And Then There Was One!

Well not really, but…

Over the past couple of years many small and large insurance brokerage operations have been bought up by other larger brokerage operations. At times, it has seemed like everyone was buying and selling their agency.

For years we have espoused the need for a producer to utilize a top insurance brokerage outlet for disability insurance products.

The reasons were (and still are) easy—A brokerage outlet can give you a full selection of options to solve different needs because they use multiple carriers.

Most carriers have a “sweet spot.” In some cases it may be price, in some cases it may be terms and conditions, and in other cases it may be underwriting abilities.

Keep in mind that insurance is regulated at the State level, which effectively means we have 50 “countries” in the USA, when it comes to insurance products. While the top disability carriers are more similar than dissimilar in each State, even between carriers there could be some subtle nuances depending upon the State. This is why a brokerage outlet is often a great resource for producers. Local knowledge and disability insurance expertise is king!

As many of these agencies have been bought by other insurance brokers, they often express that being bigger will add more resources for the producer. At the same time, many of them express that the new parent company wants to leave them alone to do “business as usual.”

So, Is Bigger Better?

Sometimes, and sometimes not. What I have found over my almost 40 years in the disability insurance business is that:

  • Expertise is first and foremost, especially if you are not a regular disability insurance producer. You need reliable and accurate information. You need to be competitive. You may also need some training or coaching.
  • A large brokerage may have the resources to give you all of this, or they may be so big that they run their operation as a mill. A smaller brokerage may have the technical expertise, but not the time and resources for coaching. In other cases, smaller firms may spend more “hand-holding” to make sure a case gets sold.

This is not to say big or small is good or bad, but merely to point out that there are various parts to preparing to sell a disability case. In some cases more info and assistance is important and in other cases, less is needed. It is also a function of your starting spot as to your disability insurance expertise.

Price and Commission is everything? Not
In the real world, lowest price often wins and highest commission excites the producer. I understand that. However, as a professional, and perhaps as a fiduciary, we have an obligation to stand tall and give our clients the “best” they can get.

Best is not always the most expensive, but it might be!

When seeking a proposal for your client, it is always important to understand what you are selling and what the terms and conditions do mean, or can mean, to your client.

For example, one company has a policy that appears similar to others but costs substantially less. Upon closer inspection you will find that there is a clause which allows the insurer to cancel coverage, on an individual basis, with only a 30 day notice! Wow! Of course it would be cheaper.

Now don’t get me wrong. For every pool of carriers represented, even with as close to exact same terms and conditions, there will always be a high and a low priced product. However, they should all be within a fairly narrow range of pricing, not a huge gap!

Sometimes a client needs, or wants, higher limits, longer terms, or they may have a special situation that impacts underwriting. In these special cases, price isn’t the important point—solving the need is! This takes an expert who can assist you with determining which is the best carrier for the situation.

How about Service?
Service means different things to different people.

Timeliness—Service starts at the producer level where getting a proposal is timely and accurate. Most producers need information quickly. Waiting days to get a proposal could make the difference between a sale or no sale.

Accuracy—Service also means getting the right information up front, not after the fact! The brokerage outlet’s job is to make the producer look good to his/her client!

Accuracy is also a part of the post-sale. Is the policy information accurate? Who is checking this because oftentimes the buyer might not read the policy (although they should) and they are relying on what the producer has told them. Makes for an interesting discussion if there is a problem down the road!

Bottom Line
The bottom line is this: While a number of disability insurance brokerage outlets have been bought and while there are still many smaller brokerage outlets remaining, as a producer you need to find a place that gives you what you need.

Fortunately, in my experience, we have far more good to great brokerage outlets to serve you than poor ones, but you still need to find the one that works best for you!