How to Sell It: Commercial Umbrellas

Industry watchers don’t expect commercial umbrella pricing to change much in 2014. But that doesn’t mean agents can’t take steps to ensure their own success in the market.

When it comes to selling commercial umbrella policies, “the agent is between a rock and a hard place,” says Tom Ryder, associate vice president and director of excess casualty at Burns & Wilcox, which binds and issues umbrella policies as a managing general agency for Markel. “It’s a bit of a dilemma for the independent agent to be sitting in front of an insurance buyer saying ‘You really need $5 million worth of coverage,’ so the buyer buys $5 million worth of coverage—and then gets a claim for $10 million.”

To avoid these situations, Ryder says Burns & Wilcox encourages agents to over-prepare by starting new clients off with an idea of what higher limits would cost. “They may only ask for $1 million, but we’re giving them more information than they’re asking for,” he explains. “That helps from an errors & omissions standpoint as well.”

Allison Barefoot, assistant vice president at Ames & Gough, says agents should propose a true umbrella policy for clients and prospects. “This goes beyond the typical follow-form excess liability policy,” she explains. “While a follow-form excess policy will pick up coverages extended in the general liability or other underlying policies, the umbrella form goes further and can pick up other coverage gaps.”

Barefoot adds that ensuring the accuracy of the underlying schedule is equally important. “So many times, we see prospects that have an umbrella policy, and the underlying policies either aren’t there or they’re inaccurately scheduled," she says.

But beyond housekeeping issues, how can agents stay competitive in a market where pricing variations are few and far between? “Service is king,” Ryder says. “There are some who make decisions solely on pricing, but most people don’t. If you’re a thousand or two thousand dollars this way or that way, but you’re delivering quality service, that means a lot more than just the premium.”

Providing above-average service to clients who are struggling to stay afloat in a legal and regulatory environment that’s constantly in flux will require agents to keep their ears to the ground.

“Legal environments change all the time,” says Brian Lineberger, president of Admiral Risk Insurance Services, Inc. “With things like the Affordable Care Act coming out—we really don’t know what kind of an impact they’re going to have. Advise insureds to get informed as best they can, because the smaller insureds are the ones that are going to be affected.”

Jacquelyn Connelly is IA assistant editor.