Bob,
In regards to what value an insurance agent has, I understand your argument relative to the relationship with the customer. What I don't understand is what value agents have relative to the carriers? If I were an big name insurance carrier with lots of name recognition, why pay a commission to an independent middleman versus having an in-house sales department? Obviously, they know better than I do. But the reason I brought it up is that I rarely deal with my agent, and on the occasion that I do it's always something that could either be handled by an automated self-service website or unskilled administrative people.


A number of insurers do offer direct sales. Usually, as you commented, it's in a high volume line of insurance - PAPs (Personal Auto Policies) come to mind. You, and many, are probably brighter and better informed than many. Still, you seemed to have gotten confused (didn't know fact as well as you might have) when the company employee told you that you needed to report the change of ownership of the shares of the Corp, which wasn't accurate information, which I and probably your agent realized, and as your attorney confirmed. As a consumer, do you really want to deal directly with incorrect information? Do you really want to deal with a representative of the company, or someone who relies on YOU for their livelihood. There's an old adage among independent Insurance agents and brokers - "Control the customer and you control the business." Our success, or failure, depends on our service to you, and what we do for you, period. Given enough volume, we can always find an insurer willing to compete aggressively for the business, both in price and coverages. We also afford "backup" for you... Your agent sent you an email, whereas the company rep wasn't willing to confirm - It wasn't their job to interfere directly with you, in the first place... I suspect, but don't know for a fact, that the company employee may have been reprimanded for doing so . They were both out of line and wrong. But, back to your question about how agents benefit insurers. (I did mention some of these in a prior post):

Our agency gets a LOT of calls from people who have very little grasp of Insurance contracts, terminology, limitations, exclusions, available optional benefits, etc. A company rep on a telephone may be able to deal with this, to an extent, but it's more difficult long distance over a telephone than face-to-face, and an agent (should) know a common terminology with which to communicate between the insured's wants/needs and the carrier... Some of our customers walk into our office and tell us that they want some "Reliable, Comprehension and Collusion" Insurance. Many others tell us that they want "Full Coverage" - I've never read that term in ANY policy. Few realize the difference between Replacement Cost Coverage and Guaranteed Replacement Cost Coverage. Few realize the difference between Excess Medical Expense Reimbursement and Medical Payments coverage, the later an indemnity type of coverage that pays in addition and regardless of other health/medical insurance, the former is, well, excess over other collectible health/medical coverage. Few realize the difference between Rental Reimbursement and Loss of Use. Few realize the difference between an Occurrence type policy and a Claims Made based policy... The list goes on. It takes time and understanding to delve through what a client really wants, what is available and what they are willing to accept, at a price that they can afford. Then you need to make sure that they understand what they are buying, or risk loss of a customer, loss of reputation, potential for an E&O claim and a possibility of a complaint filled with a State Department of Insurance.

A local agent can see what the potential insured wants to insure, first hand. From the insurer's prospective (and their overall client base perspective, as respects unwarranted claims, and ability to continue to competitively price coverages), he can see some things, like preexisting damage that really/rightfully shouldn't be covered under a new policy. A photo doesn't show preexisting damage as well as you can see it when it's in front of you, "live". An agent can see a camper cover on a pickup or other custom equipment, coverage for which needs to be offered to an insured, that an insured might overlook when dealing directly with an insurer. The insurer avoids negative claims experience. Training is expensive, licensing is somewhat expensive, computers aren't free, advertising isn't cheep, real estate still isn't cheep, employee benefits aren't cheep, Work Comp isn't too bad in the field, but costs something, supervisor salaries aren't cheep... The list goes on. Not every insurer "wants to" (or will) insure everyone who calls them. How do they break that to those who aren't in their "target market", w/o offending them and maybe incurring a Personal Injury liability lawsuit in the process? Their rate structure doesn't anticipate insuring everyone who calls them, and they would rather focus on a market with which they are familiar and experienced.

just a few points from my experiences. I didn't take the time to proofread.

Respectfully,
Bob