We are grateful to the friend of the Academy, Chris Burand, CEO of Burand & Associates, LLC for this current article. Thanks, Chris!
Now let's come to his question: Is it really necessary to read forms?
Of course not! Lots of people have made careers in this industry without reading forms or understanding the covers they sell.
I've met many lawyers who probably surprised when they passed the bar. I know I have been surprised that they are allowed to practice law. Insurance forms are nothing more than legal agreements, so if lawyers do not need to know contract law, why should agents understand insurance contracts that they sell?
Lots of truly incompetent people in many areas make good life changes so that they are competent is not a requirement. To some extent, there is a professional liability insurance for these persons.
Being competent is a personal choice. For some people, they are happy to be incompetent if they can pay their bills. I've met many agents like this. I have met many E&O as lawyers advise agents not to be professional, because as an amateur (if you are not a professional you are an amateur by definition), the standard of care is smaller and I have heard many agents ask and even ask for even lower levels of care so that they cannot be held responsible for their incompetence.
Some Insuretechs definitely want a low standard of care because their models are based on a combination of price and user-friendliness, not coverage. Several direct authors strike me the same way.
A particular area of incompetence that I have witnessed countless times is the inability and / or reluctance to read politics and forms. A competent producer will read and strive to understand the forms they sell so that they can give advice to the customers in an appropriate manner. An incompetent means will not.
Some incompetent means also fool themselves. They call insurers rather than reading politics. This is stupid for many reasons:
- Many insurers have been so insufficiently trained today that their opinion is usually of limited value. I hate being so hard to have started my career as a writer. But with predictive modeling, some companies do not really need insurers who know about cover.
- With just a few exceptions where the insurer has many years of experience who usually work for multiple companies, the guarantor is unlikely to know more than their corporate format. If the producer does not get an explanation from all of their company's policyholders, an explanation does not work.
- Believe it or not, not all policies and forms read the same. I know that this comes as a surprise to many, especially those who do not read politics and therefore would not know that different companies' forms read differently, but there are actual differences.
- Are there shortcuts to read the whole boring policy? If all politics were the same, a set of clip notes would be sufficient. But it is not so. An agent can read examples in relation to specific forms, but all case law is based on the actual contractual wording. If the contract form in a contract is substantially different, this case-law cannot apply!
- A common question I get is where can I investigate this coverage instead of reading the forms? Because the coverage varies based on the form, you may read the form.
- Another comment / question I get is that I like to investigate covers on Google. What are your thoughts? Does Google actually have an analysis of the form you're selling? If nothing more than extremely basic data, you may want to read the form.
Reading and understanding the forms is part of being a professional agent. Being a professional agent is a personal choice. It's your choice. What choice will you make?
Chris is a frequent contributor to the Insurance Journal and Insurance Academy. He has recently published his annual report on the insurance industry.
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