Municipal insurance: A "buyer's" advice to sellers

Rough Notes, Sep 1998 by Zinobile, Joseph D

Are you interested in municipal insurance sales? Do you already have a sizeable book of municipal business? If your answer to either question is "yes," read on!

As independent consultants, with municipal entities comprising over half of our client base, we have significant experience with the municipal insurance buyer's perspective. Although we do not make the final buying decision, our recommendations are usually followed. We hope that sharing some of our experience as buyers' assistants" will help you to increase and protect your municipal insurance business.

Our clients are situated primarily in Pennsylvania, a state with over 5,000 municipal entities. If your state is anything like ours, a staff risk manager or outside consultant does not control most municipal insurance bidding processes. This article deals with the typical, uncontrolled municipal insurance bid process.

Politics

Failure to understand the politics involved in a municipal entity's insurance program can result in a big waste of time. A common "war story" complaint from agents is that their offer was rejected in spite of superior pricing and coverage simply because the buyer had no intention of changing agents in the first place! Check this out in advance. Candidly but tactfully ask a few questions, such as:

"How long have you been serviced by your present agent?"

* "What relationships exist between your present insurance agent and the decision-makers?"

* "What will it take to earn your business?"

You have a right to know whether the playing field is level or tilted. Time is our stock-in-trade and should not be wasted unnecessarily. Of course, you may want a "pure learning experience" (no chance for success)...in which case, never mind!

During my years as an agent, I decided not to participate in a few bids because my contact honestly answered the "relationship question" when a situation involved little or no chance of change. I also had some avoidable "pure learning experiences" when I forgot or simply did not ask about political ties.

Professionalism

Agents who simply prepare renewals or proposals without asking exposure identification questions are setting themselves up for embarrassment, E&O claims, and loss of the business! Resist the temptation to take this short cut.

We routinely find major flaws in our new municipal clients' insurance programs. Among the most recent ones: an entire location of over 50 acres with five buildings owned by the municipality for years...not included. The insured gave the agent copies of the budget each year, answered all questions that were asked, and assumed that all of its operations were covered. Neither of the two agents handling the account in recent years ever noticed the second location or asked the basic questions. Neither of the two recent insurers was aware that this location existed!

Municipal entities, particularly small ones, can present unique difficulties in obtaining needed information. Do things right! Take the time to ask the basic exposure identification questions. Consistent, professional procedure is a great way to protect your book of business and an opportunity to distinguish yourself to prospects. It's the best way to break out of the "price contest mindset" which afflicts many prospects.

Say what?

Why do so many insurance professionals use language that no one else can understand? We often use words for something other than their common meaning. Terms such as "coinsurance," "agreed value," "blanket insurance," "umbrella" and "all-risk" can mean something very different to a client than what we intend! Most of the proposals we see are filled with examples of this phenomenon.

This topic never goes away! It has been the subject of seminars, tradepress articles, and Internet discussion. It reminds me of the "Year 2000" issue in a way: non-stop publicity, widespread awareness, and low-level compliance.

A few helpful techniques that seem to get lost in all of the advice on this subject:

Ask a person who is marginally familiar with insurance to proofread important communications and tell you what makes sense, and what doesn't. This is the client's status: marginally familiar with insurance. This is the level on which we must communicate.

Avoid careless use of boilerplate material in your proposal. The client will not appreciate needing to hunt through it for desired information. Some of this is necessary, but use only what you must. Tailor it carefully to the client's situation.

Take the time to develop a proposal style that targets the audience: busy administrators who are not insurance experts. Distinguish yourself in this area, and an important advantage may result.

Expectations

Understanding client expectations is critical. This process should begin with the first meeting. Skillful questioning and listening is needed since many clients don't think this through in advance. That doesn't mean they don't have expectations, though!

Ask! 'What do you expect?" Is it superior service? To correct existing problems? The lowest price? Some clients will be honest and tell you if their objective is to get competitive proposals with which to bludgeon the incumbent agent...if you ask. Some will tell you precisely what they want in terms of price, coverage, and/or service in order to renew with you or change to you.