Insurance agent role resembles other pros'

It is not so much that your policies are good or bad; it is how your agent helps you determine what is right for you. My own personal lines insurance agent has been very helpful, proactive and loyal for more than 12 years. Many times, if you are merely shopping for price, you will find there are some options out there, but your agent should cover them all.

Your agent is really like your attorney or your certified public accountant. Ask yourself, “How often do I change or seek to change my agent for insurance?” Every year? Every three years? OK, how often do you look for a new attorney or accountant? Every once in a while? Never?

Your policy is only as good as your agent. Not everything will be covered exactly the way you want it to be, because insurance is a tool to accommodate risk transfer. Those risks are what are really important, and if your current agent is just “shopping the market,” he may not be doing his job. An insurance agent should be providing clear, concise answers about his plan and what differences there are in the plans you have and in the plans that may be available.

Your agent relationship should be the same as the relationship you have with your attorney or CPA. The biggest difference in that relationship is that agents do not have billable hours. Agents typically work on commission. Commissions are how agents get paid for their knowledge and expertise and for keeping you informed of changes that are important to you and your company.

For fully insured employee benefit plans, depending on the size of group you have, commissions will be based on a declining or downgraded scale that starts at 10 percent or less. Most groups of more than 100 employees will typically have a standard commission on a flat rate or level basis of usually no more than 2 percent. Most insurance carriers will allow some negotiation of commissions on accounts greater than 100 members. That may sound like a lot of money, but you would not want to go without an agent, because the agent is your eyes and ears to the available markets. Commissions are a revenue source or income. Just as for your business, it costs money to operate – rent, utilities, phone, fax, paper, toner, taxes, Internet upkeep, attorney fees, CPA fees, salary and benefits, just to name a few.

Basic services should include claim service, enrollment issues, billing issues and renewal services. Some agents host seminars for their clients or prospects. This is a service that will typically provide a lot of benefit for you and your company, and if you are invited, try to attend. Some agents provide value-added services such as Internet resources, employee education, seminars or service promises. You will only recognize value-added services if you see the true value of those services. Agents can provide those services as well as or better than any of their competitors, but what you really want is a relationship.

If you have insurance, at some point you will need help with a claim or billing problem, but the type of relationship you have with your agent will definitely impact your service. You should feel like you can call your agent for anything related to the plan and he can help you within a reasonable time or direct you to the proper person to resolve the issue. You cannot expect your agent to be available at all times, because he must be doing the other parts of the job, such as selling new business and providing some of the value-added services described above. Your agent should have a person on staff who can assist you or your employees with issues as a part of their primary responsibilities.

To make sure you have the right type of relationship, ask yourself these questions:

• Does my agent provide timely follow-up on questions?

• Does my agent regularly call throughout the year to check on things?

• Does my agent provide renewal strategies and information that is useful, or is it just more paper to toss?

• Does my agent have value-added services that truly add value?

• Does my agent talk with me about risk management?

Proper risk management of your plan and benefits can certainly outweigh any savings you might realize by making the wrong choice. How are you on Consolidated Omnibus Budget Reconciliation Act, or COBRA, policies and procedures? What about Family and Medical Leave Act or the ever-present and paper-eating Health Insurance Portability and Accountability Act rules? Those are just a few of the laws that employers must understand – and follow.

Did you know that the Immigration Naturalization Service boasts that a majority of their income is from fees? Those fees are the fines that employers paid for having incomplete records or policies that are required of every employer. And it has grown every year since INS began doing audits of employer records. Good risk management to help you comply with all applicable regulations and laws is important.

Now back to the first question: Is your agent relationship like the relationship you have with your attorney or CPA? If not, is that because you haven’t viewed it that way, or is it because your agent hasn’t viewed it that way? Those questions are worthy of discussion with your current agent and any prospective agent. Together, you can determine the type relationship you want.

Mike Scott is an account executive for Barker-Phillips-Jackson, an employee-owned independent insurance agency.