Insureds depend on their agent for protection; but too many agents depend on price to close the deal and "win" the client. Winning on price can be a Pyrrhic victory because making the "war" about price kills a majority of opportunities to establish a long-term relationship. Without a protection or risk management-based relationship, the agent will lose the client the same way he gained it - on price.

Insurance is not a commodity. Correctly designed protection in the wake of a major loss is the difference between the insured's utter financial destruction and its restoration to financial health. Agents are and must act like more than mere "order takers," they must be the professionals the protection they offer requires.

Becoming and practicing like a professional insurance agent necessitates analysis of the client's exposures and an understanding of the applicable insurance policy's limitations and exclusions. Checklists are the tools of insurance professionals; their use confirms that all relevant questions are asked, but more importantly they reveal coverage gaps.

Checklists Win Clients

Checklists; every errors and omissions underwriter and loss control representative wants agents to use checklists. Agency consultants continually push the use of checklists. Agents, like the Grinch, imagine all the "noise" they are going to hear at the next E&O class about, you guessed it, checklists. But beyond the hyper-importance of protecting the agency in an E&O suit, checklist can actually help agents SELL MORE BUSINESS and MAKE MORE MONEY.

The "hassle" of using a checklist disappears when viewed from the perspective of increased income. But how do these annoying checklists help the agent sell more business? "Gaps" is the magic word; gaps in protection, gaps in the limits; all manner of gaps. In other words, checklists find the gaps that sell the client on the agent, allowing the agent to gain a new client and write more business.

Regardless of the coverage or client type, there are always gaps between the true exposure and the protection provided. Some gaps are purposed and others are a surprise to the client. It's the surprises the agent needs to discover, explain and win the client with. This is done with - checklists.

Gaps lead to opportunities: the opportunity to unseat the incumbent agent; the opportunity to develop a strong agent/client relationship; and decreased likelihood the client will move solely due to a lower premium.

No More Talk of Checklists!

There is no more talk of checklists from this point forward, lest you tire of the conversation. The remainder of this article details the two classes of coverage/exposure gaps: 1) those that will almost certainly result in winning the client when presented; and 2) those that don't necessarily win the client but rather serve to cement the agent/client relationship.

Gaps Likely to get the Agent Hired (aka: "Type 1" Gaps)
"Type 1" gaps themselves fall into two subcategories: A) those common enough that a majority of insureds within a particular class have the exposure; and B) gaps so uniquely situational and rare that only a very few insureds actually have the exposure. Both will win the client, but each requires a different approach.

"Common" coverage gaps ("Type 1.A." gaps) require skillful introduction and explanation. The mention of these gaps and their solutions should be conversational and not presented "checklist style."

"Checklist style" sounds like this, "Looking at my notes from our meeting, it appears that you have some unique exposures that we need to discuss," (the "notes" are, of course, the checklist that was completed).Don't misunderstand, the "checklist style" is not wrong, in fact this is the approach for "Type 1.B." gaps; but it is not the best approach for gaps common to a large percentage of insureds.

A conversational approach to common coverage gaps is more effective because it is not necessarily required to first find out if the insured has the exposure, because most within a specific class do. The goal is to impart important information about these common gaps to the insured and then tell them how to fill the gaps.

Assume the insured owns a 20-year-old building; it's likely the building is not totally compliant with the current building code. The unendorsed commercial property policy does not respond to this exposure, it requires the attachment of the ordinance or law endorsement (as detailed in an earlier series). Before meeting with the insured, the agent researches the jurisdictional building codes. At an appropriate place in the meeting (when the question regarding the age of the building is posed), the agent pauses and says, "I was reviewing the local building codes and noticed that [name of jurisdiction] has some unusual requirements. If your building is damaged beyond 50 percent of its MARKET VALUE, it has to be torn down and rebuilt to current building codes. This could be costly."

Obviously the information presented to the client must be true and relevant. In the above example, the agent has the opportunity to explain the problem(s) (as there are multiple issues) and the solutions. Because most buildings within this "class" (more than 10 or 15 years old) don't meet building codes, the agent was able to plan ahead and proactively offer a solution (conversational style) rather than reactively find a solution (checklist style).

Conversational style doesn't look like or feel like selling; it's an exchange of information that builds trust. If the client is unconcerned with the exposure, it's still in the notes that the exposure was discussed. This style also moves the insured away from basing the decision on price alone.

Differentiating between "1.A." and "1.B." gaps is rather simple. While both are hot-button gaps that should convert a prospect into a client, "1.A." gaps are general in nature applying to all insureds in a particular class (i.e. all homeowners' policies exclude personal injury, older buildings don't meet code, etc.) where "1.B." gaps are operational in nature. An operational gap is specific to the insured and is only known once the checklist is complete. The difference between the general nature and operational nature of these gaps gives rise to the different styles (conversational vs. checklist) used to discuss both.

Agents must look for, prepare for and capitalize on both of these client-winning gaps. Advanced preparation and policy knowledge are required.

Gaps that Cement Relationships (aka "Type 2" Gaps)
"Type 2" gaps are those that don't cause immediate panic or need in the insured; but those on which the insured wants to invest more time an discussion. Being able to act as a trusted authority and advisor allows the insured to build trust in the business relationship.

Common "type 2" gaps/exposures include coverage limits, valuation methods and contractual risk transfer issues. These, like the "1.B." gaps above, are nearly always operational exposures unique to the insured.

In the client's mind, these exposures/gaps do not require immediate attention; but they want the agent to invest time in researching the answers and offering alternatives.

Again, "type 2" gaps are not necessarily client winners (but they could be), they are relationship clenching. Addressing these issues will tie the client to the agent far better than price.

Synopsis

Use checklists to find gaps. Hot button gaps require preparation and study (agent has to know coverage and about the class of business being pursued). Capitalize on the gaps to win and tie yourself to the client for the long term.