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Getting Your Broker to Act In Your Behalf

By Douglas H. Hartman, ARM

A couple of ugly incidents prompt me to pen this pep talk to insurance buyers.

  • I am angered by a Mississippi judge’s decision in which he said that the policyholder “inferred too much” when their Nationwide agent told them that hurricane losses are insured.
  • I was insulted by an insurance broker's general counsel who found my expert opinion “entertaining,” when I wrote that the account executive handling a renewal should have foreseen that his customer would get a huge bill for additional premiums when the policy was audited by the insurance company.
  • I have become impatient waiting for Lloyds of London to issue insurance contracts that have already expired!
  • I am disappointed every time I read a broker transmittal letter that says: “Here is your policy. It contains many forms, exclusions, conditions and definitions, so you better read it. Do not hesitate to call me if you have any questions.”

It has been my experience that insurance brokers act on behalf of their customers in the insurance market. They want your business. The insurance companies with whom they do business want them to bring your application to them.

It also has been my experience that insurance brokers always act in behalf of their financial interests. I'm certainly not the only consultant who has received an angry call from a broker who lost the business because a client concluded that another broker's offer was a better value. Has anyone else noticed that insurance brokers' recorded telephone greetings often say "Coverage cannot be bound over the 'phone?" How about those elaborate commission disclosure statements? These caveates and disclaimers are risk-shifting devices and often work-shirking symptoms.

 

Getting Your Broker to Act In Your Behalf

First, you've got to tell them that you expect them to always act in your behalf. Reinforce your expectations with action you want to see. Put it in writing -- and don't be afraid to humanize the process by telling them why faithful representation is personally important to you.

You want them to:

  1. Choose insurance companies who provide the best value to you and not the highest commission income to them.
  2. Challenge the status quo -- or give you good reasons why insurance companies, types of coverage, deductibles, policy limits and premium rating plans should renew on the expiring terms.
  3. Control the process. They are the insurance placement process experts. They should set the timeline and make you, the customer, provide them the information they need to renew a policy or settle a claim.
  4. Completely review the insurance companies' temporary insurance binders and insurance policies before sending them to you -- and to never end their transmittal letters with the words: "We trust you will find everything in order."
  5. Communicate the important things you need to know. Their transmittal letters, emails and faxes should be the appropriate time to communicate changes in coverage and rates, convey statistical observations concerning your loss runs and benchmarking information and to guide you as to the next steps in any process.
  6. Confer with independent insurance experts to get the unvarnished truth.

Lastly, tell your insurance broker: "Do not hesitate to call me, if you have any questions."