What blows me away is how many agencies only have a minuscule 1 million of coverage. They sell and advise on insurance and they think that is enough? If they can’t properly protect themselves, they certainly are not going to be good or sincere advisers to their clients. Agencies should have a minimum of 5 million coverage unless they only do very small risks.
A VERY wise mentor once told me, never sell any policy with a value of more than your E&O coverage. If you’re only carrying $1,000,000 you’d better not be selling high GL limits and you’d better stay out of the high end personal lines market. $5,000,000 for my office.
Time for my “soap box”. I looked at the risk management steps, and one critical item was missing. Binding arbitration. What can an agent do? Just like attorneys and doctors, they can have prospective clients and current clients (at renewal) sign a binding arbitration agreement for any disputes. What can you include in the agreement? Whatever you chose. Can restrict damages to premium paid for the policy, limit on discovery and on and on. But what if the prospect or client doesn’t want to sign? In my opinion, you have just discovered a potential claim. No great loss. But, as I’ve said before, too many agents are fixated on the commission. Sell on price, die on price. Sell on knowledge, client for life. And, how about this. How many times have you really worked to land a new client and they take your work and hand it to their current agent? Many years ago, a group of agents asked me what could they do? I designed a “pre-quote” agreement that the prospect would sign. If the agent came up with some unique changes to the clients insurance program, and the client gave it to their current agent, the client was obligated to pay half of what the annual commission would have been. Enforceable? You bet. Especially if there was a binding arbitration provision. A contract is a contract. And of course, have a detailed check list of potential exposures. When the client declines a coverage, have them sign that they decline that coverage.
What blows me away is how many agencies only have a minuscule 1 million of coverage. They sell and advise on insurance and they think that is enough? If they can’t properly protect themselves, they certainly are not going to be good or sincere advisers to their clients. Agencies should have a minimum of 5 million coverage unless they only do very small risks.
A VERY wise mentor once told me, never sell any policy with a value of more than your E&O coverage. If you’re only carrying $1,000,000 you’d better not be selling high GL limits and you’d better stay out of the high end personal lines market. $5,000,000 for my office.
Time for my “soap box”. I looked at the risk management steps, and one critical item was missing. Binding arbitration. What can an agent do? Just like attorneys and doctors, they can have prospective clients and current clients (at renewal) sign a binding arbitration agreement for any disputes. What can you include in the agreement? Whatever you chose. Can restrict damages to premium paid for the policy, limit on discovery and on and on. But what if the prospect or client doesn’t want to sign? In my opinion, you have just discovered a potential claim. No great loss. But, as I’ve said before, too many agents are fixated on the commission. Sell on price, die on price. Sell on knowledge, client for life. And, how about this. How many times have you really worked to land a new client and they take your work and hand it to their current agent? Many years ago, a group of agents asked me what could they do? I designed a “pre-quote” agreement that the prospect would sign. If the agent came up with some unique changes to the clients insurance program, and the client gave it to their current agent, the client was obligated to pay half of what the annual commission would have been. Enforceable? You bet. Especially if there was a binding arbitration provision. A contract is a contract. And of course, have a detailed check list of potential exposures. When the client declines a coverage, have them sign that they decline that coverage.