Why Do Insurance Advisers Do It?

Insurance is subtle. Life insurance and living benefits like income protection and lump sums for catastrophic injury or illness are especially so. Advisers have the frequently unpleasant task of trying to explain the subtlety of the product to self-professed bulletproof prospects. It does not always end well.

The worst ending is having someone who would have had a claim, but for whatever reason I could not convince them to own the coverage. No one wins here. That is truly insurance poor.

Many years ago, I knew an agent who, in 22 years of business, had never delivered a claim check. I have sometimes wondered if he was incredibly lucky or if he had never made enough effort to help people get the coverage.

For myself, I can recall every claim. Why? Because they mattered. Young widows and widowers with a family to raise are pretty obvious. But there are more. The father whose insurance money gave the children a fighting chance at learning the business even without his guidance. The child who died after buying a big piece of the family business. You think business succession is hard. Should try running it in reverse. Money makes the difference.

Income insurance and illness insurance provide dignity and adjustment money. Things that seem little, matter. A neurosurgeon once told me that if he lost the feeling in the tip of the index finger on his dominant hand, he could be a general surgeon but not a neurosurgeon. Maybe a burn while barbecuing.

A chiropractor with an own occupation claim is running a successful business without the worry of day to day living costs. He has damaged elbows. Chiropractors need to be able to accelerate their hands.

Most of the advisers actually want the client to have the protection they need. They have seen what happens both with and without the coverage. The pros know how much the coverage is worth.

The amateurs know how much the commission will be. Advisers who do it only for the money don’t last very long. The business is too hard to do, just for money.

I recently asked David Bourke at Bourke Financial Services in Australia about how Critical Illness insurance was doing in his market. Trauma insurance there. His reply was interesting in two ways.

  1. He told me that it was a growing part of their business and he represented that by how many dollars of claims they had paid. Notice not how many policies they had sold, nor how much coverage or premium.
  2. He told me they have a claims log and he knows how much coverage has been paid out by line of business.

It occurred to me that the claim log is why we do it. For David, it is the history of the difference that he has made. I suspect that sometimes he looks at it for encouragement when things are not going as well as he might like. A professional keeps track of important metrics. An adviser who looks at what the product does for people is a worthy adviser.

We do it for the lives made whole by our efforts.

If you don’t have a claims log, it might be good to start one. It will remind you why this business matters and why you are a good guy.

Thanks for the insight David.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.

don@moneyfyi.com | Twitter @DonShaughnessy | Follow by email at moneyFYI

9 Comments on “Why Do Insurance Advisers Do It?

  1. Thanks again, Don. Your messages are most often welcome reminders of why we professionals do what we do–not just for the income (which sometimes is far less that our cost of providing needed service) but for the effect that we offer has on our clients and their families. Keep it up!!

  2. Excellent summary of the virtues of an outstanding business. In my 25 years of involvement, I have seen two types of agent attrition:
    1. People who, as you say, never comrehended the greatness of the business, and were in for the wrong reason. They deserved to go, as did the multitude of people who just didn’t want to work all that hard.
    2. The tragic cases of agents, agencies, and even insurance companies, which were influenced by bright people of diverse backgrounds, who had no idea of what an insurance policy does –or for that matter, what an agent does. These upwardly mobile bureaucrats saw sales support and underwriting as aopportunities to elevate their own careers; the more complex, mysterious, and capricious, the safer they percieved themselves to be. Indeed, for these purposes, a change is equal in value to an improvement.
    In the absence of their own understanding, these business school graduates, corporate in-laws and hangers-on resorted to throwing up snowstorms of numbers which meant little, but obscured the human element of the sales process.
    And because they were completely baffled as to why agents were paid so much for doing so little, these bright but ignorant political wind surfers succeeded in eliminating the factors that would attract the very people who were most capable of bringing in the loyal, long term business that insurance companies need to succeed on a real basis. To their own peril, they defied the axiom,”the business that stays is the business that pays.”

    The sedimentary residue remains as the life insurance industry we have today.

    • Good points. I had ignored the bureaucratization of the insurers. There is little question that it is a big numbers game any more. I suspect that, as always, the losers are the ones who fail to get the coverage and service that they needed. A seasoned hand once told me that insurance is the only successful business where none of the customers, none of the salespeople, and none of the manufacturers have the slightest clue what it is really about. Too bad.

  3. Hi Don

    Your comments are very much appreciated.
    One of the main beauties of my claims register is that it allows me to tell stories to my clients who are unsure about the benefits of what we offer.
    At a glance I can recall so and so who had breast cancer and the difference it made in her life etc.
    Because Insurance is such an intangible our story telling ability with real life situations assists enormously.
    I will send you a copy of our claims register so you can see there is no discrimination about who is affected.
    As you rightly said it is a must have for all advisers.

  4. Thank you Don for reminding us how important a role we play in the lives of our clients.It boils down to us advisers being prepared to put the industry first before the commission.I have made it a point to include the comprehensive risk presentation to all clients even those that seek only investments.Recent sad case is one of my young clients who passed away as a result of an accident just because according to him he needed investments above the risk and I could not do it and the appointment shifted until the tragic accident.Now he is dead and leaves young children with his elderly mom.Keep up the good good work we will preach until we sleep and wake up preaching.You are a gift to us and clients

  5. Pingback: Why Insurance Matters | moneyFYI

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