, Hilb Rogal & Hobbs of
Tampa. “You have to get into details, assess
the risks, understand the operations —
past, present and future.”

Smart Business spoke with Mehlich
about the distinct differences between selling insurance and selling risk management,
and how the best insurance brokers assess,
underwrite, market and service their customers to best manage their risk.

What are the keys to properly assessing a
company’s insurance requirements?

Anybody can sell an insurance policy, but
what you really need is a risk management
approach that encompasses knowing
everything about what the company is
doing now, what the company has done in
the past and what the company wants to
do going forward.

The first meeting with a client should be
all about reviewing what’s going on with
the company. This is especially critical
when it comes to general liability coverage.
If a manufacturer was making parts for an
aircraft years ago but no longer makes the
parts, it’s the broker’s job to make sure the
company is still covered for prior operations.

How are these requirements shopped for the
best programs and value?

To get the best price for the best coverage, you’ve got to see what the market will
bear. Obviously, some carriers like certain
classes, while some carriers don’t like
them — but you go ahead and put it out to
market to gather positive feedback as to
what’s going to be the most beneficial for
the client. A good agent is actually making
two sales — one to the client and the other
to the carrier.

How does underwriting experience work in
concert with sales?

Underwriters have their own language.
By nature, underwriters are pessimistic
and agents are optimistic. In a past life, I
was an underwriter with American
International Group, the world’s largest
insurance company. I was able to learn
how the carriers think. In my mind, the
underwriter is the true insurance person.
The broker is really the sales function.

This is why companies need an agent that
understands the carrier side and the underwriting aspect. Being able to appreciate the
underwriting process makes it much easier
to send a company’s insurance needs out
to the market. Remember, there are two
dynamics here — two clients you’re trying
to sell. One sale is between the broker and
the client, and the other is between the broker and the carrier. If you can’t sell the account to the carrier, you’re not going to get
the best deal for the client.

How does that integrate with today’s insurance market?

The hot topic continues to be Florida
property insurance. Interestingly, for the past six months the rates have been dropping dramatically, upwards of 40 percent.
The interesting dynamic with property
comes back to knowing the details.
Possessing a thorough understanding of
insurance policies, exclusions and specific
endorsement forms allows you to get the
client a better deal. For example, one
endorsement of property allows you to
drive down the rate on a piece of machinery. If it is fixed to the wall or fixed to the
ground, it now becomes a part of the building. This drives down the rate because normally rates are higher for stand-alone
machinery. It’s up to the broker to get into
the plant, survey, ask questions and look
around to see if certain endorsements
could apply.

What levels of service should companies
now expect from agents?

In light of what’s going on down here with
property, brokers have to get creative.
Examples of getting creative are utilizing
endorsements or layering a program.
Layering means you’re going to bring in
three or four different property carriers to
underwrite one account. Let’s say AIG
wants the account, and while the building
is worth $50 million, it only wants $25 million of the account. Meanwhile, Travelers
also wants a piece of the account, but it
doesn’t necessarily want the other $25 million. In this case, you can layer them to
where both carriers are happy — one carrier takes a piece of this and another takes
a piece of that — which drives down the
rate.

On a final note, a good agent takes a pure
risk management approach. This has
always been my philosophy. When you
take this approach, your client ultimately
will be the beneficiary of a strong, competitive and, most importantly, protective
insurance program.

GRANT CONNOR MEHLICH is a producer at Hilb Rogal &
Hobbs, Tampa. Reach him at (813) 261-7982 or
[email protected].