Our goal with every post is to provide insight, and hopefully education into the world of insurance. While I have personally addressed the topic of Is An Insurance Agent Necessary, I haven’t yet provided a voice to real world experts providing advice every day, so we’ve contacted some of our favorite agents and industry experts to get their thoughts on some of the daily issues in the insurance world and why you should work with an insurance agent.
Meet The Industry Experts
Mark Reilly, Diversified Insurance Service – Mark is one of the top insurance instructors in the Midwest on topics from Professional E&O Liability to Ethics and Commercial Lines Insurance. He has also won a number of insurance awards, ranging from Industry Person of the Year to the Jack Hedges Insurance Educator of the Year Award.
Tom Deml, Deml Insurance Agency, Inc. – Tom has been a trusted insurance agent and advisor for his customers for over 17 years. he is one of the nicest people I’ve met in my five decades in this industry. View Enhance Profile
Char Davis, Marketing Link Insurance, Inc. – Char has been a close friend, trusted insurance agent and nationally known crop-hail expert for several decades. View Enhance Profile
Questions for the Experts
1. What confuses people most about private passenger auto insurance?
Tom Deml – In Minnesota, Personal Injury Protection (PIP) seems to confuse people the most. It is Minnesota’s auto insurance “no-fault” coverage. It has a number of different facets to it and even though it’s been around since the mid 1970s, I would suspect that over 50 percent of the driving public has no idea how the coverage works. Even when explained in fairly simple terms to customers, they have a hard time grasping the concept.
Mark Reilly – The Auto Insurance industry is now focused on price – the lowest common denominator. One of my favorite ways to understand auto insurance pricing is to compare it to tangible property. Two examples most consumers can relate to are cars and computers. If you drive by a car lot and see two red Mustangs side by side, one having a sticker of $33,000 and the other with $26,000 most consumers would readily assume that the pricier car has better equipment, a larger engine, less miles, etc. If two Dell laptops sitting in a store cost $1,200 and $500 respectively, most consumers will assume the speed, memory, and program capabilities are different. Auto insurance quotes differ in price depending on the contract, coverage, and limits. We as advisors have not prevented clients from making similar assumptions to the car and computer examples. When a client says they are leaving because they found a better policy it often is because of price. Independent agents will lose the price battle unless we converting our information into knowledge for our customers.
Char Davis – No fault. . .. Why your company pays a percentage of fault. It is hard for people to understand even when the other party gets a ticket that their company still makes pay a percentage of claim.
2. When people try to save money on their private passenger auto insurance premium what is the first mistake they make?
Tom Deml – They think that lowering their liability limits is a good way to save money. They rationalize that decision by saying “They’ll just sue you for more if you’ve got higher limits”. Liability limits are at the root of why you have insurance in the first place. And some times the conversation to lower limits happens when adding a youthful operator, and frankly that’s when the customer statistically needs higher limits the most.
Mark Reilly – Consumers do not fully understand the complexities of their contracts. Often before purchasing they only know their term premium and some basic policy information like Liability Limits, Deductibles and payment options. If they were to examine policies more closely they would find a wide range of options. One of our carriers offers no-deductible coverage for electronic devices – this could save them from buying inferior coverage through their phone company. Other agreements pay for extra expense when they suffer a loss away from home. So, when they crash in Atlanta and live in Ohio, the hotel is covered. If we do not take the time to educate our clients, they have to go back to price and payment options.
3. What do you find yourself repeating to new private passenger auto insurance customers ?
Tom Deml – I have to re-explain their coverage. Especially if the customer has been purchasing their auto insurance via an “agent-less channel”, such as GEICO or Progressive Direct. They have no idea what they’ve been buying or what it covers. They just wanted the cheapest policy possible. We try to educate them as to the value of proper coverage and the right way to spend money on insurance premiums. They want to have insurance that will meet their expectations in the event of a claim.
Mark Reilly – In the first year after purchasing the policy, there is often buyer’s remorse and informational overload. We are in the process of using email to communicate with our new clients. Our on-boarding process includes calling the customer from thanking them for their business. This is then followed by a series of contacts reinforcing some of our value added services like our 24 hour service line and our mobile application. Hopefully this will increase awareness, engagement, and retention.
4. What is it about selling private passenger auto insurance that gives you satisfaction?
Mark Reilly – It is most satisfying when our staff can move the process from the “apples to apples” commodity to a discussion of value. This helps treating your prospective client’s entire exposure to risk, not just their auto.
Tom Deml – When a customer is informed and makes a good buying decision for their auto insurance, they become your best advocates. Knowing our customer is now wiser and pleased with their insurance policy value relative to their premium paid is why I’m humbly proud to be called a professional. Those customers become loyal, satisfied, and grateful when a claim occurs. Some become good friends. There is a lot of satisfaction in building those relationships.
5. Recently Peter Lewis died. As an executive at Progressive he made that company a dominant force in the private passenger auto insurance industry. He has stated since the late 1960’s that insurance agents will soon be extinct. Why was he wrong? And, why will agents always be a part of the insurance buying process?
Tom Deml – Lewis was visionary in a number of ways, but he was also very wrong about agents. Frankly Progressive’s own statistics have proven over and over again that Progressive’s independent agent channel business is significantly more profitable and stable as compared to their direct business. Lewis didn’t recognize that insurance to a customer is a series of promises, but to an insurance company it’s a complicated contract. The only way those promises can be consistently delivered (sold) to a customer profitably is through a trust relationship between the customer and an agent. The vast majority of customers want an agent they trust to help them make an intelligent and informed buying decision. Most people seemingly have no desire to read or understand their policy. The insurance consumer still wants someone to guide them that they can personally trust.
Mark Reilly – Peter was wrong about a number of things, but he did correctly predict other aspects of the insurance industry. I do think we as Independent Agents are at a crossroads. I wonder if the book industry could have predicted their downfall a year before the popularization of the eReader. Progressive has realized that clients have different buying styles and want access to whatever method suits them. I do not think we are going away, at least not all of us. The statistics are staggering. Seventy-two percent of consumers start their search for insurance on the internet, but more than 80% contact an agent to buy their insurance. We have to provide access to these eighty percent – or they have to find us. The place they are looking is Google. How hard is it to find your agency on Google? If you are not on page one Peter Lewis, (God rest his Soul) is!
I would sleep nights insured by any of these three. They’re not average agents. They’re all extremely successful. Their attitudes are what I have come to expect from independent agents in most instances.
Other Enhanced Insurance articles related to agents:
Enhanced Insurance is not written by attorneys. If you’re looking for legal advice, you need to contact a lawyer. Further, insurance practices and forms change constantly and are varied from state to state. For definitive answers in your area, contact a local agent.
While the majority of people want an agent involved in their purchase of insurance, many people want to see if they can save money by buying direct from the insurance company. Others want to try a direct quote to make sure the premium they’re now paying through their local agent is fair. If you want a quote for your coverage, click on the competitive quote button on the right side of this page.