Bill, let's accept Jtabosida's premise…
- Premiums are higher in CA than in Maine.
--If premiums are higher then the value of assistance in managing an insurance program is higher.
--If value is higher, a consultant's fees are higher.
--With higher fees a consultant can afford to pay higher E&O premiums.
E&O is just a cost of doing business. But, I say again, consulting isn't for everyone and not every insurance buyer needs a consultant.
Now to Dogs points…
The key part of my comment was "unbiased review." As far as many buyers are concerned getting another broker to quote is getting another biased opinion. Now the buyer has two quotes and both brokers are telling him that their program is better. Who does he believe? Who does he turn to for help?
If the insurance buyer is looking for bids then another broker is obviously the way to go. However, in most cases where I am involved the buyer isn't unhappy with the current broker but wants to perform "due diligence" on their insurance coverage.
Let look at this a different way...
Dog, the CFO of your best client comes to you and says, "The chairman of the board is questioning if we have the right insurance program. He wants me to get another opinion of the coverage." Are you going to recommend that he call your competition for that review? Perhaps you would rather that your client calls me? Remember, I don't compete with you. I'm not going to take the account from you. Your competitor broker certainly will try to unseat you.
I'm going to review the exposure and operations of the company. I'll then review the current insurance program and make recommendations for improvements. In most cases you and I would work together to resolve the issues identified - if any. Common issues I find are:
--incorrect or missing named insureds, locations, vehicles
--missing coverage - EPL, D&O, Employee Dishonesty, Professional Liability
--low deductibles
--coinsurance issues
--improperly designed loss of business income coverage
--exclusionary language that removes vital coverage
--workers' compensation experience modification issues
--workers' compensation classification / payroll issues
In many ways my work now is not unlike what I did as a broker - identifying exposures and recommending ways to address those exposures. I just get paid by the insurance buyer on a fee basis and have no ties to any insurance company or agency.
Again, what I do isn't for everyone. Some want my service and others don't.
Consulting
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Tip: If you are posting a market request, include the state abbreviation in your post title to get better responses.
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SD, I've been looking at this... A broker may consult with the client but a consultant is not a broker.
A broker has a fiduciary and contractual relationship with the insurance company. A consultant does not - their contractual relationship is only with their client.
I see the distinction. I also see the need in the marketplace - from the buyers perspective. I agree with Scott that this is not for everyone.
My problem with consultants in general is that their work goes on and on racking up their hours and bills.
(Also, nice mention in Money Magazine)
A broker has a fiduciary and contractual relationship with the insurance company. A consultant does not - their contractual relationship is only with their client.
I see the distinction. I also see the need in the marketplace - from the buyers perspective. I agree with Scott that this is not for everyone.
My problem with consultants in general is that their work goes on and on racking up their hours and bills.
(Also, nice mention in Money Magazine)
Consultants
A broker has a fiduciary and contractual relationship with the insurance company. A consultant does not - their contractual relationship is only with their client.
Actually, a broker has a fiduciary and contractual obligation to his client, an insurance agent has a fiduciary and contractual obligation to the carrier, a consultant works for the client.
Insurance brokers are suppose to represent the best interests of the client, not the carrier. A consultant can be used by a client to determine if they have adequate insurance coverage, if not, the broker is going to be blamed.
If I were a consultant, I imagine I would be looking for gaps in coverage, inadequate limits, etc. to prove to the client that my services were valuable. A competing broker would do the same thing. The consultant may not come in with the objective of displacing the broker but that would most likely happen if the consultant finds problems with the policy, no matter how much the client likes the broker. I would assume that in the event the client elects to replace the broker, the consultant would be in a position to recommend a replacement. I would be interested in hearing from Scott what he does in that situation.
Sounds like Scott is pretty well educated and knowledgeable about insurance which would be necessary to be a successful and useful consultant. I do feel consultants should be under some licensing authority to protect the public. If you are giving advice on insurance products, you should be regulated and subject to the same CE requirements as insurance brokers.
Enjoy!
Actually, a broker has a fiduciary and contractual obligation to his client, an insurance agent has a fiduciary and contractual obligation to the carrier, a consultant works for the client.
Insurance brokers are suppose to represent the best interests of the client, not the carrier. A consultant can be used by a client to determine if they have adequate insurance coverage, if not, the broker is going to be blamed.
If I were a consultant, I imagine I would be looking for gaps in coverage, inadequate limits, etc. to prove to the client that my services were valuable. A competing broker would do the same thing. The consultant may not come in with the objective of displacing the broker but that would most likely happen if the consultant finds problems with the policy, no matter how much the client likes the broker. I would assume that in the event the client elects to replace the broker, the consultant would be in a position to recommend a replacement. I would be interested in hearing from Scott what he does in that situation.
Sounds like Scott is pretty well educated and knowledgeable about insurance which would be necessary to be a successful and useful consultant. I do feel consultants should be under some licensing authority to protect the public. If you are giving advice on insurance products, you should be regulated and subject to the same CE requirements as insurance brokers.
Enjoy!
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scott
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First to Risky, I have heard the same concern regarding hourly fees from many people. In my own practice I never charge by the hour - I only work on a project basis. My fee is fixed including all expense. My client also knows exactly what is to be spent on my service and can decide beforehand if there is potential value in my work. Fee setting is the toughest part of the job.
Ekpabon, in Maine my license is as a consultant - separate license, and test from producers. I also took a separate test for life/health consulting. I follow the same continuing ed rules as producers. Many states have consultants work under the producers license. I don't think any state allows for consultants to work unlicensed. Each state's insurance department website will spell out the specific requirements.
Ekpabon, in Maine my license is as a consultant - separate license, and test from producers. I also took a separate test for life/health consulting. I follow the same continuing ed rules as producers. Many states have consultants work under the producers license. I don't think any state allows for consultants to work unlicensed. Each state's insurance department website will spell out the specific requirements.
Scott Simmonds, CPCU, ARM
Insurance Consultant
Insurance Consultant
Consulting
I did look up some other states in addition to Maine and those states do require the applicant to hold an insurance broker's license in order to be licensed as a consultant so the general public is being protected.
Scott, I am still interested in knowing what role a consultant such as yourself takes in referring or recommending a new broker when the client looks to replace the incumbent broker based upon the results of your consulting project.
Have a great weekend!
Scott, I am still interested in knowing what role a consultant such as yourself takes in referring or recommending a new broker when the client looks to replace the incumbent broker based upon the results of your consulting project.
Have a great weekend!
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scott
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I work with more than 100 different agents / brokers a year. Most of those are my client's current agent.
I bring new brokers in when there is a problem with the current service / coverage. I usually use a broker selection process - a structured review of the abilities of a broker including interviews and a presentation by the broker. I work with the insurance buyer, facilitating the process and helping with the decision of who will handle the account - this is most often without a bid.
I occasionally work with a client in a bid process. This obviously involves selection of participating agencies / brokers.
My selection of the insurance people I deal with is based on the quality of work I have seen, their reputation, and recommendations from my clients. I also use gut instinct.
I get emails every week from agents wanting to be added to my list of brokers for consideration. Most of those get tossed. Brokers that get my attention are those that can provide value to my client. I want to work with insurance people who are smarter than I am. I don't care that your agency is 120 years old or that you have a fancy website. How can you help my client?
Here's a piece I wrote for Agent and Broker Magazine a few months ago - http://www.icmentor.com/articles/abletter.htm
I bring new brokers in when there is a problem with the current service / coverage. I usually use a broker selection process - a structured review of the abilities of a broker including interviews and a presentation by the broker. I work with the insurance buyer, facilitating the process and helping with the decision of who will handle the account - this is most often without a bid.
I occasionally work with a client in a bid process. This obviously involves selection of participating agencies / brokers.
My selection of the insurance people I deal with is based on the quality of work I have seen, their reputation, and recommendations from my clients. I also use gut instinct.
I get emails every week from agents wanting to be added to my list of brokers for consideration. Most of those get tossed. Brokers that get my attention are those that can provide value to my client. I want to work with insurance people who are smarter than I am. I don't care that your agency is 120 years old or that you have a fancy website. How can you help my client?
Here's a piece I wrote for Agent and Broker Magazine a few months ago - http://www.icmentor.com/articles/abletter.htm
Scott Simmonds, CPCU, ARM
Insurance Consultant
Insurance Consultant
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pita3333
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Scott: Very nice article . . . I agree 1000% with you on everything you said. I'm also a content over presentation person.
Have been monitoring the comments being posted, seems some egos out there are taking a hit. If an agent has done their best, and searched for any potential gaps...a consultant like you should do nothing but confirm their value to the mutual client.
Over the years I have seen many many many gaps that were completely obvious to the naked eye...
Keep up the great work Scott.
Have been monitoring the comments being posted, seems some egos out there are taking a hit. If an agent has done their best, and searched for any potential gaps...a consultant like you should do nothing but confirm their value to the mutual client.
Over the years I have seen many many many gaps that were completely obvious to the naked eye...
Keep up the great work Scott.
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scott
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I feel like I'm defending my honor here <smile>
MA-Guy, based on the few words you posted here I would guess you struggle mightily to succeed in this business.
In every profession there are ethical individuals and those who miss the mark. It is true of agents and of consultants.
When I started my practice I was the first aggressively marketed consulting firm in Maine. There were consultants around, but they didn't do much - mostly retirees and other part-timers. Agents were skeptical of how I would approach matters. I had been selling insurance and competing with these people for many years. As my work became better known agents started to realize that they had nothing to worry about if they had done the job for the client.
I'm told that my reputation now in the agent community is of a fair, practical advocate for my client. I'm proud to say that about 15% of my new clients come to me on a referral from an insurance agent (obviously, I don't pay finders fees and make no promises to the agents as to the result of my work).
I work with agents and brokers to improve the insurance my clients buy. I believe most agents will tell you that they have a stronger relationship with their client because of the work I have done.
MA-Guy, based on the few words you posted here I would guess you struggle mightily to succeed in this business.
In every profession there are ethical individuals and those who miss the mark. It is true of agents and of consultants.
When I started my practice I was the first aggressively marketed consulting firm in Maine. There were consultants around, but they didn't do much - mostly retirees and other part-timers. Agents were skeptical of how I would approach matters. I had been selling insurance and competing with these people for many years. As my work became better known agents started to realize that they had nothing to worry about if they had done the job for the client.
I'm told that my reputation now in the agent community is of a fair, practical advocate for my client. I'm proud to say that about 15% of my new clients come to me on a referral from an insurance agent (obviously, I don't pay finders fees and make no promises to the agents as to the result of my work).
I work with agents and brokers to improve the insurance my clients buy. I believe most agents will tell you that they have a stronger relationship with their client because of the work I have done.
Scott Simmonds, CPCU, ARM
Insurance Consultant
Insurance Consultant
TomZ, I started an insurance consulting practice this year, in Connecticut. For me it seems like the best way to provide value in an entrepreneurial setting. My background includes 12+ years experience with 2 major P&C carriers and one specialty carrrier (that was bought out by a big carrier) in line of business and claims attorney roles.
So far, so good. I've received great advice from others that have been in the consulting business for longer than I. Scott Simmonds is one of them-his advice is right on the money.
The agents and brokers I've encountered as a consultant first seem a little confused about my role. None of them had worked with an insurance consultant before. But as the projects develop there seems to be a much better comfort level as they realize that my client chose me to be their advocate, and that I am bringing unique skills to the transaction.
Oh and about the licensing stuff - my state (CT) does require insurance consultants to be licensed (so I am.) There are test waiver rules for professionals that already have certain other designations, such as CPCU, CIC or AAI for the P&C exam, and CLU for the Life & Health exam.
Hope this helps!
So far, so good. I've received great advice from others that have been in the consulting business for longer than I. Scott Simmonds is one of them-his advice is right on the money.
The agents and brokers I've encountered as a consultant first seem a little confused about my role. None of them had worked with an insurance consultant before. But as the projects develop there seems to be a much better comfort level as they realize that my client chose me to be their advocate, and that I am bringing unique skills to the transaction.
Oh and about the licensing stuff - my state (CT) does require insurance consultants to be licensed (so I am.) There are test waiver rules for professionals that already have certain other designations, such as CPCU, CIC or AAI for the P&C exam, and CLU for the Life & Health exam.
Hope this helps!
Consulting
Scott, it seems like you are getting hammered here! I think that you provide a valuable service.
Not many will need it - either they are comfortable with the job their agents are doing or don't want to pay the fees for your work.
I've been in the industry for over 12 years on both the company and agency side. I think that in some cases an unbiased opinion is needed to help insureds select the best coverage for their operations. Agents must have their own interests at heart as well as the insureds or they don't get paid. If you don't get sales you end up closing shop after enough of these. As a consultant you are free from this pressure.
I think that quite a few insureds would appreciate a truly unbiased opinion on their insurance matters. Congrats to you for being one of the few I've heard of to sucessfully do this.
Kevin
Not many will need it - either they are comfortable with the job their agents are doing or don't want to pay the fees for your work.
I've been in the industry for over 12 years on both the company and agency side. I think that in some cases an unbiased opinion is needed to help insureds select the best coverage for their operations. Agents must have their own interests at heart as well as the insureds or they don't get paid. If you don't get sales you end up closing shop after enough of these. As a consultant you are free from this pressure.
I think that quite a few insureds would appreciate a truly unbiased opinion on their insurance matters. Congrats to you for being one of the few I've heard of to sucessfully do this.
Kevin
Consulting
From a consultant:
"The most disturbing industry practice, in my opinion, is the property and casualty insurance tradition of an insurer only offering a quote to one agent. For example, if ABC Insurance Company has three agents in an area and all three are bidding on the coverage for a client, ABC will only offer a quote to the first agent that submits an application. This is clearly anti-competitive and allows insurance agents and brokers to control the marketplace without value to the insurance buyer. It is certainly true that the insurance buyer can assign the insurer to another agent. All three agents can't quote though.
I have railed against this practice for twenty years. Imagine the price of any product without competition on the specific item. I cannot get quotes from Ace Insurance Agency and Beta Agency for a Travelers insurance policy. I must choose either Ace or Beta. The agents also can't adjust their commissions to be more competitive. Insurance regulators should ban any practice that limits the free competition of sellers in the marketplace."
"The most disturbing industry practice, in my opinion, is the property and casualty insurance tradition of an insurer only offering a quote to one agent. For example, if ABC Insurance Company has three agents in an area and all three are bidding on the coverage for a client, ABC will only offer a quote to the first agent that submits an application. This is clearly anti-competitive and allows insurance agents and brokers to control the marketplace without value to the insurance buyer. It is certainly true that the insurance buyer can assign the insurer to another agent. All three agents can't quote though.
I have railed against this practice for twenty years. Imagine the price of any product without competition on the specific item. I cannot get quotes from Ace Insurance Agency and Beta Agency for a Travelers insurance policy. I must choose either Ace or Beta. The agents also can't adjust their commissions to be more competitive. Insurance regulators should ban any practice that limits the free competition of sellers in the marketplace."
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scott
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Thanks Kevin, but I don't feel hammered. It's been interesting watching this unfold.
As I've said, consulting isn't for every insurance pro and using a consultant isn't for every insurance buyer.
My practice shows there is a need in the marketplace for consultants. I don't think there will be a consultant in every town 5 years from now. I know there will be many more than the 200+ I have identified around the country. The growth of my mentor program for new consultants proves that.
Consulting can also be the "next step" for an insurance pro who is looking to semi-retire. It's a great choice for insurance pros who want to control their own future without many of the hassles that go with selling insurance.
Insurance buyers seek information on the right coverage so they can make the right decisions.
Buyers can get information from books, websites, and the media. They can get information from insurance professionals - brokers, agents or consultants. Consultants offer a different perspective from insurance sales people - sometimes the advice is the same - the perspective, however, is different.
It's also been great to read the private emails some "lurkers" have sent me. I've received some rather lengthy, thoughtful emails from forum readers. A few have been critical. Some have questioned my parent's marital status. Most have been interesting.
As I've said, consulting isn't for every insurance pro and using a consultant isn't for every insurance buyer.
My practice shows there is a need in the marketplace for consultants. I don't think there will be a consultant in every town 5 years from now. I know there will be many more than the 200+ I have identified around the country. The growth of my mentor program for new consultants proves that.
Consulting can also be the "next step" for an insurance pro who is looking to semi-retire. It's a great choice for insurance pros who want to control their own future without many of the hassles that go with selling insurance.
Insurance buyers seek information on the right coverage so they can make the right decisions.
Buyers can get information from books, websites, and the media. They can get information from insurance professionals - brokers, agents or consultants. Consultants offer a different perspective from insurance sales people - sometimes the advice is the same - the perspective, however, is different.
It's also been great to read the private emails some "lurkers" have sent me. I've received some rather lengthy, thoughtful emails from forum readers. A few have been critical. Some have questioned my parent's marital status. Most have been interesting.
Scott Simmonds, CPCU, ARM
Insurance Consultant
Insurance Consultant