Lazy Agents vs. Diligent Agents
Most seasoned business owners think they have the insurance game figured out. They have a false confidence that because they’ve been in business for so long they know how to always get the best deal. In reality, everything that most business owners do in the process of quoting their insurance is detrimental to them.
Make no mistake – business insurance is a game. But it’s one that insurance agents have been winning for a very long time. Insurance agents are winning so much that they’ve convinced business owners that THEY’RE actually the ones winning. How can they do that? Because business owners don’t realize the mistakes they’re making that’s allowing them to be taken advantage of.
Before I explain the 4 major issues most businesses make – I want to share a story. For many business owners, this story will be eerily similar to their past insurance experiences. For many agents, this will look look exactly like their “gameplan”. This story involves three people: a business owner (you), an incumbent (lazy) agent, and a new (diligent) agent. The business owners’ (your) insurance renewal is in 45 days…
Diligent Agent is hungry for new business and is cold calling business owners for an opportunity to quote their business insurance. He magically catches the business owner (you) in a good mood when you decide, “heck, I haven’t quoted my insurance in years, I’ll give it a shot”. So, 45 days from renewal, Diligent Agent takes the business’ information and sends it to carriers for quotes. He gets his quote back and is eager to share it with you. We’re now three weeks from your renewal and Diligent Agent asks the business owner if they’ve heard from Lazy Agent regarding the renewal. “Not yet”, he responds.
In an effort to make a good first impression, Diligent Agent sets a time to present his proposal 2 weeks before the renewal. Before he begins, he inquires again, “hear anything on your renewal yet?”. “Not yet”, you say. Diligent Agent excitingly goes through his proposal anyways because he knows he maybe has a few better coverages and a 10% lower price. You like what you see but you’re not willing to make a switch until you see your renewal from Lazy Agent.
A week later, one week before the renewal, Lazy Agent finally calls/emails you with your renewal. You tell Lazy Agent that you are thinking of switching for an offer that will save you 10%. Chaos ensues.
“Well, uh, let me see if there’s anything we can do! I mean, we’ve handled your insurance for the last 10 years, that must count for something!?”, cries Lazy Agent. You allow it because, hey, we have worked together for a long time and we had something special at one point! 3 days later, now just 4 days before renewal, Lazy Agent calls you back and now he magically has a better rate with the same carrier.
You’re happy to hear! You’ve got your renewal price down and you don’t have to go through the process of changing agents! So you decide to renew with Lazy Agent for another year because they were able to match the price that Diligent Agent came in with. Lazy Agent counts his commission and Diligent Agent takes hit bat and ball and goes home. 10 months later – rinse and repeat.
Now, let’s break down the subtle games that were played and the impact they will have on you, Lazy Agent, and Diligent Agent.
Issue #1: “I haven’t quoted my insurance in years” (with a caveat).
As a business owner, you owe it to yourself to complete the necessary due diligence around your business insurance every few years. If nothing more than to hold your agent accountable, no matter how long you’ve been with them. The caveat here is that you don’t have to spend the time getting alternative quotes if you have an agent who is proving to you that they are working for you every year (i.e. providing detailed market comparisons each year at renewal & offering value above and beyond answering the phone).
Issue #2: Not having your renewal 15-30 days out.
Insurance agents love it when their clients believe that they haven’t gotten their renewal back from underwriting until the last minute. It gives the agent a chance to be “last-in” and as far as the business owner is concerned, it’s out of their hands. But here’s the truth…your agent has your renewal anywhere from 3-6 weeks before your actual renewal date. So, why don’t they present it as soon as they have it? That’s right, because they want to see if you got any other offers before they decide to actually do their job. If you didn’t, then they don’t need to do anything!
Issue #3: Telling your current agent you have a better offer.
When you bid on a contract or a job, aren’t you expected to put forth your best offer the first time around? Of course you are if you want to have a chance of getting the business. So, then why do you let your agent get multiple swings? You should be asking each agent to provide you with their best offer without sharing any other competitive information you may have about other offers. This will give you the clearest understanding of who is really working in your best interest.
Issue #4: Giving the business to your agent who “saved the day” at the eleventh hour.
This is the BIGGEST mistake you can possibly make in this situation. Why? Because it tells your current agent that they can get away with this process every year. You’re setting a precedent that you’re ultimately going to suffer from. Your agent will think, “hey, I was able to keep the business last year by waiting until the last second to do my job, why would I do anything different next year?”. In this situation, you are rewarding your agent for a lackluster effort, and you are likely damaging the relationship you had with the agent who really was trying to help you.
Sure, this is a bit of a “woe-is-me” story that nearly every insurance agent who has been “rolled” can relate to. The point I want to make however, is how this process is damaging for a business as well. It allows agents to continue to take advantage of their clients.
Next time you decide to review your business insurance program, keep this in mind. It’s a difficult trend to break – especially for businesses that have been following this script for so many years. But, if you take back control of this process and hold your agent accountable, I guarantee you will find the insurance quoting process 100X less stressful.
If you want to learn more about how to level the playing field, check out my eBook here: https://blog.mchughinsurancegroup.com/ebook-leveling-the-playing-field
Written by: Hunter McHugh, President of McHugh Insurance Group