28 Apr Look at Your Agency Proposal from a Different Perspective
Most agencies look at the insurance proposals they provide to customers and prospects as one of the key tools that will determine whether they land the account. A great proposal should increase the potential for a successful outcome.
One issue to consider when developing the proposal is how well your client understands the insurance program you are proposing. There is a good chance that your agency understands it implicitly, after all, you deal with the coverages and the various insurance language virtually every day. For example, say you are providing a proposal to a restaurant. The owner undoubtedly knows the restaurant business, but how knowledgeable are they on the finer points of the insurance business? Put yourself in the restaurant owner’s position when receiving this proposal. Does the proposal help you understand the insurance program, or is it all jargon? Are there terms used that you don’t actually understand (such as actual cash value/replacement cost or coinsurance)? I often address this in my E&O classes by saying, “take the proposal home to your spouse and ask if they understand it.” It always gets a good laugh.
If your proposals are structured strictly to provide an overview, you may be missing an important element – one that may play a role in landing the account, while also providing quality E&O protection. That issue is education – proposals should educate your prospects and help them understand their insurance program. Educating customers and prospects is a key issue in minimizing E&O claims activity. If an E&O claim developed, there is the distinct possibility that the agency proposal will be one of the documents introduced. The goal is to ensure that when this occurs, the proposal helps your case instead of hurting it.
Key ingredients to include in your proposal:
- Detailed explanations and definitions of key terms.What is the look you get when you tell a client that ACV is replacement minus depreciation or that their policy has a retro date? Look to avoid abbreviations if there is any chance the customer will not understand what they mean.
- Easy-to-understand language. The language should not be above the ability of the prospect to understand it.
- Additional parties. Reference any known mortgagee or loss payees.
- Include details.For example, when dealing with workers’ compensation, reference should be made to whether the policy affords coverage for sole proprietors/partners based on the corporate structure of the entity. If the general liability policy is “subject to audit,” it should be stated. For management liability, explain terms such as “retro date” and how defense costs are handled.
- Note that higher limits may be available upon request.
- Carrier rating information.Include A.M. Best information for each of the carriers, with an explanation of what the rating means. It is recommended to use the exact definition as provided by A.M. Best. For any of the carriers that are non-admitted, provide an explanation of what this means.
Many agencies are very sensitive to the length of their proposals. Is it better to have a shorter proposal that the client does not understand, or a slightly longer one that educates the client? If a problem develops, I think it is very clear which one will work to your benefit.