The Trust Factor-Building Relationships with Your Clients

Baffled by the product, overwhelmed by policy verbiage and totally put off by the adversarial nature of the whole business, consumers nationwide express having serious trust issues with the insurance industry.

In “Which profession/Who do you trust?” polls (e.g., Readers’ Digest survey; Leger Marketing Report), insurance agents typically rank in the bottom third—rubbing elbows with car salesmen and politicians rather than upper-echelon nurses and firefighters.

That image problem
The oft-maligned insurance salesman is perceived as a rather pushy, commission-hungry individual who preys on family, friends and the elderly—an image reinforced by newspaper cartoons and movies like “Groundhog Day.”

“The insurance agent who will say and do anything to make a sale is the one who sticks in consumers’ minds,” said Steve A. Reichman, executive vice president of The NIA Group in Somerset, N.J. “Those of us who have gone through designation programs and have morals and scruples have a greater sense of our ethical responsibility to take care of our clients first.”

Reichman believes that the CE ethics course requirements that many states have adopted help remind license-holders and reinforce the punishment that can result if they circumvent the system. He cited a quarterly newsletter produced by the New Jersey Department of Banking and Insurance that prominently lists the names of those who have accrued fines and suspensions. “It’s the first place people look, and the last list you want to be on!” he said.

The image of insurance salesmen (along with other financial service professions) has been dealt a further blow during disappointing economic times—when Americans’ finances in general have taken a hit and they’re not sure whom to trust.

The general climate of distrust and suspicion surrounds large corporations, large insurance companies included. Before pay-at-the-pump became the standard, Texaco promised: “You can trust your car to the man who wears the star.” How do you think that ad campaign would fly today?

“Trust and satisfaction with an insurance agent depends on the circumstances and expectations of the people involved,” said William T. Hold, Ph.D., president of Austin, Texas-based The National Alliance for Insurance Education & Research.

“The problem people have with insurance is that while they’re constantly paying out money, they’re not receiving a tangible benefit.”

According to Hold, most people think they’ve thrown away all their money if they’ve never had a claim. “This industry focuses on unhappy circumstances; and people pay for the right to collect money when they have had a personal disaster and their lives may be at an all-time low.”

If you say it, do it
Simply put, trust issues frequently develop when agents do not do what they say they are going to do. Some examples:
• They quote one price and the policy is issued at another with no explanation.
• The agent reduces coverage or places clients with carriers providing limited forms in order to obtain a cheaper price, and doesn’t inform the insured of the limitations.
• The agent doesn’t return phone calls and follow-up as promised.
• They take the customer’s money without providing a binder or evidence of coverage.
• They don’t adhere to time-sensitive situations (i.e., when certificates of insurance cannot be provided in a timely manner or with proper verbiage, this needs to be addressed prior to binding the coverage, not afterwards).
• They abandon the customer after the policy is written.

What’s an agent to do?
Dean L. Fletcher, national director of business development for The National Alliance, has been in the insurance business in California for 35 years as a salesman and agency owner. Fletcher recommends education on both sides of the fence to help rebuild trust in the industry.

“Most purchasers of insurance services and products, both personal and commercial lines, have only the vaguest idea of what they are buying,” he explained. “And many agents do a poor job of educating consumers on the benefits of the policies they are recommending. Add to that the complexities of the products and the fact that many independent agents are floating around unsupervised, and you have the recipe for distrust.”

“Less than one percent of those employees designated with the job of contracting for commercial insurance are qualified for the responsibility,” Fletcher said. He said that most are just looking for a price that will make the boss happy, rather than taking the time to understand what they’re really buying.

“Price isn’t the issue; cost is the issue. That’s cost in terms of claims paid and losses out-of-pocket in a disaster situation. Our mantra is that the true value of a policy is in peace of mind.

“It’s up to the agent to inform the buyer so they understand what they’re buying,” Fletcher emphasized. “Most agents don’t do that.” That’s why, he explained, that the first reaction the employee responsible for insurance coverage has when a fire or other disaster occurs in a business is panic. “Fear and anxiety are the initial responses. Even sophisticated buyers panic and believe they are going to get the short end.”

What happens next? Often, the anxious consumer over-reports the loss, putting the adjuster in an even more adversarial position where scoring a victory means denying all or part of a claim. Not the best result for anyone involved.

A Florida agent with 30-plus years of industry experience in personal lines, commercial lines and employee benefits reinforced Fletcher’s account that many buyers have a distorted view of their coverage. “It breeds distrust when agents make hit-and-run sales without taking the time to educate their buyers by presenting scenarios of what an actual claim could look like,” she said.

She described a case where ill will and bad word-of-mouth resulted from a woman’s denied claim on her 30-year-old, expired refrigerator. “Wear and tear” was not a concept, or fair reason for denial, that this customer could grasp, and she felt cheated.

“When attorneys advertising on TV say: ‘Don’t trust your insurance agent. Call us first!’ it makes me want to go on television myself and say, ‘Don’t talk to your attorney before you talk to your insurance agent!’ I don’t think that, as a profession, we do a very good job of standing up for ourselves,” this agent lamented.

Damage control
With all this water under the bridge, is there anything agents can do to improve their pervasively negative image? I offer these simple suggestions:
• Do what you say you are going to do.
• Be honest, fully disclose the good points and bad points of the product.
• Be consistent (and timely) in providing good customer service.
• Be empathetic to your customers’ needs.
• Be approachable and available.
• Return phone calls (the good and the bad).
• Do not abandon your client once the policy is written.
• Establish trustworthiness.

Agents can alleviate some fear and engender trust in potential clients by encouraging them to check out and verify their professional credentials. If you have designations such as CIC and CISR, explain to your clients-to-be that this represents well-tested knowledge and training, and such designations are stripped away in instances of improper conduct.

Another way to demonstrate trust to potential clients is to discuss the drawbacks of an insurance investment along with the plusses. This tells a customer that you really do have his best interest at heart, even though it could kill the sale.

If your potential client has been referred through a mutual acquaintance, chances are your good track record has already paved the way for trust. An established, trustworthy agent relies on his good name and will always think twice before risking it.

Lynn DellaCroce is the owner of LDC Insurance Education in Nipoma, Calif., and has been teaching insurance subjects for 22 years. She is also a producer for Byars-Thompson-Buchanan Insurance Services of Santa Maria, Calif. Along with her experience as a CSR, producer and instructor, DellaCroce has also sat on numerous insurance boards, including the California Curriculum Board for the Department of Insurance.