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Insurance Producer or Risk Manager?

By November 24, 2020December 21st, 2021Agency Management Moments, Charlie's Corner

Calling anyone who identifies as an insurance producer. Scott Addis, of Beyond Insurance joins us for a two-part episode. In section one, we review the 5 steps process to risk management. Insurance producers listening in will also learn how to avoid falling into the perception trap. Scott urges agents to ask themselves: “what makes me different and what is my story?” Be sure to come back next Tuesday for part two of this episode. Find the next episode under the podcast tab on our website.

Think of yourself as a risk manager not an insurance producer.


Edwin K. Morris (7s):
Welcome to the trusted advisor podcast brought to you by Iroquois group. Iroquois is your trusted advisor in all things insurance. This week, you’re listening to Charlie’s corner, a segment hosted by our very own Charlie Venus.

Charlie Venus (22s):
Our guest on today’s podcast is Scott Addis, CEO of Beyond Insurance. Let me just give you a little bit of a background on Scott. He started his career with Johnson and Higgins, and only long timers in the industry likely remember that, the name of that national broker. And in 1990, he started his own agency from scratch, which was focused on risk management solutions for middle market clients. The Addis group is now part of McGriff insurance. Scott moved on to start Beyond Insurance after selling his agency. And the firm focuses on a coaching and consulting practice that empowers insurance agency leaders, carriers, and the other insurance and risk management professionals to capture unrealized potential.

Charlie Venus (1m 7s):
Thanks for being here with us today, Scott.

Scott Addis (1m 9s):
Thank you, Charlie.

Charlie Venus (1m 10s):
So, Scott, a couple of areas I want to explore with you today. First, I want to touch on the, the issue of COVID, you know, it’s impacted the industry significantly as well as other parts of the economy. And the question I’d like you to address is what should agents be learning from this experience, this pandemic experience?

Scott Addis (1m 31s):
Well, it’s a great question. And in our lifetimes, we probably have never been through something like this or as challenging, but I’d like to suggest to going down two paths, there’s a true silver lining to COVID-19. And let me explain. If, would we agree in the end of February, most consumers did not have risk and uncertainty as top of mind, would you agree? Absolutely. But all of a sudden in mid-March it is pandemic recovery, they’re saying, can someone please help me? Can someone please stand up and say, how do you help me recover from this pandemic? And for some they got through it and some didn’t, but the next phase was okay, returned to normal.

Scott Addis (2m 12s):
Is there any way somebody can help me? Hey, how to we return to normal. And today where we are is basically some organizations are still in the pandemic recovery phase and struggling like crazy. Others have moved through pandemic recovery trying to return to normal, but Charlie, you with your incredible background in risk control, would you agree that today every consumer, small and large, risk and uncertainty is top of mind?

Charlie Venus (2m 39s):
Oh, absolutely. And, and going back to my early days, you know, I started in the loss control, risk control area, did that, did industrial hygiene work. And then later went into the underwriting side with the Hartford. And the thing that strikes me as for probably since the mid two thousands, we’ve been in a soft insurance market and risk control and risk mitigation was kind of low on the scale of what customers were concerned about. You know, they could always get a cheaper price by shopping their coverage and just market conditions overall and now the pandemic has changed that outlook and people are really looking to, to employ more risk control measures.

Scott Addis (3m 27s):
Exactly. So if you think about what is insurance, insurance is nothing more than a mechanism to transfer a risk to another party, but I suggest that today whoever’s on the call, whether it’s your smallest personal lines account, your largest commercial account, anything in between, you employ the risk management process. And the process is one we have learned every one of us in some way or mechanism within the insurance marketplace. So Charlie, may I walk through the five steps of the risk management process?

Charlie Venus (3m 59s):
Well, you certainly can. And that was going to be my next question, if you would do that.

Scott Addis (4m 3s):
Okay. And what I’d like to do is imagine you on the call are this prospect or client that is really going through a lot of challenging issues today. Charlie, I come before you with a defined process and what’s important today is for you to understand, I have a desire and an ability to execute each of the five steps of the process. Step one is helping you identify what are the risk issues confronting your organization or family today? Now everyone knows it’s COVID 19, but from there, what are the outlying risk issues emanating from COVID-19? The second step was once we identified that risk issue in focus, we need to really step back and to assess the impact to your family or organization, the frequency, the severity.

Scott Addis (4m 51s):
In other words, at this point in time, how impactful, how debilitating is. So would you agree? I start with risk identification. I then moved to assessment and then in step three, we’re going to evaluate different ways of handling the risk. And when I say evaluate, we might suggest that we just retain it. We can’t do anything about it. We might say, can we minimize it? Can we contract see shifted? Can we avoid it? And of course the other option is taking risk and transfer it to an insurance company for a price. But what I’m getting at is that the consumer today is starving. So intently for someone to step up and say, you know what? I am willing to take on an understanding of the risk issues facing you and your family and your business, and apply a strategy, a strategic approach.

Scott Addis (5m 37s):
So step one is identification. Step two is really the, the assessment of the impact. Step three is evaluation and in step four, you take action on the risk. Action is once again, any of the form four situations. It could be avoidance. It could be transference, it could be minimization, it could be retention. And then in step five, you go ahead, really assess how well you’ve done in the risk management process. So today what I see happening is it’s so many well-intended agents or brokers are focusing in on step four. They’re trying to take action through the insurance mechanism. And I’m not saying that’s wrong. That’s right. But don’t forget the first three steps.

Scott Addis (6m 19s):
Today’s consumers are starved for a consultation and diagnostic. I’m going to call a risk manager to come in and say, I’m going to help you really understand deeply the impact of the risk. We’re going to evaluate strategies, take action, and then monitor success.

Charlie Venus (6m 33s):
Well, it’s interesting you say that Scott, because a recent study that Nationwide did of middle market clients and middle market agents. On the client side, 71% of the clients said they didn’t understand what was covered in their policies. 69% said they had difficulty understanding the different coverages. And then even the numbers are even worse on the agency side, because just over the half of the agents that responded said they believed they could educate their clients on coverage, could help their clients with disaster preparedness and even understood the coverage nuances between different industries and those numbers for all three of those responses were in the low fifties.

Charlie Venus (7m 19s):
So bringing this risk management technique is critical. And I think the other part right now is that you, you have a really hard market going on throughout the industry. Property’s a hard market. Auto is a hard market. D&O is a hard market. Cyber liability is turning into a hard market. Umbrellas and the excess is a hard market. So there’s gotta be those conversations about risk management, because you’re not going to be able to buy insurance for all those exposures. It may be unaffordable.

Scott Addis (7m 49s):
You’re making such a great comment and therefore to simplify it for the customer, anybody on the call today, we’re in the business of risk and how do we deal with risk and put it simply to a customer is let me understand at this point in time, what are your risks? And then try to prioritize, you know, it’s interesting. We need to also allow underwriters, our insureds, and prospects to know that on the commercial side, there is predictive analytics and there are different rating tiers on the personal side. So if you can get an underwriter to agree that your client or prospect has been through a process oriented approach where they have assessed risk and they’re strategically dealing with risk, I truly believe that underwriters today are willing to move beyond predictive analytics and say, you know what?

Scott Addis (8m 33s):
This risk is, warrants consideration because they are thinking strategically about risk or different rating tiers for personal lines. But you’re making a really good point, Charlie.

Charlie Venus (8m 43s):
How do you see taking this risk management process and converting it to a sales process? There’s a great opportunity for, for the independent agents in this to go out and grow their businesses, given those stats I just talked about from that nationwide study, how do you make that conversion to a sales, to a sales strategy?

Scott Addis (9m 5s):
I’m glad you asked the question. I also had a chance to see this nationwide study and they talked about something called the perception trap. And everybody has to somehow have a value proposition, which is somehow distinguished. So let me give an example, amazing person named Warren sitting in Juno beach, Florida, and a little bit about Warren’s background. He was actually a pilot for American, I’m sorry for United Airlines, flying 777s from New York over the globe to Shanghai. Take a moment and think about that responsibility. And if you asked Warren to go back in time, he would say he did weather patterns. He did instrument checks. He went the nth degree because he knew the magnitude of responsibility taking 330 people from New York across the globe to Shanghai.

Scott Addis (9m 53s):
Well, after 9/11 Warren gets downsized. So he comes in our industry and I have to say, he is, he is basically falling in the perception trap. There’s no difference between Warren and anyone else because what he’s doing is pushing product and so forth. So I get a call from him a couple of years ago, and I said, Warren, let’s talk about your, why, what is your cause? What’s your purpose? And I don’t think he had a defined why, but if we move back to when he was a pilot, there was no question. He had a huge why. I said, Warren, we have to somehow give you the same feeling, the same why that you can communicate to your customers. So I suggested that he adopt this process oriented approach, one of which you’re going to help every client to identify, to assess, to evaluate, to take action and the last, but not least, to go ahead and monitor the success as dealing with risk, but go ahead and private label it.

Scott Addis (10m 46s):
So today Warren Cleveland has a process called Flight Plans 365. It is a protected process and no one else in the world has it. So, Charlie, imagine I come to you and I’m Warren. Charlie, I have a proprietary process no one in the world has, except me. It’s called flight plan 365. It’s a protected, registered process that no one else has. I mean, I explained the process. And as part of that, he also goes back in time and said, you know why the process is important is I need to take your business and family from point A to point B as I once did taking 330 people from point A to point B. Once he was able to feel confident with the process, which is so simple and they went ahead and packaged it and then he was able to convey his why, his business just took off.

Scott Addis (11m 31s):
It doesn’t have to be a five step process, but somehow being able to convey to the customer you’re process oriented, not product oriented, the products would be in step four. And that’s simply a way to protect risk which might be contractually or shifting through insurance. But what defines you is really the ability to identify, to assess and evaluate how you can go ahead and manage risk and then go in protect that with a name.

Edwin K. Morris (11m 58s):
Thanks for listening to this edition of Charlie’s corner, brought to you by Iroquois group. I am Edwin K. Morris, and I invite you to join us for the next edition of the trusted advisor podcast.

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