June 2022: We had the opportunity to welcome Gary Miller as our Peer-to-Peer trainer for June. Gary is the agency principal of The Miller Financial Group and has been a broker for over 41 years. He shared some lessons learned as a third-generation independent insurance agency owner and principal. Gary says that by embracing technology, his agency has been able to re-engineer critical agency functions and position the agency to become more consultative and nimble. As a team, they are now also able to better educate their clients on how to manage risk and uncertainty.
Gary wanted to set the stage for what he’s learned as a broker. He feels that there are three primary ways that agents can have a critical position strategically in our industry. He shares that we need to become the primary educators on the nature of risk, and uncertainty in insurance. Agents need to become masters in that discipline, which requires a lot of study and hard work. He says “We need to recognize that we need to grow insurance literacy so that consumers learn the proper way of buying insurance”. And finally, the premise that insurance is a commodity, we need to kick it to the side. Because it’s not a commodity. It’s a very sophisticated buying decision.
A bit about the present industry landscape
As Stacie’s shared with you, I’ve been a broker for 41 years, but our family’s been in the insurance business for over 100. And so I’ve seen many, many channels of distribution, the direct-to-consumer model such as State Farm Geico, progressive. I’ve seen the independent agency model, which obviously, I’m been a part of where you represent more than one carrier, and also the E-commerce digital internet, direct-to-consumer model. Okay. I think the market distribution system that seems to be growing the most right now is the independent agency channel. And I also think that, as agents and brokers, we need to understand that. Executives today, continue to be focused on market share, in my opinion, as the first priority, which I think doesn’t necessarily afford the proper allocation of industry resources. And I think that’s been evident if you look at all the commercials that are being advertised about, you know, the property and casualty products or even the life products, you know, they’re trying to make the argument that buying insurance is really a commodity, it’s not. So we can’t become blinded by the pursuit of market share. And I think the consumers are demanding that we become educators. So we’ve all heard the expression that was introduced by Geico the middleman. Well, I think we need to push aside the middleman concept and realize that if we’re going to define our role, yes, we are in between the carrier and the consumer. But if you look at the Labor trends, at the federal level, where the real growth and the engine is, is the intermediary than the intermediary broker is basically agents, brokers, advisors, that’s where really the growth is. And I think that’s a reflection that the consumers are saying to In the industry, we want to learn about insurance, we want to understand the role of how insurance companies bear risk, we need to understand the risk-bearing system.
Agents and brokers, you can’t be afraid to talk about the quantitative side of our profession, such as probabilities or likelihoods
Expected Value frequency and severity, the normal distribution, you got to be able to talk to that, because if you relate to them that way, then you’re gonna have you have a better understanding of the nature of risk and the nature of insurance. So where are we? And what do we need to tackle next, we need to understand who is our customer, the consumer, they need to be led and educated to recognize that price of insurance is not the only yardstick or determinant of the insurance purchase. And we need to encourage an alternative view and don’t always cave in to the pressure of buyers, I have a new client that wants me to focus strictly on price. We know it’s a price-sensitive purchase. We know that. But I think the tough challenge is why selling insurance as a commodity is an easy task. But if you’re going to try to educate the consumer of what are the yardsticks and the metrics, it’s more than the frequency of invoices that you get in the mail from the company. And if you’re unfortunate to have a financial loss, that’s an insured loss. Some consumers if you read the reviews on the Internet, some consumers aren’t very satisfied with how their claim was handled. And many times it’s the fault of the broker because they don’t know the last settlement value provisions. They don’t know the name of perils, they don’t understand hazards. So there are a lot of things in that contract of insurance that are very problematic. So we need to grow a new appreciation of the nature of risk. I taught for 12 years at Temple in the risk management insurance department in the Fox School of Business. And one of the things I always introduced at the very beginning was that we deal in the arena of pure risk. Pure risk has two outcomes, loss and no loss. Speculative risk, which is a risk that the stockbrokers or the wealth managers get involved with they have a third outcome gain, okay, but insurance was designed not to profit, okay, you have no loss, or you have a loss. And if you have a loss, the most likely solution to address financial losses is you pay a small premium that binds an insurance contract. So you transfer the responsibility for that financial loss through an insurance policy to the company. So you’re budgeting a fixed premium, that each year you can anticipate and manage. So there’s no greater premium that you’re going to be assessed as a traditional concept of being indemnified. We need to explain how risk pools are spreading the risk. If you think of it this way. 95 97% of the consumers may not have losses, no losses.
97% of the insurance-buying public do not have claims
So that means the two to 3% of those that buy insurance have claims so that’s the risk of spreading the concept that you have 97% underwriting and financing the claims of a few. Okay. Now let’s talk about how agents and brokers can lead and engage consumers and insurers. Well, we’ve learned to be very agile and nimble. You know, we’re a flat organization. Okay. Our agency Yes, we have an answering machine. But when a consumer calls after hours, it doesn’t go to the answering machine, it comes right to me. So I told my IT company, I don’t want any messages left on a voicemail. So that way, I’m not chasing my clients and the clients, they really feel because I can quickly delegate who that call is going to go to after hours. So we are really 24 and seven and you know, agent, Taro has a smart app. And if you haven’t looked at that smart app, I think we all we’ve all been trained to understand that being in touch with the consumer, our clients is very, very important. And the more context you have throughout the year, the more likely the consumer and client is going to think of you as their insurance counselor. So take a look at that smart app.
Agentero has the ability where a client is going to be sent an invitation, and they can go ahead and sign up for it. And that allows them the integration with your client management system. They can look at their policies, and they can print on auto ID cards. So it’s really no cost to the consumer. And it’s part of your relationship with Agent Taro. And it’s a branded smart app of your agency, not travelers, not State Farm. Not nationwide, not all states, okay. It’s, for example, the Miller Financial Group. All right. And so the agencies need to focus on growing partnerships and enterprises that will enable you as an agency principal to lead your organization and I believe, accomplish a very, very noble mission.