I was still a fairly “green” insurance broker when I was granted the distinct privilege of shadowing a veteran producer on a new business sales call. (For the sake of those involved, let’s refer to this veteran producer as Bob.)
FYI: Don’t Sell Insurance Like Bob
Bob had been selling insurance longer than I had been breathing air, and that doesn’t even include the many years he spent on the Company side of the industry. Bob had been both an Executive and an Underwriting Manager at a prestigious insurance carrier. He knew ISO policy language better than his own native tongue, and he had a handful of clients whose individual commissions each brought in mid six-figure revenue annually. He also happened to be a genuinely nice guy and his clients truly enjoyed working with him.
But when it came down to it, Bob was really more of an Account Executive than he was a Producer of new business.
The prospecting appointment that morning was with a very large supplement manufacturing facility in California. Bob was the lead producer on the account and I was there to watch him, to shadow him, to learn, and to take notes. (And now I’m using some of those memorable notes to teach you what not to do in the insurance sales cycle.)
What Was The Goal For That Day Again?
We met with the insured’s two primary decision makers and took a golf cart tour of their production plant. We then settled back into their plush office and the insured soon volunteered the news that they weren’t satisfied with either their current agent or their current insurance carrier.
Bob and I quickly scanned the Declarations pages of their General Liability policy and it was obvious they had some significant gaps in coverage based on their current exposures. In fact, we estimated that roughly 40% of their total revenue would not be covered (was excluded) by their current policy.
The General Liability policy was written by a non-standard insurance company with non-standard policy language. Almost everything in the policy was manuscript. Moreover, we felt the premium being charged was possibly two to three times what it should have been, even if it was covering all of their exposures.
It was a real mess.
Impressed by our immediate assessment, the insured then leaned across the table and asked us to take over their policies via a Broker of Record letter. I smiled, because that’s precisely what I was thinking too.
But not Bob. No, Bob had a different idea in mind.
Wait…What Just Happened?
Bob politely declined to take the current polices over on a Broker of Record letter. Instead, he announced that we would take our submission to the standard market, fill in the gaps with the proper coverages, save them a boat load of premium, and come back looking like superheroes.
I couldn’t believe what I was hearing. To this day I still think I may have gasped out loud. I did not at all agree with Bob’s decision on the account. But he was the lead producer on the account, so that was that.
Ahem…
We went back to your office, huddled with our team members to figure out a game plan, gathered all the loss runs, put together a massive submission with an auto schedule so long it would make your head spin, and then hand-delivered it to a few cherry-picked carriers Bob felt would be a great fit for the account.
Unfortunately, the account didn’t fit anywhere. Anywhere, that is, except where it was currently placed, in the non-standard market with one of the few non-standard carriers willing to entertain it. It turned out that the insured had some hairy exposures that no standard carrier was willing to consider. None would even quote it with an exclusion for such a large percentage of their known exposure.
In the end, we actually spent a lot of wasted time doing the dog and pony show with underwriters. We gathered data, had paperwork and folders coming out of our ears, our Customer Service Representatives developed Carpal Tunnel Syndrome from doing overtime on the auto schedule, and we spent a good day or so driving out to the underwriters offices to hand deliver our submission in person.
A submission which, unfortunately for us, was quickly declined and handed back to us in less than a few minutes.
Needless to say, that whole experience was a disaster. Bob declined the signed Broker of Record letter and we wasted a tremendous amount of personnel hours and resources on something that never panned out.
We were hoping to come out looking like superheroes in the end. Instead, we showed back up at the insured’s location the next month with our hats in hand.
Bob politely asked if they’d still be interested in assigning us as the Broker of Record on their current policies, but the damage had already been done. The insured rightly assumed that Bob was only asking because we had no other options for them.
Sent Home Broke and Empty-Handed
We were sent home with nothing to show for our team’s massive efforts.
TEACHING POINT: That particular new business prospecting fiasco is a perfect example of why insurance producers need to get out of their own way and start doing insurance sales the smart way. And the smart way begins by no longer being your own worst enemy, and earning the insured’s PERMISSION before you take one more step.
A great point, and something we always encourage all of our producers to ask for when they meet with prospects, IF that is the best course of action. Just remember though, that most carriers will not pay commission to a new broker until the renewal, so you’re not getting paid until the next renewal. Oftentimes, the carrier will require an account taken on a BOR to be cancelled and re-written with a new effective date, which will get you paid, but may not be in the Insured’s best interest. BOR’s are fine-you just to know what you’re getting yourself into with them. Working as an unpaid consultant until the next renewal, or messing
with the Insured’s effective date.
Hello Prescott, and thanks for your comment.
I personally believe that getting control of the account is “almost” always, always, ALWAYS in the best interest of the agent. Very rarely would a signed BOR be something you wouldn’t want.
The incumbent agent is going to retain the business more than 90% of the time, and competing brokers win the business less than 10%. So becoming the incumbent agent is a smart move in the sales process.
Good luck in your sales efforts, and sell a lot of business!
I must be missing something here; so I welcome a reply. Unless the BOR has been effectively shielded from exposure to potential regulatory or civil complaints, the rush to BOR status seems a bit misguided. Consideration should not be premised on speculation whether or not a “complaint” would prevail. No agent wants enter that quagmire from the start. — David F. Sterling, Esq., Consultant and Insurance Licensed
Thanks for the comment, David.
As an insurance producer, the job is to sell insurance and while selling the insurance, to secure the very best coverage available to insure the client’s exposures, or to sculpt the policy per the insured’s desires/needs.
I would say that most agents try to give their client the very best policy available to them. That isn’t always the case, but I do believe that accurately represents the ethics of most agents today. Therefore, whatever policy the insured purchased was likely the best or close to best thing they could get at the time. So taking over a policy via a Broker of Record letter is simply taking over what the insured purchased and was the “best” at the time.
The new agent can then make recommendations, renegotiate with the underwriters, etc.
Personally, I don’t know any agents who were sued over a policy the agent took over mid-term which was written by another agent. I’m sure it has happened somewhere at sometime, but I assume it is quite rare. Therefore, getting the signed B.O.R. is the best move a broker can make in the sales process.
Again, thanks for commenting!
As a long time underwriter of complex accounts, I think I am seeing things in this story a little differently.
Firstly, I see a broker sales producer making a sales pitch and promising the world, which ultimately, he can’t deliver. I see a young broker who is driven foremost by his desire to secure another client, regardless of what the clients best interests may be, and regardless of the fact that he doesn’t understand the account complexities in the slightest.
I think this story is valuable, in that it highlights something which has been lost from the noble craft of Insurance Broking, and that is a culture that the broker must at all times serve his client’s interests, and not just his own sales figures.
As an underwriter, I would be much rather deal with the Bobs of this world every day.
Thank you, David. I appreciate your comment.
I can appreciate an underwriter’s opinion on it but that’s exactly what I would guess an underwriter would say. When you’re a producer and you work on commission only, it’s a dog eat dog world. You can sign an AOR and still quote out the business to your other carriers.. Give the guy some options.. You win both ways.. Just my opinion..
As a previous agent myself, I agree with you completely!
I can see the underwriting point as well. But…. If I am an agent and I am able to obtain the AOR I will every day. If I go to an underwriter and tell them I am the incumbent, in my personal experience, I get a better proposal. Instead of the underwriter having to worry about 4-5 carriers they know all the have to do is provide a better value over their current policy and they will get the account.
So in a sense you can be both of those agents in one! If you can’t find another market you go back to the current carrier and try to cover the gaps.
I also understand the underwriter point of view. WIth that said I think they should understand ours as well. I have lost many deals for not having the authority over the gieven account. I came from the corporate world before opening my own agency and the AOR was CRUCIAL in just about every Monday Mornig Meetings, that was the ultimate question to the junior producers … did you get the AOR signed if. It then your just waist if your time. SO if you don’t want to quote till you turn blue in the face then then then GET THAT AOR SIGNED!!!!!! No excuses!!!!!!!