When you buy insurance, you better know what you are buying. You cannot look back and change it.

When you buy an insurance policy, you better be sure how it will perform at the time of the claim. How to create spectacular outcomes is something you cannot know, even as a sophisticated consumer, unless you have experience with this insurer. Knowing the internal and the external environment surrounding an insurer and surrounding claims is imperative. Buyers need the type of guidance provided by an independent agent. Not just an agent but one who is free to give you the objective advice you need.

It has become normal for an agent to turn the claims process over to an insurer. This is a mistake in many ways. Claim time is showtime and we agents are just throwing away the opportunity to strut our expertise and to advocate for our clients.

During the post-purchase and pre-activation “claim” phase, the insurance contract remains dormant as a promise of future performance. When you purchase insurance, you cannot accurately predict the conditions at the time of the loss, thus the promise must be made to flex to the conditions at the time of the loss. The insured faces at least two types of risk associated with the covered causes of loss: the risk of fortuity and the risk of volatility due to the change in conditions from the passage of time. If the insurer or the agent undertake to set limits, for instance, you must allow the contract to flex at the time of loss. It is simply unethical to do anything else. The limit was always intended as a method to calculate the correct premium, not a point for the insurer to freeze and pay no more.

A dormant insurance contract (a contract of future performance) changes dramatically at the trigger point of a covered claim. The contract shift from a promise of future performance to a contract of specific performance. All things can be accurately calculated as the event is time defined. This makes it possible for the agent to advocate for the client as the outcomes can be defined and the dynamics of the contract are stable. There can be no uncertainty to argue about. The claim is what it is.

When the consumer and the agent set the coverage up, they must make the specific performance meet or exceed the expectations of the insured. The agent and the insured must work together, as a team, to make sure they design the insurance contract to create post-loss outcomes to meet or exceed the outcomes expected by the team. This is not the typical approach of most agents, rather it is the approach of a consultant.

The agent needs to have a diligent focus on building an equitable outcome that benefits the insured without post claim contention. The entire process must be focused on the needs of the customer. This mirrors the thinking outlined in Blue Ocean Strategy or the Three Questions. Unwavering customer focus is imperative for industry improvement or innovation. Companies and insurers being treated fairly. Not issuing an unintelligible promise and then attempting to deprive the client of their rights after the loss.

I do not know when we (the insurance industry) came to the point that meeting customer expectations is unnecessary. The primary measure of value is the degree to which a customer is satisfied and how much the outcome exceeds the expectation of the insured.

Copyright 2017 by H. E. Candage. All rights reserved.
Please email the author for reprint permissions.

Howard E. Candage, CPCU, CIC, CRM
207 671 7066

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Bill Wilson

Founder at InsuranceCommentary.com
One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America. Reprint Request Information