When You're Wrong Even When You're Just Asking a Question
Everyone has likely heard the saying, "Damned if you do and damned if you don't." Insurance agents who try to do the right thing (not the sloppy, incompetent agents who are only interested in making a sale, even if it is the wrong sale) are so often caught between these rocks and hard places. They try to advise their client they truly need additional coverage and lose the sale because that is not what the client wanted to hear and some other agent offered them a lower price without mentioning the coverage was inadequate.
Conscientious agents cannot bring themselves to offer inadequate coverage, but they need to eat too. Life is hard for do-gooders.
One of the plagues of the industry is the decades long effort to make insurance "simple" by ignoring the "coverage" aspects. The commoditization of a complex product that technically cannot be commoditized happens because the people selling insurance and the people buying insurance do not understand its complexity. The result is a pretend dumbing down that only serves those entities who sell insurance by cutting corners.
Just how hard it is to sell insurance effectively is exemplified when a client protests not only against good recommendations, but even when the agent asks deep questions. An extremely common situation involves insurable interests. An agent friend of mine was asked by his family to insure a vacation home owned by different members of his extended family. The question was, "Who has an insurable interest in this home?" The response was, "What difference does that make? The whole extended family owns it and we're all good people so there will never be a problem." It is my understanding that the family then told their own family member-agent that if he would not sell them the policy as requested, they would find an agent who would.
If your own family does not appreciate a perfectly reasonable question from a family member they supposedly trust (who knows -- maybe they don't trust him), what are you going to do? I had the same issue happen in my own family when I asked a family member why they were insuring another family member's vehicle when they had no insurable interest in that vehicle. Their response was, "My agent told me it was cheaper that way." When I asked for their agent's name so I could turn the agent in to the insurance department, I became persona non grata rather than the incompetent agent.
No wonder so many people just give in and sell clients whatever they ask for, even if it is wrong, and then hope for the best relative to E&O claims. Sometimes ignorance is indeed bliss.
But what if you are one of those people who just cannot bring yourself to just give in to harmful client demands? First, we should eliminate mind altering drugs and alcohol as potential solutions to the pain you will bear. Next you will need to find the daily fortitude required when you buck the system of clients, peers, competitors, and sometimes carriers who will nudge and push you to go along with the flow. Where you find that fortitude will vary by person, maybe daily.
One consistent solution I have seen agents discover is deep coverage knowledge shared in the form of questions rather than statements. Rather than asking about insurable interests, begin by asking more oblique open-ended questions designed to gauge how much someone wants solid coverage. Then play along with whichever path they choose relative to the strength of the coverage they want versus the time and money they are willing to spend with you. The deeper your coverage knowledge, the better you will be able to ask the right questions.
Then as you are closing the sale, give them three options. Give them a high-quality coverage option, a medium quality option, and a low quality option with a cheap price tag (not to the point of deception or saying insurable interest does not matter). If they choose low quality, have them sign off in writing that they are knowingly choosing a low-quality solution.
This takes the burden off your back to convince clients to buy the right coverage and when they don’t, you feel bad that you failed to get them to make the right decision. They may still not make the right decision, but they are signing off on it. Your responsibility ends and you have the client's signature to prove it. You can sleep well and move on to the next client who will make a better decision.
Many of my clients have also discovered that by requiring a client to sign off and willingly walking away from a sale if it comes to that, causes clients to respect the agent's recommendations to a greater extent resulting in the client buying more coverage. These are truly win-win situations for both parties.
Otherwise, trying to convince people you are attempting to help who get upset with you just for asking totally reasonable questions, much less offering only one quote with really good coverages (coverages other agents are at least quietly suggesting are unnecessary), is one tough road to travel. The messaging in the industry is that insurance is a commodity and is simply too much to overcome with the vast majority of clients and prospects.
The commoditization of insurance really amounts to, "Buy insurance from us and then just trust us that your claim will be paid." Then, when a claim occurs that is not covered, carriers and agents both hide behind the legal castle wall of, "The insured has a duty to read and understand their policy." It is a system that benefits those people who truly do not care about their clients more than they care about making the next sale.
Rise above the cacophony by knowing your coverages, learn how to ask the right questions that do not send people running to competitors, and offer multiple quotes with sign-offs. I am confident this is a better solution than beating your head against a wall, having family members resent you, and even drinking too much.
NOTE: The information provided herein is intended for educational and informational purposes only and it represents only the views of the authors. It is not a recommendation that a particular course of action be followed. Burand & Associates, LLC and Chris Burand assume, and will have, no responsibility for liability or damage which may result from the use of any of this information.
None of the materials in this article should be construed as offering legal advice, and the specific advice of legal counsel is recommended before acting on any matter discussed in this article. Regulated individuals/entities should also ensure that they comply with all applicable laws, rules, and regulations.