Fan Letter – Anti-Competative Insurance Behavior


I get fan mail!  This one refers to a letter to the editor I wrote to an insurance journal in 2009.  Fan mail below.  My reply below that. 




Hi Scott!

I am a huge fan after reading this article on blocking the markets.  We are a small agency in Florida so we have a difficult time finding property insurance for our commercial accounts.  We have been getting blocked because we are going through a broker and don’t have a direct appointment with some of these carriers.  We are the incumbent but they tossed our submission through a broker because they got one from a direct appointment.   

How are we as a small agency going to compete under this environment? We are considering filing a complaint with our state department of insurance as unfair business practices.  You have done a great deal of research so I wondered if you have any suggestions or advice to offer us.  Would you please review and let me know if there have been any attempts to stop this unfair and unethical practice?  Thank you very much in advance for your help.   

Best wishes,
Name Withheld By Me
Commercial Account Manager
A Florida City That Starts With S


Dear Name Withheld,

Nice to hear from you.  My reply will cause you to resign your membership in my fan club…  (Stepping onto my soap box)

Insurance regulations are like most (all?) regulation of commerce – the rules do more to protect some special interest than in promoting free markets.  Most all (again, all?) regulation negatively impacts the buyer of the product or service.  In fact, the very definition of a free market precludes regulation – the word “free” is the kicker.


Most of us want free markets until it is our market that becomes too free. 


Given the above, regulators promote anti-competative behavior.


I am against any regulation that gets between me and the other party in my commercial transactions.  (Note – force and fraud excepted – thats why we need courts.)


Insurers should be free to appoint anyone they want to appoint.  They should be able to make any bad business decision they want to.  You and I may not like their approach and think it anticompetitive.  However, they should be able to act in what they see as in their self-interest – as long as their actions are not fraudulent.


You also are free to compete as you can.  Nobody owes you an insurance market – or a quote.  Big-boy rules.
You are getting blocked because you are unable/unwilling to work within the parameters of the marketplace (good rules or bad, ethical or unethical).


So, you need to either work around their rules (ethically) or bring in regulators to further pollute the business environment.


An apparent “Morton’s Fork” until you think past the traditions of the business.


One strategy that gets you past the dillema is to be so good, so invaluable, so amazing, that your prospect says to the insurers. “Give me a quote using Alliance or dont quote my business.”  You turn the Mortons Fork into a Hobson’s Choice.


(I had minor surgery this morning and am on pain meds — plus I am prone to pontification.)


Not ever insurance agency is owed success.  Many great insurance people fail at the insurance business.  The successful are certainly not always the best.  Sometimes the strongest moose in the woods is the one that gets shot by the 12 year-old, first-time hunter.  Nothin’ fair about any of it.


Close your office on Monday (Columbus Day – nobody expects you to be open anyway) and have your staff spend the day coming up with ways to be the most valuable (to your clients) insurance agency in 100 miles.  Brokers and insurers will line up at your door to work with your clients.


Thanks for letting me bloviate.


Regards,

Scott