The Robots Are Coming! The Robots Are Coming!!!
I don’t know about you, but all this talk about losing my job to automation has me a little paranoid. All the insurance industry reading I do indicates clearly that insurance agents will one day –probably sooner than later—become obsolete. So naturally, I begin justifying my existence to myself and wonder if there’s anything I could do better than a robot to increase my longevity in the workplace. Because sadly enough, I expect to be working into my 90’s at this stage in the game. And fitting squarely into the X-Gen, Latchkey Kid bracket, I’m comfortable with no one giving a damn.
To give you a little background, I work primarily in the property & casualty insurance profession, marketing personal and business insurance packages in the states of New Jersey and Pennsylvania. I don’t have a niche, per se. But like most insurance agents out there, I spend an awful lot of time aiming for prospective clients who never file claims. This narrows my target market substantially. It seems the ones who seek me out are always on the extreme opposite end of the spectrum.
Recently, during an insurance review and proposal development I was performing for someone, I had a revelation. It occurred to me that the work I do may not be as easily duplicated by a robot as I had feared. You see, I was introduced to an architect by a mutual friend whose homeowners policy renewed at a significantly higher premium. So, my friend vouched for me and the architect was willing to give me a look at his policy to see if I could do better.
I work for an independent agency, which gives me access to several insurance companies, each with their own product suites and what we call “risk appetites” in the biz. This is a blessing and a curse. It’s nice to have options, but options lead to indecisiveness and undoubtedly more work for the independent agent. And when an independent agent dabbles in commercial and personal insurance lines with multiple carriers like I do, there’s really no way to keep it all straight unless you wear a big “S” on your chest. There’s no mold or model to rely on because every single scenario is different. Different account sizes. Different industries. Different scoring factors. Different states. Different risk appetites. Different underwriters. Yada yada yada. Different, different, different. It gets confusing as hell for me doing it 365/24/7. Trying to keep the choices clear and simple for busy executives and homeowners who have no idea what the hell you're talking about is damn near impossible.
So please allow me the opportunity now to elaborate in a somewhat condensed, yet detailed fashion, why you may decide to choose an insurance agent over a robot, using the following prospective architect/homeowner client scenario as an example…
Can we first agree that architects know more than the average bear about home construction labor and material costs? That’s a fundamental premise of homeowners (and commercial building) insurance. If your house burns down to the ground, and you have what you think is a good insurance policy, you expect the insurance company to rebuild your home (or business quarters) and bring you whole. So, in order for an insurance company to determine how much money to give you to rebuild after a disaster, they need to calculate a value. This value is called “Replacement Cost Value” or “RCV”.
When you have an architect who literally designed and subcontracted all the work to have his home built, he knows, to the penny, what it should cost to rebuild the house. He knows better than I do. Problem is, not every homeowner is an architect and so it’s generally the agent’s and insurance company’s combined responsibility to perform the valuation to get the Replacement Cost as accurate as possible so there’s no discrepancies at the time of a claim. There’s software most insurance companies make available to us agents to calculate these values. Sometimes there are preset assumptions built into the software, and most other times it requires the agent to probe relentlessly to gather each home’s unique construction and renovation details to ensure accuracy, especially on custom built, high-value homes where you won’t find replacement materials at the Home Cheapo.
When a prospect knows more about certain aspects of my business than I do, I lose a little leverage. But that’s ok. I’ve never made a habit out of pulling the wool over anyone’s eyes so I carry on as usual. Albeit a bit more carefully. The same could be said about explaining liability coverage options to attorneys. It’s dangerous territory for insurance agents to tread through, but someone’s got to do it. I digress.
Getting back to the homeowners quotes I’ve been working on for this gentleman…
The Replacement Cost of this home is currently valued at $2MM. It’s a custom-built home in an affluent area of New Jersey not far from NYC in a gated community with centrally-monitored fire and burglar alarms and 24-hour security patrols. The home was built brand new from the ground up in 2008. There was only one Superstorm Sandy claim filed in 2012 which was clearly no fault of the homeowner. Other than that, the home is immaculately maintained and being that the homeowner has near-perfect credit and pays all his insurance premiums on time, he should be recognized as a “golden child” in the eyes of the insurance company, right? Not so fast…
Most standard carriers don’t like to insure homes valued over $1.5MM for some reason. Carrier options are much more limited when you get into this arena. A handful will go up to $2MM or maybe $2.2MM, but to qualify means a long list of eligibility requirements need to be met. And unfortunately, once I found out that this particular home had cedar shake shingles covering the entire roof, it narrowed my options down to 3 carriers, and one of them had previously determined that the Replacement Cost of this home should be valued at $2.8MM after an inspection had been done a few years ago through a different agency (the company retained the inspection on file and informed me of this when I reviewed with the underwriter). Now in my mind I’m second guessing the $2MM current value I have it at, but having to be sensitive to the fact that the architect is not going to want to hear the insurance company’s appraisal is substantially higher than his own. After all, he built the house and is an expert in his field. And as we know, insurance companies are not always right. Also, the higher RCV, the higher the annual premium will be charged. Get my drift? Can you hear the eggshells crackling under my feet?
There’s another twist: ultimately, we agents like to round our accounts out and control as many lines with the same business or home owner that we can. Besides earning a higher commission, there are incentives for the client as most insurance companies extend substantial discounts when policies are packaged together. We’ve all seen the commercials. This is no secret. But not all carriers write the same lines of coverage in all states. Two of the three carriers I have to work with at this point will only allow me to write the homeowners policy in NJ, not the auto. So I’m at a slight competitive disadvantage with the incumbent agent who has them packaged at a discount with the same company. Now I’m down to one serious contender.
I won’t divulge any identifiable information about this account, so let me make up a name for this gentleman’s current insurance carrier: The "ABC Insurance Co". Not only did ABC insure this $2MM custom-built home with a cedar shake roof, they also extended a $1MM policy liability limit (that’s the limit that would cover you if your 80' oak tree crashed through your neighbor’s house; or your son’s best friend cannonballed off your rooftop into the shallow end of the pool and became paralyzed while you were away). Along with these factors were some other “bells and whistles” that you would expect to come included in an affluent homeowners package that made it viable for him initially.
After narrowing my options down to one carrier that will save 20% in premium; finds cedar shake roofs acceptable; writes auto insurance in New Jersey; and meets or exceeds all the “bells and whistles” of his current policy; what might distinguish me through all of this are the many discoveries, discussions and negotiations between the company underwriters and prospect. I always say "I'm the tennis ball between two racquets". What I truly believe, though, is this architect/homeowner appreciates the time it’s taken to gather all the intricate details about the home he’s poured his heart and soul into building, and knowing someone cares enough to be thorough.
Will robots be able to act in this capacity? There are certainly days I wish I had one of my own to delegate work to. But maybe, just maybe, there’s nothing artificially intelligent about being an insurance agent? An element of Emotional IQ is perhaps a critical component. And so, I begin to take solace in the thought that if I'm really lucky, I’ll still be cranking out policies at 95.
I’m Gabe Schick, a licensed Property & Casualty Insurance Producer in the states of New Jersey and Pennsylvania with markets made available through McPherson & Newland Insurance in Flemington, New Jersey. I would be happy to assist you with your insurance needs if you would contact me directly at (609)240-1767 or [email protected]. I also love music and perform as a part-time professional musician under the alias of "The Tune Dude'. Thank you for reading. I sincerely hope my sarcastic writing style hasn't offended anyone.