Insurance Buyers Of The World Unite!
By: Scott Simmonds, CPCU

Reprinted with permission from Mainebiz October 27, 2003

It's time for business insurance buyers to stand up and say, "No more!"

For more than twenty years I have made my living in the insurance industry. Four years ago I started an insurance consulting firm to give insurance buyers unbiased "insider's" help and assistance. As a consultant I have been involved in the administration of hundreds of insurance policies. The world looks different as an insurance buyer. I am appalled at the service I see.

Late Renewal Quotes
On the day a policy renews your insurer knows it will expire in 364 days. Why can't they deliver your renewal premium a month before the policy expires? Most renewal quotes come in a few days before expiration. What can you do then? Are insurers concerned that if you know your premium early you might not renew? Might they be afraid that such will present a stationary target for competing insurers? Insurance buyers should be able to make informed decisions without the pressures of a renewal in twenty-four hours. I have an account right now that expired two weeks ago - we still are waiting to find out the renewal terms. Inexcusable.

Slow Delivery Of Policy Changes
Why does it take weeks or months to change an insurance policy? You buy a new car, call your agent and add it to your policy. Two months later you get an endorsement showing the premium. I can go on the Internet and order a plane ticket. I know the price in fifteen seconds. I have the "ticket" in my email five minutes later. What about an insurance policy is more complicated than a plane ticket?

Unintelligible Loss Runs
Loss runs are a listing of the claims pending and paid under an insurance policy. Why can't insurance companies provide a simple listing of the date of loss, an event description and the dollar amounts? Instead most insurers deliver an unintelligible, amazingly small glob of data and codes. To be really progressive I could ask that the information be sent as a data file allowing me to analyze and manipulate the information so I can really see what is happening within a business. Spreadsheet software programs have been around for almost thirty years. I guess it takes my industry a while to implement technology.

Mistakes On The Policy
It has always amazed me how multi-billion dollar insurance companies can produce such junk! Names and addresses wrong, dates missing, incorrect information regarding the insured, incorrect (or unexpected) endorsements, torn and missing pages. The buyers of business insurance spend thousands if not hundreds of thousands of dollars for insurance and they get back a policy with their name spelled wrong!

Proliferation Of Endorsements
In its simplest form an insurance policy is confusing. I have met countless attorneys who are baffled by insurance contracts. The policy starts by telling you what's covered then you get to exclusions. The contract then defines the words it uses and then changes the coverage with exceptions and limitations. Then there are the endorsements! I have policies I am reviewing now for clients that include endorsements that change endorsements. Give me a policy in one document that spells out the coverage in a straightforward and clear manner.

Business leaders have long looked at the definition of quality as "meeting the customer's expectations." By this measure the insurance companies fail miserably. Its time my industry recognized the needs of policyholders.

In one line of insurance, homeowners, the Maine Bureau of Insurance received 85 complaints in 2000, 96 complaints in 2001 and a whopping 487 in 2002. A 400% increase in one year! Auto insurance complaints showed a similar increase: 45 in 2000, 54 in 2001 and 337 in 2002. The insurance bureau does not publish business insurance complaint statistics. If they did, the story would not be much better.

It's time for change. Right now. As insurance buyers, we should demand it.