I have been exposed to insurance since I was a little girl. My father, Jack McBriarty, started an agency in Milford, NH, in1985 and often said that being an insurance agent is a secure career because everyone needs it. Though true, he could not have imagined how much would change how nsurance is bought and sold and make the role of an agent less obvious.
What Does an Insurance Agency Do?
The uncertainty of exactly what an insurance agency does became apparent during a conversation I had with a recent UNH graduate. She is a young woman who just began a career in insurance. Though she is getting to know the business, she said she spends a lot of time explaining to her friends exactly what insurance agencies do. Though disheartening, it is not surprising given the millions of dollars poured into advertising from direct carriers like Geico and Progressive. These companies promise a quick quote and hundreds of dollars in savings. It is so convenient; her friends often ask why she would need an insurance agent?
5 Reasons Why You Need an Insurance Agent
1. Insurance is complicated:
Buying insurance is not like buying a loaf of bread. If you choose poorly you can not return your policy for a refund, but risk your entire financial future. This was evident when I recently went onto the Geico website to get a quote. I entered much of the basic information that we would ask and then produced a very low quote. My first reaction was "uh-oh" given the lower price; however, upon reviewing the quote as a licensed insurance professional, I could see the reason for the lower premium:
- The system chose the lowest liability limits allowed by state law, not considering the assets I have at risk.
- No collision or comprehensive coverage was selected for any car that did not have a loan, regardless of the vehicles' age or what I wanted for coverage.
- No towing, car rental, or gap coverage selected
No one likes to spend more money than necessary. Still, if you don't know the ramifications of what you are buying and are only intrigued by price, you could put your financial security in jeopardy. This example only addresses car insurance, but what about the more complex policies?
- What if you are a consultant who works from home. Do you need insurance?
- What if you are a general contractor who has a couple of guys occasionally working for you. Do you need NH worker's comp? What if you do work in Massachusetts? Do you need a separate policy?
- What if you are an Amherst real estate agent who uses your own car while showing homes - is this covered on your personal auto policy?
- What if you are a Milford homeowner and have a lot of jewelry - does homeowners insurance cover this?
The bottom line is that you don't know what you don't know, so it is helpful to have someone to provide counsel and advice on best protecting you, your family, and your assets.
There are three ways to purchase insurance.
Direct Writer (like Geico, Esurance, etc.): There is no insurance agency involved, and you deal directly with the company. They tout low rates, but this may or may not be the case given how many factors impact the premium. This blanket statement is made given the company equates the 15% savings on the commission not paid to an agent; however, this assumes all company rates are the same, which is not the case
A problem with going direct is that you assume all the responsibility in picking your coverage correctly and hope you don't miss out on purchasing critical coverage. There is also limited choice within the company. If you don't like the rate or coverage, your options are limited to what the company can provide.
Captive Agency (like State Farm or AllState): These agencies provide the benefit of counsel by licensed professionals on the coverage needed; however, if you don't like the rate or coverage options, the agency only represents the single company. It is a take-it-or-leave-it system.
Independent Agency (like HPM Insurance): These agencies provide the benefit of counsel by licensed professionals on the coverage needed and represent numerous insurance companies to meet the needs and budget of the client. Like any business, insurance companies change with time. What may be a fit for a client today may not be in the future for various reasons. Perhaps there is a new driver on the policy or a recent claim. Each insurance company rates these situations differently, so you want to be with an agency that understands the impact of these factors with various companies, not just one or two.
Some companies also have target markets that change. Perhaps you were initially with a company that wanted to compete in the Bedford and Manchester area and had an attractive rate initially; however, losses took a toll. The company begins to increase premiums in these areas. You want an agent that is on top of this to move you to a more competitive company. This is not possible if with a direct or captive agency.
3. Your advocate:
When you have an independent insurance agency, you have someone looking out for your interests. Independent agents do not work for any specific company, so they can help you objectively through a claim, coverage, or billing issue. How far will you get, without hiring a lawyer, if you have a severe disagreement with a company and their legal department?
4. Personal Service:
When you have an insurance agency, you typically know who handles your policies. You have a name and face that you can speak with and get to know to enable an open discussion about your concerns or financial protection goals. You do not call into a phone bank and await the next customer service rep who may or may not give you their extension for the next time you want to call back. With a direct writer, you may be simply a caller in a queue.
5. Your Community Partner:
Most insurance agencies are small businesses within your community. If there is a significant weather event that has caused damage, the agency will be well aware of the situation. It can better assist you in getting the help you need, whether going out directly to the claim site or suggesting a restoration company to help you begin emergency repairs.
Many agencies also help support the local causes that you and/or our community support, whether it is a local food bank like SHARE Outreach of Milford or the Boys and Girls Club in Laconia. Shopping local can mean shopping at the farmers' market on the weekend, but it can also mean supporting your local insurance agency.
In summary, the role of an insurance agent is not going the way of the dinosaur. Many agencies have just been overwhelmed by the massive marketing budgets of the gigantic insurance companies. Still, it is time agents let the public know what we do given its importance and value. Presented all the facts, we are confident that the insurance agency will remain a vibrant business for years to come, supporting both the consumer and the community.