You don't always get what you pay for

Catching my eye in a recent publication was a story regarding the attitudes of insurance buyers towards the professionals who are responsible for selling, delivering and servicing the insurance product. The comments were disheartening. A majority of persons interviewed did not associate the insurance industry with superior, or even above average, service. Also disturbing to me is the widespread perception that the delivery of insurance and risk management services is worsening.

It appears obvious that the insurance industry, which includes public entity self-insured products and pools, has performed poorly in communicating to its customers the tremendous improvement in professionalism which has occurred during the past 10 to 15 years. Agents and brokers, underwriters and risk managers — even pool administrators — have never been better educated and trained. Professional designations which require months and years of study often are a requirement for entry level positions. Participation in classes on technical and ethical issues has never been greater.

Those of us who consider ourselves insurance professionals must take the lion's share of the blame for these misconceptions. Too often, we allow (even encourage) our customers to believe that price is the only important difference in two or more insurance products. Too many of us don't trust ourselves or our professional service enough, to attach a fair price for our added value. Instead, we apologize if our quotation isn't the lowest on our customer's table. Despite our own firm belief that our product or program is the best available, we allow the competition to focus our customers only on price.

Most buyers of insurance or risk management services want more from their insurance representative than a quotation and binder, and they become frustrated when that's exactly what they receive. Communicating your expectations of your insurance program can be improved by asking your risk management professional to review the following questions with you at least every few years.

What do I expect to receive from my risk management program this year? In the next three years?

Do you expect payment of claims, and nothing more? Or, maybe you want help in developing a review of risk management results for the city or village council. Maybe you want a five-year claims analysis with recommendations for improvement. The range of services can be from simple to complex, and pricing often can be adjusted to match the service level desired. Communication of expectations is the key.

A caveat: If you receive an insurance quotation that is substantially less than your current premium, chances are that your coverage or service will be sacrificed. The market for public entity insurance has been very competitive for many years, and there simply isn't much fat in premiums to justify significant decreases on an apples-to-apples comparison.

What enhancements in coverage and service can be recommended?

A review of your community's activities may be needed to recognize new or unique exposures which have developed since the last analysis.

For example, your community now sponsors a Fourth of July fireworks display; several minor office remodeling projects have resulted in a substantial increase in total property values; the elimination of several positions is possible within the next year. These types of increased exposures to loss should be discussed so that your community makes its decisions with as much information as possible. Your risk management professional can be a valuable information resource and coverage consultant.

Are my community's premium dollars being spent in the most efficient manner possible?

Many cities and villages are paying less for insurance now than they did five years ago. But are they receiving the best value for their money? Many examples could be cited, but suffice it to say that if your community has the same limits of liability, the same deductibles or the same loss control services it did 10, seven or even five years ago, you should review your current program structure with your insurance representative. You may be able to improve efficiency by reallocating your risk management resources.

You probably can think of several more questions that are specific to your community which you know should be discussed. The point is, it takes very little experience to deliver a low insurance quote, and little customer respect is given in return. However, developing your risk management professional as an administrative resource and partner will result in an improved relationship that is more beneficial for your community.