In another thread Crossins puts out concerns with the tradition of market blocking:
"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."
I agree with the consultant's comment. Somehow the phrasing seems familiar to me. Crossins, can you name the mystery consultant?
Blocking Markets
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scott
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Scott Simmonds, CPCU, ARM
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protecting agents
I can't understand why an agent would want anything different. Do you want your customers to move to other agents in your city but stay with YOUR carrier?
How stupid would an insurer look if it sent out three quotes on the same piece of business with three separate prices? Depending on how the insurer is set up, they could have three different underwriters for the agencies and each would use their own rationale to determine the rate (particularly on commercial business where there are more intangibles in rating)....and truthfully, why would an insurer want to pay three people to work on three quotes when the income to the carrier would not change. All you are doing is creating more work for the insurer, increasing their expenses which will ultimately drive up rates.
Its bad enough competing with other companies without having to compete with ourselves too.
How stupid would an insurer look if it sent out three quotes on the same piece of business with three separate prices? Depending on how the insurer is set up, they could have three different underwriters for the agencies and each would use their own rationale to determine the rate (particularly on commercial business where there are more intangibles in rating)....and truthfully, why would an insurer want to pay three people to work on three quotes when the income to the carrier would not change. All you are doing is creating more work for the insurer, increasing their expenses which will ultimately drive up rates.
Its bad enough competing with other companies without having to compete with ourselves too.
Crazy Insurance Practices
This is one of those crazy insurance practices that should've gone the way of the horse and buggy whip. Let me disect your argument because when you really think through what you actually said, it doesn't hang together.
"Do you want your customers to move to other agents in your city but stay with YOUR carrier?"
- You might own the expirations with the carrier, but you don't own the company. In fact, the legal term is an agency relationship. You are nothing more than the extension of the company - a contractual relationship that can be cancelled by either side. So, it is not your carrier to begin with. If you represent this otherwise, you need are misrepresenting your relationship with the companies that you represent.
"How stupid would an insurer look if it sent out three quotes on the same piece of business with three separate prices?"
- It is absolutely crazy that insurance carriers don't have the processes and systems in place to uncover where they have variation in pricing. If I remember correctly from grad school, there could be some Sherman anti-trust implications to these types of practices.
"Depending on how the insurer is set up, they could have three different underwriters for the agencies and each would use their own rationale to determine the rate (particularly on commercial business where there are more intangibles in rating)"
- Again, there is a fly in the ointment. The industry needs to change to drive consistency in process and procedures not to cover up the problems of same.
"why would an insurer want to pay three people to work on three quotes when the income to the carrier would not change. All you are doing is creating more work for the insurer, increasing their expenses which will ultimately drive up rates."
- The insurance industry needs to drive efficiency. If they choose to do business with multiple agents/brokers in the same geographic areas, they've made their bed. Now, they need to figure out how to drive this efficiently.
Basically, this boils down to the insurance industry needing to change. Spitzer's investigations started some of this and the UK's FSA is driving some of this in the London markets, but carriers need to wake up and realize that they have fallen way behind their peer industries in driving an efficient operating model.
"Do you want your customers to move to other agents in your city but stay with YOUR carrier?"
- You might own the expirations with the carrier, but you don't own the company. In fact, the legal term is an agency relationship. You are nothing more than the extension of the company - a contractual relationship that can be cancelled by either side. So, it is not your carrier to begin with. If you represent this otherwise, you need are misrepresenting your relationship with the companies that you represent.
"How stupid would an insurer look if it sent out three quotes on the same piece of business with three separate prices?"
- It is absolutely crazy that insurance carriers don't have the processes and systems in place to uncover where they have variation in pricing. If I remember correctly from grad school, there could be some Sherman anti-trust implications to these types of practices.
"Depending on how the insurer is set up, they could have three different underwriters for the agencies and each would use their own rationale to determine the rate (particularly on commercial business where there are more intangibles in rating)"
- Again, there is a fly in the ointment. The industry needs to change to drive consistency in process and procedures not to cover up the problems of same.
"why would an insurer want to pay three people to work on three quotes when the income to the carrier would not change. All you are doing is creating more work for the insurer, increasing their expenses which will ultimately drive up rates."
- The insurance industry needs to drive efficiency. If they choose to do business with multiple agents/brokers in the same geographic areas, they've made their bed. Now, they need to figure out how to drive this efficiently.
Basically, this boils down to the insurance industry needing to change. Spitzer's investigations started some of this and the UK's FSA is driving some of this in the London markets, but carriers need to wake up and realize that they have fallen way behind their peer industries in driving an efficient operating model.
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Callen
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Blocking Markets
Pardon my ignorance, but are you an independent broker Racerd? Your responses don't lead me to think that you are and that is ok, but I think your response to Dilbert is uncalled for.
As an independent broker for 20+ years, I completely agree with Dilbert and also, am aware of the costs involved to the insurance industry. Carriers would not be interested in providing 3 separate quotes by three different underwriters for three different brokers for the same risk. That is just plain stupid and bad business.
As an independent broker, we are representing our clients and if we cannot convey to them the way the market works and provide them with the opportunity to choose our services over our competition, then we are all doing a disservice to ourselves and to our clients. There is more to this industry than promoting "price" to our clients. We all know that there aren't many companies to choose from anymore, the only way that we distinguish our offerings from our competitors, is by the quality of service and expertise that we can offer our clients. By having the same carrier provide multiple quotes to a single client via multiple channels is just plain and simple, bad business.
As far as your comments about Spitzer go, again I don't think you have a clue on how the industry works. Your comments about changing the industry make it very clear that you frown upon the services that we independent brokers provide to our clients. Obviously, you need to change your broker because there are a lot of outstanding, responsible brokers out there that do not condone the "bid rigging" fiasco that has gone on, nor the witch hunt that Mr. Spitzer continues to endure. Spitzer has his own agenda.
[/u]
As an independent broker for 20+ years, I completely agree with Dilbert and also, am aware of the costs involved to the insurance industry. Carriers would not be interested in providing 3 separate quotes by three different underwriters for three different brokers for the same risk. That is just plain stupid and bad business.
As an independent broker, we are representing our clients and if we cannot convey to them the way the market works and provide them with the opportunity to choose our services over our competition, then we are all doing a disservice to ourselves and to our clients. There is more to this industry than promoting "price" to our clients. We all know that there aren't many companies to choose from anymore, the only way that we distinguish our offerings from our competitors, is by the quality of service and expertise that we can offer our clients. By having the same carrier provide multiple quotes to a single client via multiple channels is just plain and simple, bad business.
As far as your comments about Spitzer go, again I don't think you have a clue on how the industry works. Your comments about changing the industry make it very clear that you frown upon the services that we independent brokers provide to our clients. Obviously, you need to change your broker because there are a lot of outstanding, responsible brokers out there that do not condone the "bid rigging" fiasco that has gone on, nor the witch hunt that Mr. Spitzer continues to endure. Spitzer has his own agenda.
[/u]
Blocking Markets
Hey heres an idea. KNOW YOUR MARKETS! and you wont have to worry about being blocked. We represent every carrier that writes professional liability in California. I dont go out to every market when I get a submission because I know my markets. In a situation where it would be new business to us I find out where they have the application out to. If the top three carriers I would go to are in their list I tell them to have a nice day and don't spin my wheels. I do follow up to be sure they got those terms from those markets and in the event they did not I BOR them.
your response to Dilbert is uncalled for
I merely dissected the argument - can't see where that is uncalled for, just a logical rebuttal to a somewhat ill construed, hardly thought out argument. Regardless if I am an independent agent or broker or not, the industry is stuck in an early 1900's mentality that I believe that Sherman Anti-Trust Act would deem as being uncompetitive.
I think that you will probably see this practice challenged in the not so distant future. I honestly don't think that this will stand up to case law when compared with other industries of similar ilk.
I think that you will probably see this practice challenged in the not so distant future. I honestly don't think that this will stand up to case law when compared with other industries of similar ilk.
Blocked for a reason
There is a reason why one agent/broker -- one carrier happens. It falls perfectly in line with the dynamics of selling.
4 key components to a sale:
*Relationship
*Coverage
*Service
*Price
If you don't have all 4...you may write the account..but you won't keep it.
If a producer knows his/her markets, his client, his coverages, and if his/her price is competitive he will win and keep his client.
If you are not smart enough or ambitious enough to create an overall value for your client...having a single market blocked isn't the problem...you are....stop whining.
Thank you for your time.
sworth
4 key components to a sale:
*Relationship
*Coverage
*Service
*Price
If you don't have all 4...you may write the account..but you won't keep it.
If a producer knows his/her markets, his client, his coverages, and if his/her price is competitive he will win and keep his client.
If you are not smart enough or ambitious enough to create an overall value for your client...having a single market blocked isn't the problem...you are....stop whining.
Thank you for your time.
sworth
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Callen
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Blocking Markets
SWorth, you said it! Thank you for being so specific to your response.
Blocking Markets
I agree with racerd. The group health markets will give any and every agent a quote - the same quote. Then, may the best agent win!
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Callen
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Blocking Markets
Hi Sandit,
Yes, this is correct with Group Health, but not with Property & Casualty. The marketplace is completely different.
Yes, this is correct with Group Health, but not with Property & Casualty. The marketplace is completely different.
Blocked Markets
With all things being equal or close with virtually the same product being sold for close to the same price, as it is in Group Health, it's not the best agent that wins the account...it's usually the first agent that particular year...then the first agent the next year when the insured's rates inevitably go up..then the first agent the next year...and so on. Open markets feed that problem..not prevent it.
I prefer P&C because I don't have to worry about price being the only factor...as I said before..I provide value.
Not to mention, if you are that good of an agent, you would simply request the markets that you want in advance, because you know which markets are good for that risk...if you don't get those markets, the insured isn't impressed with you enough to do business and you should take the hint and walk. You would be missing one of the 4 keys to a sale at that point...the most important one...Relationship.
I prefer P&C because I don't have to worry about price being the only factor...as I said before..I provide value.
Not to mention, if you are that good of an agent, you would simply request the markets that you want in advance, because you know which markets are good for that risk...if you don't get those markets, the insured isn't impressed with you enough to do business and you should take the hint and walk. You would be missing one of the 4 keys to a sale at that point...the most important one...Relationship.
Blocked Markets
Sworth writes: "I prefer P&C because I don't have to worry about price being the only factor...as I said before..I provide value."
Back up a sec. I am a licensed health broker and I provide a very high degree of value to my clients. It is my expertise and experience that makes sure the carrier pays all of my client's employee medical, dental, life and disability claims correctly and when they don't it is my diligence and follow up effort that makes sure the claim is finalized accurately. I am also responsible for making sure their benefit program is keeping up with current trends from a financial and benefit standpoint. It isn't easy being a benefits broker if you do it right and provide a value to your clients. I would imagine that if you were truly keeping up with P&C and benefits to provide the same level of value to each type of insurance, you would never have time to do anything else, including sleep.
I am not saying P&C brokers do not provide a value to their clients but don't downplay the importance of a good health insurance broker. When claims are erroneously denied or providers balance bill my client's, it is their personal money that I protect. My clients are extremely satisfied with my representation and I am proud to say that I don't lose them over price, I know my markets, I know the industry and I keep one step ahead of my competition by providing a superior level of service to retain my clients. I meet prospects all the time who kept their P&C and health with one broker and didn't receive any service on the health insurance. What value did they receive? Not much.
I am licensed as a P&C broker in addition to life and health but I don't consider myself to be a P&C expert in any form or fashion. However, I know that my benefits expertise is exceptional and I would challenge any P&C broker to provide a greater value than I do.
Enjoy!!
[/quote]
Back up a sec. I am a licensed health broker and I provide a very high degree of value to my clients. It is my expertise and experience that makes sure the carrier pays all of my client's employee medical, dental, life and disability claims correctly and when they don't it is my diligence and follow up effort that makes sure the claim is finalized accurately. I am also responsible for making sure their benefit program is keeping up with current trends from a financial and benefit standpoint. It isn't easy being a benefits broker if you do it right and provide a value to your clients. I would imagine that if you were truly keeping up with P&C and benefits to provide the same level of value to each type of insurance, you would never have time to do anything else, including sleep.
I am not saying P&C brokers do not provide a value to their clients but don't downplay the importance of a good health insurance broker. When claims are erroneously denied or providers balance bill my client's, it is their personal money that I protect. My clients are extremely satisfied with my representation and I am proud to say that I don't lose them over price, I know my markets, I know the industry and I keep one step ahead of my competition by providing a superior level of service to retain my clients. I meet prospects all the time who kept their P&C and health with one broker and didn't receive any service on the health insurance. What value did they receive? Not much.
I am licensed as a P&C broker in addition to life and health but I don't consider myself to be a P&C expert in any form or fashion. However, I know that my benefits expertise is exceptional and I would challenge any P&C broker to provide a greater value than I do.
Enjoy!!
[/quote]
Blocked Markets
Well said...
Obviously, I am not a benefits agent. If you provide a better value, and apparently you do, we both have the same idea of what our jobs entail.
What I said was not meant to be a shot at your line of work...but to make a point about multiple quotes being taken from multiple producers/brokers with one carrier...apparently I failed in part, with your lively response as proof.
Getting back to the point of blocked markets...I have a quick thought for you all..
If you were the carrier who had 3 agents to send the same quote to...what incentive would you have to provide agressive pricing? If you have 3 agents quoting one account..it seems you will end up writing it through one of them...what's the point of giving discounts if you don't have to? Carriers would price gouge every insured they could...it sure seems like health carriers do with what I pay for health insurance...
Obviously, I am not a benefits agent. If you provide a better value, and apparently you do, we both have the same idea of what our jobs entail.
What I said was not meant to be a shot at your line of work...but to make a point about multiple quotes being taken from multiple producers/brokers with one carrier...apparently I failed in part, with your lively response as proof.
Getting back to the point of blocked markets...I have a quick thought for you all..
If you were the carrier who had 3 agents to send the same quote to...what incentive would you have to provide agressive pricing? If you have 3 agents quoting one account..it seems you will end up writing it through one of them...what's the point of giving discounts if you don't have to? Carriers would price gouge every insured they could...it sure seems like health carriers do with what I pay for health insurance...
RE: Blocked Markets
With group benefits, the carrier will not compete against itself so if 5 brokers go and ask for the same exact plan design, the carrier will release the same quote to all five. However, if one broker was more innovative than the rest and requested plan designs that were specific to their quote and no one else asked for those specifics, the carrier would provide a different quote to that one broker.
The carrier is not the only one responsible for providing aggressive pricing, one broker may have more experience or expertise in a particular line of coverage and therefore could request variables that the other brokers did not consider. Additionally, a broker who studied the client's historical loss data may be inclined to advise the client to take on a higher retention to reduce premium.
There are many opportunities in the P&C marketing arena for one broker to provide a better quote but allowing the market to be blocked by the first one at the door makes this opportunity impossible.
I am sure many clients have stayed with a broker simply because it was easier to stick with him than type that LOA to give someone else access.
Remember, if any of your client's have been spooked by scary health insurance rates, who ya gonna call? me..rate busta!!!
Enjoy and Happy Halloween!
Eileen
The carrier is not the only one responsible for providing aggressive pricing, one broker may have more experience or expertise in a particular line of coverage and therefore could request variables that the other brokers did not consider. Additionally, a broker who studied the client's historical loss data may be inclined to advise the client to take on a higher retention to reduce premium.
There are many opportunities in the P&C marketing arena for one broker to provide a better quote but allowing the market to be blocked by the first one at the door makes this opportunity impossible.
I am sure many clients have stayed with a broker simply because it was easier to stick with him than type that LOA to give someone else access.
Remember, if any of your client's have been spooked by scary health insurance rates, who ya gonna call? me..rate busta!!!
Enjoy and Happy Halloween!
Eileen