Point/Counterpoint: Too Many Carrier Appointments?

Is there such a thing as too many carrier appointments?

Yes.

We could talk about how too many carrier appointments can lead to an inability to meet production requirements, or an inability to maintain solid relationships with underwriters.

Those are both great reasons supporting the idea that it is possible to have too many carrier relationships, but I’d like to focus on what I see as the core issue.

As independent insurance agents, it is our primary duty to serve our clients. We aim to provide the best coverage and service at the best price. Some will argue that this is why you should collect as many carriers as possible, but I don’t believe this is the best approach.

Independent agents are more than shoppers of insurance. We are professionals who, in many states, are held to a professional standard of care.

In addition, we all agree to a code of ethics when we apply for Big “I” membership, which states that we will “endeavor to elevate the standards of [our] occupation.” We have a duty to our clients and to our profession to be vigilant about seeking more knowledge.

We need to know which carrier has the best coverage in order to provide it to our clients. We need to know each of our carriers’ policy forms and endorsements inside and out. We also need to understand our insured, their risks and how those policy forms and endorsements will respond to that insured in the event of a loss.

Ultimately, independent agents have a duty to know without a doubt how each policy they sell will respond in the event of a claim. At the point your agency can no longer provide this expertise to your clients, you have too many carrier appointments.

—Ariana Patton, Agent owner, Firefly Insurance Services, Tucson branch.

No.

Independent insurance agencies set themselves apart by serving their clients in the best way possible rather than selling a commodity. Along with sound risk management advice, this includes offering the insurance products that best fit the client’s need.

Our agency is located in the south central part of the country, where several factors contribute to a sometimes perilous underwriting environment. Not least of these is the weather: Wind and hail losses cause many an unprofitable year for insurers, whose property appetites therefore vary from year to year.

We’ve had insurers limit their property writings in the state by setting limits on roof square footage, bumping wind/hail deductible percentages and even pulling out of the state altogether.

While we can advise our clients of the changing market conditions that cause their wind and hail deductibles and premiums to increase, having multiple insurer contracts is still very much to our advantage because it enables us to move coverage to a more favorable policy if necessary.

Another reason for having a substantial number of contracted markets is the varied nature of many of our clients’ businesses. In addition to more traditional industries like financial, public entities, construction, technology, service and standard manufacturing, we also serve a large number of clients in the energy and aviation spaces.

Some of our standard markets have divisions and subsidiaries that can provide coverage forms for energy exploration, processing/refining and delivery. However, we must also contract with some specialty insurers in order to secure a full range of options.

Considering that ours is not the only region or agency that faces unique situations requiring a multitude of insurer options, I believe the average agency is better off with more insurer contracts than fewer.

—Jim Beavers, Partner and owner, The Arrow Group.