13 Jun “Sell What You Know and Know What You Sell”
This has always been one of my favorite sayings. It is especially relevant to agencies since a significant part of the day-to-day discussions and transactions involve selling in some form. This might relate to my early days in the insurance business (back in 1975, selling Travel Accident Insurance door-to-door – $9 every six months). We were trained to know your product, and then in 1976, when I started at the agency side of the business, we had classes where we would read policies to understand what is and what is not covered. That experience has served me well.
The reason I picked this topic is largely based on the Swiss Re claim statistics (April 18 blog posting), where it was noted that 12% of the E&O claims (the statistics are from Swiss Re’s other Agents’ E&O book) involve the cause code – Failure to Adequately Explain Policy Provisions.
I will acknowledge that I don’t have any further detail than this statistic. Still, one can speculate that part of the cause code involved improper or inaccurate explanations of various policy provisions. Side note: I had a boss who honestly believed he could provide inaccurate coverage explanations under the premise that “they will only know that I didn’t know what I was talking about if they have a claim, and what are the chances of that?” But what if the client does suffer a loss and alleges the agency sales producer (or internal staff) provided inaccurate information? Could they sue the agency and win? Without a doubt, and thus this is not a position I would recommend anyone take.
There are many opportunities to better understand the products you’re selling. One is to read the policies. I have heard many stories where agencies have added new clients by 1) knowing the client and 2) discovering that some of the client’s exposures are not covered to the extent the client was led to believe by their prior agent. Another approach is to access one of the various exposure checklists that provide detailed exposure information by line of business by industry type. A further approach is to discuss the account internally and ask some of the staff questions. Lastly, I firmly believe it is ok to say you don’t know the answer to the client’s question. A response such as “That is a great question – let me check on that, and I will get back to you” will probably be ok.
Bottom line, how confident and comfortable are you (this applies especially to producers and account executives) that you know what you are selling? Do you “wing it” hoping that your answer is accurate? Can you really explain policy provisions if you are not sure what the policy provisions wording is? Not likely.
As the statistics point out, there have been many E&O claims where the agency was selling a product that they were unfamiliar with. Suppose the agency staff “selling” the product is unfamiliar with the product and what it covers and doesn’t. How will it be possible for those same agency staff to explain the coverage to the customer clearly? Do you want to be in court and admit that you were not all that familiar with the product? I don’t think that statement will help your case.
Doesn’t the “Sell what you know and know what you sell” philosophy sound reasonable? Following this advice might save you from an E&O claim.