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 Grant.Mehlich@HRH.com.