Specialization in the product lines by the insurer
This is part 2 in our series on Insurance Vendor Management. Click here to read the first article in the series, 9 Critical Steps for Insurance Vendor Management.
By specialization, I mean focus. Is this product a focus of this company or just a side product? Side products are listed farther down a company’s product listing than others. Your goal is to have the insurance company you are dealing with have that product as one of their leading income producers. What is profitable for them will be profitable for you in the long run since their attention and resources will be more dedicated. Service staff, claims personnel, policy provisions, and claims decisions will all be handled in a quicker and more important fashion on a product that is a focus of theirs. Many situations arise on claims where key employees of the actual insurance company have to decide how to interpret the policy and whether or not to pay a claim. If those employees specialize in the product, they will have previously dealt with most issues, so their decisions are swifter and normally fairer to the insured. Companies with no specialization will be slow in their response (holding up your claim) and will interpret the policy more strictly (underpaying your claims). Specialization by the insurer in that product line affects all aspects of the decision because they will devote more resources to the entire product experience if that product line is one of their focuses.
Key questions to ask:
- Approximately what percentage of company income comes from this product line?
- How much annual premium does the company write in this product?
- Is this product one of your main products?
- How much experience does the insurance company claims staff has with this product?
- What insurance company staff are dedicated to this product?
Specialization in product lines by the agent
This is almost as important as the specialization of the insurer. Every facet of a program will be affected by this. Most specialty insurance products (like those for financial institutions) have much more policy verbiage and a greater variety of claim types than a standard personal lines policy like auto or homeowners. The policy wording itself, the claims handling, the customer service, etc., are all significantly influenced by the specialty level of your agent. Agents that do not specialize in a product line will be more distant in the whole process, and on claims, they will defer to the insurance company on claims decisions. That is not good for the client. A client needs an agent that fully understands the policy, perhaps even helped craft the policy, reviews the policy provisions with your staff regularly, and will advocate for their client in the claims process.
Key questions to ask:
- What percentage of agency income comes from this product?
- How much annual premium does the agency write on this product?
- Is this product one of the leading products for the agency?
- How much experience does the agency have with this product?
- What agency staff are dedicated to this product?
- What references on this product can you give us?
Specialization is an essential consideration in insurance vendor selection. Be sure you understand what types of policies your insurance vendor and agent specialize in as you shop for portfolio protection and other risk management products.
Stay tuned for the next article in this series: All Insurance Policies are Not Created Equal, and here is the link again for the first in the series 9 Critical Steps for Insurance Vendor Management.