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MANAGING BUSINESS RISK

By Scott J. Richardson

Milo LeBaron,Marc LeBaron

 

“During a recent meeting with Marc and Milo LeBaron of LeBaron & Carroll Insurance Agency, we had the opportunity to discuss the many business risks that our clients face. Some of these are regulatory in nature, others are financial, and yet others result from non-planned events, such as accidents, change in market conditions and the like. The result of that meeting was the following, in which I interview Marc and Milo LeBaron about how insurance and insurance agents can help clients minimize risk and then they turn the tables and interview me about how your attorney can help minimize risk. “~ Scott J. Richardson

 Q & A Subject: Besides Quoting, what can I do to cut insurance cost?

 Scott: Besides selling insurance policies, how can an insurance agent help its clients minimize risk?

 Milo: The Fundamental principle of insurance is the transfer of risk to the insurance company.   This is important, and also the mechanism that actually pays the insurance agent to work on your behalf. The challenge businesses face today is twofold; first, their insurance agent has become nothing more than a vendor. He or she doesn’t earn what they are paid. The role of the agent has changed over the past number of years from that of a Trusted Advisor/Consultant to nothing more than an order taker. Second, almost everything the traditional agent does is reactionary in nature. If something needs to get done, it has to be initiated by you or your staff, using your time, money and energy. In the words of the insurance agent… If you need something, CALL ME!    And those are 2 BIG problems. 

 Scott: Recognizing those 2 problems along with numerous others, what should a business expect from their agent?

 Milo: More! Is what they should expect. Most business owners are not aware of the amount of money they pay to their agent.   We find they are paying more to their agent than they pay their CPA or Attorney, yet are receiving less. Businesses pay 10-15% of the premium to the agent and should demand more than just the placement of Insurance, certificates, endorsement and other reactionary services commonly identified as “Great Service”. 

 As I grew up listening to my grandfather and father talk about the insurance business and their involvement with their clients, it’s clear that the role of the agent has changed over the past 50 years. I believe the invention of the fax machine played a great part in the change. From that point forward, the agent was no longer required to be out and involved with their clients during the year. Does “Out of sight – out of mind” ring true?

 Scott: Then what should I expect MORE to be?

 Marc: When all is said and done, your agent and his staff should be proactive and spend time with you to help you; 1. Look more attractive to the insurance companies, and 2. Help you identify and control risks that may cost you in the future. 

 You are not in the insurance business, you pay someone who is, demand more. Would you be happy if your CPA tells you that if you had made a small change during the year, you could have saved a significant amount of money on taxes? Of course not, that is information you needed during the year. The same problem occurs in the insurance industry. The traditional agent does very little to help the business during the year prepare for renewal. Changes that would help them look more attractive to the insurance companies and drive down their insurance premium may be discussed at renewal time, by then, it is too late. 

 Scott: Can all agents provide the same services?

 Marc and Milo: I guess I would reverse the question and ask you, aren’t all landscaping firms the same? Of course not. As a matter of fact, you will find that it’s not what you do; it’s “how you do it” that makes the difference. The same applies with the insurance industry.   How many promised services never see the light of day?

 Scott: What does a business owner look for when interviewing agents?

 Marc: The phrase comes to mind; “if it looks like a duck, walks like a duck and quacks like a duck, it’s a duck”   You’ve seen them for years and you know them when they ask to quote your insurance. The traditional agent promises good service, cheap price, fast certificates, claims management and other services that they declare to be “Value Added Service”. You must raise the bar when you choose your agent and demand more:

  •     Look for Evidence of their promises
  •     Get their promises in writing
  •     Do they provide a written plan with goals?
  •     Look for a stewardship report holding themselves accountable

 Last but definitely not least,

  •   Does the culture of their business align with your goals and needs?

 Remember, a duck is a duck. If they aren’t doing it now, they are not likely to change.

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