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Beyond Insurance
The addiction that is crippling
our industry…the insurance bid
Shifting the producer’s focus from insurance and its cost to risk management
By Scott Addis
Over the past three years, Gary Abram (Addis Intellectual Capital’s director of Agency Transformation), Dave Grimmer (AIC’s director of Agency Performance), Ashley Correll (director of Beyond Insurance® programs) and I have treated more than 430 “patients” at the Beyond Insurance Treatment Centers. Our patients are typically bright, well-educated, dedicated, attractive, community-minded producers, sales managers and agency principals who have become addicted to “The Insurance Bid.”
Addiction is defined as a state of intoxication produced by repeated consumption of a drug. Its characteristics include: (1) an overpowering compulsion to continue taking the drug and to obtain it by any means; (2) a tendency to increase the dose; (3) a psychological and physical dependence on the effects of the drug; and (4) detrimental effects on the individual and on society.
Our patients enter the two-day treatment session frustrated, angry and demoralized. Their confidence and self-esteem have been sapped. Their addiction to The Insurance Bid has them caught in the “commodity trap”—the 90-day insurance bidding process. They are fighting an uphill battle against commoditization, in which the consumer perceives little or no difference between products, services and resources.
When this happens, price becomes the primary differentiator. Picture commoditization as a disease that eats away at one’s knowledge, wisdom and professionalism. It strips away the value proposition of even the most seasoned producer—his or her professional reason for existence—reducing it to a mere number.
Prior to attending a Beyond Insurance program, each patient is asked to complete a confidential 10-question survey. The responses to the survey help AIC understand the patient’s level of addiction and develop an appropriate treatment plan. As you can imagine, we see serious cases of “performance erosion” as measured by reduced new business hit ratios, substandard retention, random cross-selling strategies, no referrals and key accounts under renewal competition. Here are three of the 10 statements in the survey to which the producer-patient is asked to respond:
Statement #1: My prospect research and qualification system screens out commodity shoppers.
Statement #2: My sales process protects me from getting caught in the “commodity trap”—the 90-day insurance blitz.
Statement #3: I am enthusiastic and energized by my business model, systems and growth strategies.
Over 80% of the patients at the Beyond Insurance Treatment Centers respond “no” to each of the statements listed above. Their addiction to The Insurance Bid is affecting their personal and business careers.
Impact of the addiction
The impact of addiction to The Insurance Bid on producers, sales managers and agency principals is serious and long lasting as measured by the loss of time, reputation, confidence and money.
Time. Insurance addicts spend the vast majority of their time focused on renewal dates. These insurance junkies copy policies, dig for claim data, perform market research, design specifications and beg underwriters for the “best deal.” They get high on price and product. Their lives are consumed by pursuing the lowest bid to satisfy the customer’s appetite.
Addicted producers frequently come in second and develop a tolerance for returning to the bidding race the next year. Their compulsion to keep trying The Insurance Bid gives them false hope and a tendency to increase the dose to satisfy their addiction.
Most patients who come to the Beyond Insurance Treatment Centers have a new business hit ratio of under 50%. More than half of their professional lives are wasted in search of a number. How tragic! It is no wonder that the insidious effects of The Insurance Bid are crippling producers and those who support them—sales managers, account executives, insurance carriers, family and friends, to name a few.
Reputation. Socrates said: “The way to gain a good reputation is to endeavor to be what you desire to appear.” Reputation defines who you are in the eyes of those you serve. Your reputation is the result of what you do, what you say and what others say about you.
The producer addict has allowed The Insurance Bid to frame his or her reputation.
Confidence. The confidence levels of producers who come to Beyond Insurance Treatment Centers are depleted because they lack control over the outcome of the insurance bidding process. It is this inability to feel in control that creates tension, anger and low self-esteem.
Sadly, addicts with low self-confidence live in a vicious cycle. Their lack of confidence makes it difficult to be in control, and their inability to experience control results in self-doubt and negativity.
Money. Successful producers reap significant financial rewards. Their ability to make a lot of money is a strong motivator.
In contrast, the producer addict is frustrated with his or her compensation because there is little correlation between effort and financial rewards.
Substance-free strategy
AIC’s Beyond Insurance Treatment Plan begins with two potent, soul-searching and enlightening tools—The Diminished Value Snapshot™ and The Prosperity Gap™. For the first time, the addict is able to see the impact of The Insurance Bid on his or her time, reputation, confidence and income. These tools allow the insurance bid addict to gain a sense of clarity, simplicity, purpose and passion.
The Beyond Insurance Treatment Centers use the Risk Management Process as a means of rehabilitation. The Risk Management Process is a systematic methodology for assessing and treating loss exposures. It is the addicted producer’s understanding of, and appreciation for, the Risk Management Process that reduces his or her dependency on The Insurance Bid. The logic of the Risk Management Process shifts the producer’s mindset from insurance to risk and risk management.
Addicted producers gain immediate energy and confidence in their ability to control the outcome of risk. The identification, assessment, measurement and prioritization of risks become the therapy for the disorder. Let’s look at the four steps of the Beyond Insurance rehab process:
Step 1—Identifying loss exposures: The first and most important step of the Risk Management Process involves identifying and analyzing loss exposures that interfere with the achievement of an organization’s goals. This step of rehab begins with a curiosity and desire to understand the inner workings of a prospect’s business. As the insurance addict learns about a business, he or she becomes positioned to identify and analyze its exposures.
In the Beyond Insurance Treatment Centers, patients are taught consultative and diagnostic strategies to identify, measure and prioritize exposures to loss. Recognizing that losses vary from minor accidents to major catastrophes, Step 1 of the Risk Management Process uncovers the kinds of risks to which a business is vulnerable and determines how well positioned the company is to control a loss should one occur.
Step 2—Strategies to mitigate loss exposures: Once the addicted producer has developed a thorough understanding of a business, including its industry, corporate culture and operating procedures, he or she is ready to move beyond insurance to explore strategies to minimize risk and thereby reduce insurance costs.
It is the comprehensive understanding of the business (Step 1) that uniquely positions the producer to explore a spectrum of methods to improve an organization’s risk profile.
Step 3—Implementation of strategies: By the time the addicted producer gets to Step 3 of the rehab process, we see an amazing transformation. The burden of price and product has been lifted. The former insurance addict now has an appreciation for and understanding of risk management. Improved confidence and self-image are now part of the makeup of the Beyond Insurance producer.
Step 3 involves putting in place programs and strategies that are designed to protect the assets of a business while minimizing premium outlay. Company underwriters like the process because it leads to a more rational and efficient allocation of financial and human capital. Positive reinforcement from the underwriting community helps the insurance addict stay clean.
Step 4—Ongoing monitoring and adjustment of the plan: Businesses are dynamic. What works today may not work tomorrow. It is for this reason that the Beyond Insurance Treatment Centers prescribe risk management service plans, stewardship reviews and customer surveys to ensure a perfect fit as a business evolves and changes. Step 4 is where the producer’s addiction to The Insurance Bid is put to rest.
The 430 patients who have come through the Beyond Insurance Treatment Centers demonstrate a renewed sense of clarity, simplicity, purpose and passion for their business and personal lives. They are no longer living in an intoxicated state dominated by price and product. Their heads are clear to focus on what their clients so desperately need—a diagnostic advisor who is focused on risk identification and mitigation.
The author
Scott Addis is president and CEO of The Addis Group and Addis Intellectual Capital, LLC (AIC). AIC is a coaching and consulting company whose purpose is to transform the process that insurance agents, brokers and carriers use when working with their clients. Scott is recognized as an industry leader, having been named Inc Magazine’s “Entrepreneur of the Year” as well as one of the “25 Most Innovative Agents in America.” To learn more about The Beyond Insurance Treatment Centers, go to www.beyondinsurance.com or contact Ashley Correll at acorrell@beyondinsurance.com or (610) 945-1021.
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