How to Buy Property and Casualty Insurance

When considering business insurance ...

The most important buying decision is to choose an agent you can trust.

As a result of the Eliot Spitzer investigations and the subsequent insurance reform, many buyers of insurance are cognizant of the importance of finding an agent who is going to work in their best interest.

Many small to medium sized businesses that lack the "in house" expertise in risk management can choose to outsource these functions to an agent or to manage it themselves.

Buyers who choose to manage it spend an inordinate amount of time on insurance issues, as opposed to focusing on their core business and to increasing their bottom line.

Buyers who do not take the time to find the right agent to represent them find their biggest risk is having coverage with gaping holes.

Some criteria when picking an agent are:

  1. What is the expertise of the agent in your industry?

    Do they handle similar accounts as yours? How long have they worked with similar accounts? Can they provide references (sometimes this is difficult due to privacy concerns)? Do they participate in industry association meetings or other activities that enable them to keep up with current risk management issues affecting your industry?

  2. What are the insurance companies represented by your agent?

    Do they represent all of the insurance companies that are likely to be competitive and desirous of your account? If they don't, then they might steer your account to a company that is not the most competitive for your account.

  3. Do they have quality staff?

    What is the expertise of the staff that will be handling your account day to day? What are their education and professional qualifications? How long have they been with the agency? What is the agency's commitment to continuing education?

  4. What is the agency's process/methodology to uncovering and to communicating coverage and other risk management issues?

  5. What other resources do they have access to that might improve your risk management program?

Once you have settled on an agent to handle your risk, there will be an initial learning curve for them to become familiar with your account. Depending upon your existing program, they may recommend whether or not to shop your account with insurance carriers.

Insurers will not work with more than one agent at a time. So, if you approach agent "A," and they in turn apply for quotes from multiple insurance carriers, NO OTHER agent can then approach the carrier. In other words, the first agent to approach a given market has the exclusive right to obtain quotes until you sign what is known as an "agent of record" letter, giving another agent the exclusive rights. Unfortunately, being fast to market is not necessarily synonymous with being the best agent. We would be glad to explain how to use a "market allocation" approach to marketing your account to underwriters, which can lead to much better results for you.