Frank Pennachio has more than 30 years of experience in the insurance industry as an agency owner and producer. In 2009, he sold his agency and co-founded Oceanus Partners, a ReSource Pro company. He is now a full-time trainer and consultant to insurance organizations.
Are insurance buyers ready for the next adverse event?
COVID-19 was not the first high loss event and it will not be the last. Over the next 10 years, business leaders believe cyber incidents, extreme weather, and numerous others will pose major risks.
But are policyholders prepared to face them?
If the events of 2020, and indeed the past several years, are any indication, the answer is likely no. Countless insurance buyers have suffered uncovered losses and countless more are unknowingly at risk. Meanwhile, many insurance buyers still struggle to understand which forms of coverage they need and what the conditions of their policy involve.
For insurance agents, 2021 presents an opportunity to step up and elevate conversations with clients on coverage and risks to better prepare them for the next adverse event, yet many aren’t doing so.
What’s stopping agents from helping?
1.Errors & Omissions
Part of the issue lies in how agencies approach E&O mitigation. Agencies often advise agents to avoid explaining policies in too much detail, a practice which can help protect the agency from liability, though often at the cost of clients.
2.Buyer Knowledge & Bias
Insurance buyers do not have the information or resources that agents do to determine the probability of suffering a loss. In addition, they frequently hold biases against such losses occurring if they have not experienced a loss before.
3.Lack of Training
In some cases, agents and customer service representatives either do not have a strong grasp of the policy terms themselves or do not know how to discuss them with clients.
Guiding insureds toward better outcomes
Insurance agents need to have deeper conversations with their clients that not only help clients understand the kind of risks they face but help them overcome their biases. By doing so, agents can enable clients to make a decision, whether to purchase coverage or assume the risk on their own, that satisfies both parties. These conversations can include, for instance:
- The probability of uncovered losses occurring for the client,
- The adverse effects of those losses,
- What coverages may be needed,
- and the limits of the coverage offered.
Want to know how agents can help clients cut costs during COVID? Read our blog.
Learn how brokers can lead commercial insurance buyers during and after COVID with our Guide for Commercial Brokers in a Post COVID-19 World