Tag Archives: endorsement

You Are No Longer an Insurance Agent

News flash! You are not an insurance agent.

Yes, you sell insurance products and services for commissions, but that’s not why your clients buy from you. Every successful insurance agent today understands that they do much more than transfer risk for their clients. Today’s successful insurance agents understand that they are first and foremost marketers, publishers, creators, innovators, speakers and value providers.

This may seem like a foreign concept, but it’s true.

No insurance producer can help clients financially if she can’t first paint an emotional picture through words and ideas. Marketing is not about manipulation, tricks or tactics. Today’s insurance buyers are too educated and untrusting to fall for inauthenticity. Today’s marketing is about great content.

Content is not limited to a website, emails or product and service descriptions. Everything a customer or prospective customer comes into contact with about you or your agency is content. Content is any medium through which you communicate with the people who may use your products or services. It could be the words on your webpage, the email sent to a client, a headline on your brochure or the words used during an appointment with a prospective client.

There is no hiding from content. It will make or break you.

However, most agents don’t seize this opportunity. In fact, most agents don’t even know the opportunity exists.

Ann Handley, author of “Everybody Writes,” says it best: “Ours is a world where technology and social idea have given us access and power: Every one one of us has the awesome opportunity to own our own online publishing platforms—websites, blogs, email newsletters, Facebook pages, Twitter streams and so on.

“I don’t use the phrase ‘awesome opportunity’ lightly. The opportunity to change how we communicate with people we are trying to reach—and what we communicate—is tremendous, yet we aren’t taking full advantage of it.”

With this great opportunity, why are the vast majority of insurance agents still standing on the sidelines, simply watching and waiting?

Some think they lack time, others say they lack of knowledge or skill, and others still believe that there is no need to change.

I contend you don’t really have a choice.

  • Your prospective clients have more options than ever before.
  • Your prospective clients have more resources than ever before.
  • Your prospective clients expect more from their agent than ever before.

Those agents who deliver on these expectations will stand out and earn business from their ideal clients. Those who don’t will continue to fight and scrape for what’s left.

So, I ask you a basic question: Are you a marketer or an insurance agent?

Trick question. You have to be both.

One is expected, the other will make you successful.

You are expected to understand policy terms, definitions, exclusions, coverage gaps, underwriting, endorsements and what all those strange acronyms mean.

You get paid for providing a positive experience through your content. Providing that is not easy, and that’s why most agents are struggling. It requires that you are much more than just smart, friendly and able to ask if you can provide a quote.

  • You have to help your customers achieve something that’s important to them.
  • You have to provide a unique viewpoint.
  • You have to put 100% focus on your customer and view the world through his eyes.

All three listed above take hard work, hustle, training, continual personal development and a passion that burns deep inside you.

This passion doesn’t come from outside sources. It starts and ends with you.

  • How badly do you want to make an impact?
  • How badly do you want to help others?
  • How badly do you want to become the industry leader?

To succeed, you must decide you will not settle for being just another insurance agent. You are a professional who earns trust through consistent and valuable content, offline and online, to your clients and prospective clients.

To be a successful insurance agent today, you must first be a marketer … and a good one.

Debunking ‘Opt-Out’ Myths (Part 5)

Option programs in Texas and Oklahoma produce substantially less litigation than workers’ compensation systems do, which provides a powerful endorsement for states considering such programs.

A look at litigation for workers’ compensation and option programs must consider three main exposures: (1) claims for employer liability, (2) claims that the law violates the particular state’s constitution and (3) claims for wrongful denial of benefits.

Claims for Employer Liability

Public policymakers have long understood that it is not fair to require employers to pay a high level of statutorily mandated injury benefits and also be exposed to legal liability damage claims regarding the cause of injury. There are several approaches available to state legislators in striking that balance in a workers’ compensation system or an option to workers’ compensation, but each approach must reflect this inverse relationship between the extent of an injury benefit mandate and the extent of employer exposure to liability.

Employer exposure to liability has been almost entirely removed from workers’ compensation systems because of extensive benefit mandates that include medical coverage for life. However, the option to Texas workers’ compensation takes the opposite approach. It has no injury benefit mandates but exposes employers to broad liability for negligence.

That formula will be pursued by few, if any, other state legislatures because of the risk that certain irresponsible employers would provide no injury benefit coverage to their workers. However, the Texas option liability exposure does provide an additional incentive for employers to focus on workplace safety. It also provides employers with an incentive to make a strong commitment to take care of the injured employee’s medical and indemnity needs.

Employer liability exposure under the Texas option is real. There have been more than 80 liability settlements or judgments of $1 million or more. This unlimited risk of liability is ever-present.

However, option programs experience less than half as many disputed claims as the Texas workers’ compensation system (which is widely acknowledged as the one of the best-performing systems in the U.S.). The tiny percentage of disputed option claims is, primarily, because of legal requirements to fully communicate all rights and responsibilities (at program inception and continuing) in language that employees can understand — a requirement that is quite hard to find within any workers’ compensation program.

Option programs are also legally required to use claim procedures that ensure a full and fair review of benefit claims, including access to state and federal courts.

Yet only 1.5% of Texas option claims have any attorney involvement, and less than one in 1,000 liability claims actually go through formal litigation. So, this liability exposure has a positive impact on workplace safety, while still proving to be manageable and fully insurable in a highly competitive option marketplace.

It took more than a decade for the insurance industry and case law development to create the current balance that is delivering injury benefits to more than 95% of Texas workers through either workers’ compensation or option injury benefit plans. The existing Oklahoma option and the proposed Tennessee and South Carolina options all mandate some level of injury benefits and reduce employer exposure to liability to simplify the public policy debate and avoid this long period of industry maturation.

Constitutional Challenges

In existence for more than 100 years, the Texas option has never faced a challenge on constitutional grounds. Texas courts have long respected an employee’s right to work, employer rights to tailor employee compensation and benefits and the legislature’s right to determine an appropriate balance between mandated injury benefits and employer liability exposures.

The Oklahoma Supreme Court has now twice rejected lawsuits challenging the constitutionality of the Oklahoma option in 2013 and 2015. Oklahoma trial lawyers have filed more than a dozen lawsuits at the Oklahoma Supreme Court challenging the constitutionality of the 2013 workers’ compensation reforms. Oklahoma courts may further consider different provisions of the option law, but attorneys from the claimant and defense bar now agree that the Oklahoma Employee Injury Benefit Act is here to stay.

Oklahoma and Texas employers can freely move into and out of the workers’ compensation system at any time. So, even if the Oklahoma option is ever stricken down on constitutionality grounds (as unlikely as that prospect is), the law provides a 90-day grace period for employers to move back into workers’ compensation, without penalty. Similar provisions are in the pending Tennessee and South Carolina legislation.

Claims for Wrongful Denial of Benefits

Day-to-day legal challenges by injured workers regarding their rights to benefit payments are a normal feature of all workers’ compensation systems, and the same is true of option injury benefit systems. It is an unfortunate fact of life that, as with any line of insurance business, not every claim will be handled well. But as we have seen in Oklahoma over the past year and in Texas for more than two decades, dramatically fewer claims are disputed by injured workers under option programs.

Twice as many Texas workers’ compensation claims for benefits are disputed as compared with Texas option claims. This is true even when combining all injury benefit plan disputes and employer liability disputes under the Texas option.

Option opponents love to allege these programs only save money by failing to fully compensate injured workers. But, if this were true, why do we see fewer disputes in option programs?

Option program savings are achieved through more employee accountability for injury reporting, earlier diagnosis, persistent medical care from the best providers and more efficient resolution of fewer disputes. Option programs help ensure that employers and injured workers are communicating, engaged at the table (with or without legal counsel) and working together for better medical outcomes and return-to-work. This model must be contrasted with employers and injured workers routinely fighting through the complexity contained in thousands of pages of workers’ compensation statutes, regulations and case law that necessitate attorney involvement for basic system navigation.

A large cadre of workers’ compensation claimants and lawyers can be found in the hallways and hearing rooms of the Oklahoma and other state workers’ compensation commissions and courts on any given day. But there have been few day-to-day Oklahoma option benefit challenges. Oklahoma option programs now cover more than 22,000 workers, and almost every claim that has arisen over the past year has been fairly and efficiently resolved through the injury benefit plan’s claim procedures — essentially the same claim procedures that have applied to private employer group health and retirement plans across the U.S. for more than 40 years.

Over the span of 26 years in Texas and the past year in Oklahoma, not one state or federal employee has ever been hired to specialize in the oversight or administration of the approximately 50,000 option injury program claims that are successfully resolved every year. In contrast, tens of millions in taxpayer dollars are spent in many states every year to oversee and administer day-to-day workers’ compensation claims.

As further testimony to employee appreciation for the full disclosure of their rights and responsibilities under option injury benefit plans and the customer service they receive, not a single workforce in the past 26 years has organized a union as a result of the employer electing an option to workers’ compensation in Texas or Oklahoma. For workforces that are already unionized, their members and leadership appreciate the fact that option programs routinely pay a higher percentage of disability benefits, with no waiting period and no (or a higher) weekly dollar maximum.

Plus, disability benefits are paid on the employer’s normal payroll system, which allows employers and injured workers to seamlessly continue deductions for group health, retirement, child support and union dues. Successful Texas option programs have been in place for many, many years that cover textile, communications, food and commercial workers, teamsters and other collective bargaining units.

Conclusion

With liability exposures clarified and injured workers clearly more satisfied and getting better, faster under option programs in Texas and Oklahoma, legislators and employers in other states no longer need to “wait and see.” Single-digit annual cost savings can still be achieved through traditional workers’ compensation reforms, but option-qualified employers are seeing strong, double-digit cost reductions. Option programs support tremendous productivity, reinvestment and economic development gains for injured workers, employers and communities.

So, in spite of rhetoric from trial lawyers trying to survive and from their allies in the workers’ compensation insurance industry who fear free-market competition, there is no reason why workers’ compensation option legislation and program implementation should not be pursued by state legislators and employers as fast as their other priorities permit.

Insurance Needs a New Vocabulary

Lots of industries face criticism because they talk the talk but don’t walk the talk — the computer industry, for instance, long talked about making machines intuitive but required users to work their way through manuals and memorize long series of steps before they could accomplish anything. But the insurance industry doesn’t even talk the talk yet.

Sure, everyone is talking about improving the customer experience, but look at the words we use. Many are opaque — the industry talks to itself, somehow unaware that customers are listening and are turned off by the gobbledygook. Some words are even offensive — we’re saying things to customers that we really don’t want to be saying.

We have to at least get our talk — our vocabulary — straight before we tackle the much deeper issues and figure out to really engage customers and address their evolving needs.

My least-favorite word is one so widely used that few will find it offensive: “adjuster.” My problem: If I’m filing a claim, I don’t want it adjusted. I want it paid.

Yes, I realize that processing claims is complicated and that all sorts of adjustments need to be made. I also realize that no industry simply pays when a claim is made against a company. But if you send me an “adjuster,” you’re telling me right off the bat that you don’t trust me, and that’s a lousy way to start an interaction. It certainly isn’t any way to start a relationship, which is what insurers insist they want with customers these days. Don’t trust me, if you must, but send me a “claims professional” or simply a “customer service representative.” Don’t send me an “adjuster.”

Less offensive but still unnecessarily bad are words like “excess” and “surplus.” The insurance may be categorized as excess and surplus to you, but not to me, the customer. I’ll thank you to treat my needs with the respect they deserve (says the customer).

Some words need to go away because they already have meanings — and they aren’t the meanings assigned to the words by the insurance industry. A binder is a plastic cover with three rings that you buy for your kids at this time of year as they head back to school; it is not temporary evidence of insurance. An endorsement is something you put on the back of a check — or at least used to, before banks simplified deposits. An endorsement is not something that modifies an insurance policy.

Mostly, many terms need to be revisited because they are opaque, and often archaic:

  • “Underwriting”? How about “assessing risk”?
  • “Actuary”? That’s a legitimate word, but I prefer the European form: “mathematician.” (“What do you do at XYZ Insurance Co.?” “I’m the mathematician.”) “Mathematician” just seems friendlier.
  • “Capitation” and “subrogation”? Important functions, but there have to be layman’s terms that can be substituted.
  • If I’m buying life insurance, good luck getting me to grasp intuitively the difference between whole life and universal life; “whole” and “universal” are practically synonyms in this context.
  • “Inland marine”? Please.

While we’re at it, let’s do away with the acronyms. All of them — at least on first reference, and mostly in subsequent references, too.

Changing the language will be hard because so many in the industry subscribe to what I think of as a 19th century sort of approach to business: Let’s make things seem as complicated as possible to justify the existence of lots of experts and intermediaries and to demand nearly blind faith by clients. This is sort of the “don’t try this at home, folks,” approach to business. Leave the complicated terms to us.

The approach has worked for insurers for a very long time. It has worked for doctors and lawyers. If a cynical T.A. in a philosophy class in college way back when is to be believed, it worked for Hegel, too — he supposedly wrote a short, clear version of his big idea (thesis/antithesis/synthesis), and no one took him seriously; he then wrote a 1,000-page, nearly impenetrable version, called it merely the introduction to his ideas and found lasting fame.

But things have changed since Hegel wrote in the early 1800s. Now, if I want to remind myself about Hegel, I turn to Wikipedia and its clear, little summary; I don’t crack open The Phenomenology of Spirit. Change has accelerated in recent years, to the point where even doctors find themselves having to communicate more with patients in plain English.

If doctors can simplify how they communicate about the mind-boggling issues involved in medicine, then the rest of us can figure out how to talk the talk in insurance. We need to begin by taking a hard look at every term we use and revising many of them, from the perspective of a total newbie customer, so we talk to customers the way they expect us to talk to them.

That’s the only way to lay the groundwork for the broad improvements in the customer experience that we all want to deliver and that customers are increasingly demanding.

Getting Beyond the Policy Admin System

As SMA’s Karen Furtado wrote in last month’s blog post about core systems, “Now that the insurance industry recognizes modernization as an indispensable tool for remaining competitive, it is worthwhile to take a step back and look at the technical capabilities that insurers really need.” With underwriting, this requires a platform that extends beyond the policy administration system and makes optimal use of the expertise of the underwriters themselves.

Today’s environment is full of infinite possibilities for the future of underwriting. Advances in the electronic exchange of information have benefited the insurance industry in major ways. One example is apparent with the portals and exchanges that are making it easier for agents to submit business opportunities. Given the ease, more submissions are coming in the door. This increased workload coupled with new data sources for validation and verification leaves underwriters at a tipping point. With increased demand and increasingly more complex variables, they need a solution that gives them enhanced capabilities that extend beyond the same old way of doing things.

In today’s competitive market, the ability to issue a quote for every desired risk is critical. The power literally has shifted to the palm of the consumers’ hands, where they get instant gratification via their mobile devices. For some insurers, not being able to handle the volume of quotes that are being submitted to them means leaving significant money on the table.

Therefore, a modern policy admin system is necessary for its ability to automate the processes that are performed by the underwriting department. These systems automate the data capture, base rating and rules and final pricing, and they manage formulas and document production for all risks. They process transactions for new business, renewals, endorsements, cancellations, reinstatement, etc. But, for complex risks, the risk analyses and evaluations that are determined based on information about credit, hazards, financials and loss experience are made outside the policy admin system. Automation supporting these decision-making processes takes place outside the policy admin system. SMA research shows just 37% of the entire underwriting process is managed via the policy admin system.

Before that harsh reality sets in, realize that the modern underwriting platform is not, should not be and cannot be a standalone system. Nor is the modern policy admin system a standalone solution. Now, the two (underwriting platform and policy admin system) should be connected, with the ability to perform the complex functions mentioned above.

One of our SMA imperatives is: “Interconnect Intelligence for Underwriting.” Nothing in modern insurance can happen in isolation, in a traditional silo. Those days are over, but, fortunately, the technology is available to support current and future needs. The key is finding the right connection points, the right technology and the right fit for your organization. Today’s real-time, big-data, high-volume market dictates the same from your company’s system, and that is why modern support for underwriting requires more than just a policy admin system.