Few things are as central to the value of an insurance program as the carrier offering the coverage. 

Insurance is a promise to perform at a future date if a certain set of circumstances occur. The ability of the company to respond appropriately in the future is crucial to a positive outcome. In addition, services offered by the carrier today, and during the life of the policy, are also very important and form a part of the measure of the ultimate value of the product being offered. While the importance of these issues should be common sense, they are rarely spoken of and, rarely discussed when an insured is considering coverage options.

One of the key issues today is the inability of many agents and brokers to make any sort of independent assessment of their carrier partners, and build a complete picture of what those carriers bring to the table. The industry typically cites the AM Best Rating and presents that as the entirety of the quality statement. This is incomplete and inadequate for defining the true value of the product offered. This can cause agents to lose deals where their entire package was meaningfully more valuable, but they were not prepared to explain that value to their customer. Taking the time to understand the total value package of the carriers they work with can significantly improve an agent’s success.

Rating & Financial Security

A more detailed review of a carrier’s position on many different elements will create a much more accurate picture of the overall quality of the carrier offering the coverage. While form and terms remain important, this review process will balance the proposal. An agent or broker that takes the time to assess their carriers’ positions will be seen as a far stronger partner to the insured.

Financial security will always be the first consideration when assessing carrier partners. What is their current AM Best Rating? What is their Financial Size category? While a Best Rating is not the only important factor, it is one of the best ways to gauge the underlying financial viability of a carrier. As we need the company to be available in the future to service a policy written today, this is critically important.

Insurance company financials are incredibly complex, so it is reasonable to depend on a nationally recognized rating agency for that part of the quality assessment. Surprisingly, some agents don’t give attention to this basic information. We often see carriers with “A-“ or “B” ratings on policies where the contracts require an “A” or better carrier. In those instances, the policy sold to that client puts them out of compliance with their contract requirements.

Commitment

The next important element to consider is how committed to this type of coverage the carrier is. We believe this is important because a carrier that is really focused on a specialty will typically service their policies for the long term. If on the other hand they are just testing the waters, many of the resources promised at binding may not be present when needed, or the carrier may have moved on to other opportunities, leaving little infrastructure behind.

We measure commitment through a number of factors. The first is how long has the carrier been writing the coverage. As a broker with a specialty focus, we see new markets get into our line of business almost every day. How long has the carrier offered this type of coverage? How long has the management team been involved in this class? Has a carrier stuck with it through hard and soft markets? Have they had some meaningful claims and continued on? These are important considerations to gauge commitment. This is not to say that a new carrier cannot be a good partner. With newer entries, it is crucial to look at the management team and understand their backgrounds. There have been several cases of very strong teams starting new programs that were very serious markets from day one.

The next measure of commitment is number of employees. We see carriers with specialty divisions with three or four employees. While many of these small teams are knowledgeable and hardworking, they may not have the support needed to service the policy five years down the road. We prefer to see carriers with dedicated divisions and many employees focused on our products.

A similar measurement is number of product lines offered. Again, there are markets with one or two types of policies that may not have the experience or support to offer a wider breadth of environmental products. Is that carrier going to be writing this coverage in five years? Is a carrier with a dozen types of policies more likely to be around? We believe that a broader product commitment is a positive indicator.

Also included in a review of carrier commitment is whether they have regional offices, and their maximum limit available. As with the previous measures of commitment, we believe these make a real difference in determining the trajectory of the carrier’s program.

Companies who have made an investment in all of these areas are more likely to continue writing this coverage into the future, and thus be best situated to work with an insured when his policy renews or claims occur.

Claims Handling & Loss Control Services

In addition to considering carrier commitment, it is critical to understand and share with your client how the carrier handles claims. Some companies have in-house claims staff dedicated to the specialty product. Others use in-house staff to supervise outside claims adjustment firms, while others outsource all of it. Our experience has been that firms who handle their claims in-house seem to have a better track record with customer satisfaction. There is often more interaction with underwriting, as well as more direct oversight by people at the insurance company. It also shows a higher level of employee commitment, as discussed above

Value-added services that a carrier has available are another aspect of the product that should be shared with the client. There are carriers that provide wonderful post claim services and 24-7 call centers for reporting claims. There are other carriers who provide loss control and risk management services to the insured during the policy term. A carrier that will help an insured manage their risk and control costs are of great value. All of these services are part of the package being sold to the client, and need to be emphasized.

Service

Another important issue is the service relationship you and your client have had with a carrier. Can you reach the service person easily for changes to the policy, and are they responsive? Do they deliver endorsements in a few weeks or a few months? Are the endorsements accurate or often wrong? It is hard to imagine that companies with deficient mid-term service practices are going to be helpful with claims handling. Further, poor mid-term service leads to a poor customer experience, and it is seldom the carrier who gets the blame for this.

To give an insured the best possible experience, it is important to disclose the qualities of the carrier offering coverage. Faced with a concern about mid-term service, we have had clients pay more for coverage from a carrier where our service experience has been much better.

Long term success in the insurance industry is predicated on the ability to deliver customer satisfaction. Are your clients satisfied today and will they be tomorrow? Are your customers that purchased policies fifteen years ago still satisfied? Presenting clients with all of the factors that make up the quality and security of the carrier you are offering coverage from is part of obtaining that level of satisfaction. To truly do that, you have to do some work to determine for yourself if the carriers you have can do that.

Failing to do this can lead to dissatisfied clients who go elsewhere for their coverage. It can, in extreme cases, lead to errors and omissions claims for your agency. There is an assumption all insureds make that their insurance agent or broker is bringing them the best possible coverage. It is important to take the time to illustrate that value accurately.