21 Feb Are All Carriers Equal?
According to research on Zippia.com, there are over 5,900 insurance carriers in the United States, which is certainly not a small number. Most carriers are uniquely different in their niche in the marketplace and underwriting appetite. Without question, they are also different in their level of service (underwriting and claims) and the level of “partnership” they have with the independent agents and brokers with which they do business. So, it stands to reason that regarding the question “are all carriers equal,” the answer is a resounding “No.”
When I meet with the E&O Plus agencies I am honored to work with, one of the trends/initiatives I have observed is those agencies “rating their carriers.” This practice could involve an analysis of an entire carrier or specific divisions such as claims.
A side comment/observation on carrier claims divisions – virtually every agency I meet with have advised me that the level of claims service has deteriorated significantly over the last couple of years. This trend could be due to staffing issues or the carrier’s use of technology with less focus on human interaction. From my perspective, this is very concerning and has increased the potential for unhappy customers. Isn’t claims satisfaction one of the more critical issues impacting metrics such as retention? Isn’t the bottom line – “Performance not Promises”? To refresh everyone, since the E&O Plus program started in 1986, how agencies handle/manage their customers’ claims has been the # 2 cause of E&O claims. #2! So, for agencies looking to reduce their E&O claims potential, a strong focus on claims handling is vital.
I have seen several agencies implement an annual evaluation of their carriers from a claims perspective. I believe that responsiveness and communication are key elements of their rating approach. They then honor the #1 carrier (and possibly #2 and #3) with a function at the agency office. This practice is a nice touch, and one can only imagine the pride the #1 carrier has when honored. Just an FYI, they also advise the “bottom” carriers of their rating in a very professional and well-meaning way. I doubt there is a lunch in their honor.
I have also seen agencies evaluate both their P&C and benefits carriers and eliminate those not providing the level of service, support, and underwriting appetite the agency feels is important. Consolidating the number of carriers could result in more business placed with those carriers, resulting in the agency increasing its leverage on a wide host of issues if needed.
Most agencies are likely doing some type of evaluation but not in a structured approach. Consider formally reviewing your carriers and honoring those that rate high with nice recognition (and possibly more business). Both parties should benefit from a healthy level of communication with their carriers.