“Encountering purveyors of bad advice is not a new phenomenon for us when collecting information from local firms. But our experiences in dealing with insurance agents are particularly disturbing because the “up-selling” and downright dishonesty we encountered were so commonplace.”

As a big fan of “up-selling,” I was initially inclined to write off this comment as just another dig by some pundit who thinks “consumer-oriented” is synonymous with cheapest. But this article went beyond the mere polemic to explain the basis for its author's opinion. Here are two examples the author cited:

“When we questioned the addition of unwanted options, some agents tried to justify their selling practices by falsely telling us that the extra coverages were required by the insurance company or mandated by state law.”

“Many agents tried to sell us more insurance than requested by quoting prices based on optional, higher coverage limits. When we asked them to re-quote prices using the originally requested, lower coverage amounts, some agents falsely told us that they would be unable to do so since such limits were the minimum coverages offered by the company. For example, a common practice was to include $500,000 in liability coverage; when we contacted these agents and asked them to adjust their quotes to include our specified $300,000 for liability coverage, some told our shoppers that it would be impossible to do so because all of the company's HO-3 policies come with $500,000 in liability coverage–even for companies that have standard minimum limits of $100,000 for liability coverage.” (The researchers followed up each call to an agent by contacting the applicable carrier and checking what they were told.)

In other words, the article more or less said the agents lied. If I really believed that, I might have used this article for a column on ethics. But even accepting the article's findings as accurate, I arrive at a somewhat different, though no less disheartening, conclusion: that the agents didn't deliberately lie but rather were guilty of ignorance and laziness.

Two things about the article disturb me. First, we insurance practitioners don't need any more black eyes. No amount of goodwill or advertising can overcome the negative impression made when someone tells a tale of agent dishonesty and says, “See, we told you these people can't be trusted!” Second, these incidents are all so unnecessary. Why, oh why, couldn't those agency employees have either given the right answers to the questions or simply said, “I don't know, but let me do some checking and get back to you”? Admitting ignorance may be unpleasant, but it's far better than making false statements. Obviously, in far too many agencies, the mantra is, “When in doubt, it's too much trouble to check it out, so just fake it.” Did it never occur to the people cited in the article that someday someone might check up on their assertions? And that consumers, upon finding that agents had made them up, would assume the worst–that the agents were bold-faced liars only interested in pecuniary gain at the expense of trusting, unsuspecting consumers/victims? Once the bond of trust has been broken, soon the entire insurance-buying process, no matter the potential for good, is called into question. “Agents lie, therefore up-selling is evil.” So the idiots not only hurt themselves but they also cast suspicion on every agent who tries to offer customized solutions instead of treating insurance as a commodity.

Although it would be easy to editorialize about proper procedure and consumers' low opinion of the insurance industry, let's cut to the key question at hand: Why don't some agency employees know how to answer simple and reasonable questions about common coverages?

For example, consider the liability question cited above. The caller asked for a certain coverage limit. Fine. One can't fault consumers for doing that. Perhaps an influential article or person advised the consumer that such a limit was reasonable. Maybe the caller sought an “apples to apples” price comparison with his or her current coverages. Perhaps the caller actually was a researcher for a consumer publication. It really doesn't matter. All callers should get the same answer. An agent should have listened to such a request, then respectfully explained why, in his or her professional opinion, other possibilities warranted consideration.

Numerous reasons exist for recommending higher liability limits. Ironically, for those in our industry who evidently haven't paid enough attention in class, or when reading relevant articles, to think of any reasons, the article would make a fine text. A separate portion of it subtitled “How Much Coverage for Injuries to Others?” cited several excellent examples. Can you read the following statements and still dismiss the article's criticisms as simply anti-insurance?

“The basic liability insurance limit in most policies is $100,000. But you can purchase additional coverage inexpensively…. Most consumers consider these extra costs a bargain for increased peace of mind.”

“Under this coverage, your insurance company will hire legal representation to defend you and pay damages up to limits you have contracted for if you are found legally liable.”

“In addition to protecting you from claims by others for bodily injury and property damage, an umbrella policy will protect you against suits for other types of injures, such as libel, slander, defamation of character, false arrest, and invasion of privacy, which are not covered by your homeowners policy.”

“Without adequate liability coverage, your home, your savings and your future income are vulnerable.”

So it's safe to assume the author did not seek to nail agents for recommending higher limits, but rather surveyed the reasonableness and validity of their responses to queries. Unfortunately, instead of hearing any valid reasons, the researchers were stonewalled, or worse, treated as fellow victims of “da Man.” “Hey, if it were up to me, you could buy whatever you want. But those mean old carriers and government folks have my hands tied.”

How would you have responded to the researchers' questions? What about others in your agency? Do you know the coverages you sell well enough to heed the eternal sales mantra and talk about “benefits” rather than “features”?

The plain truth is that people need the protection we offer. According to numerous consumer and industry surveys, a few skinflints may consider “cheapest” synonymous with “best,” but the vast majority of consumers are not idiots. (If you think they are, can we talk about your prospecting?) Like the researchers, such consumers clearly are open to up-selling and coverage recommendations that go beyond the basics, but they expect to hear some intelligent justification for parting with their hard-earned dollars. The good news is that valid justifications are myriad. The bad news is that some agents apparently are still clueless.

Read your forms! Learn your stuff! Don't obfuscate, communicate!

And if you truly can't think of a better reason for consumers to protect their property, their savings, their income and their future than “because the government says so and the insurance company makes me sell this much–don't blame me,” then it's time to turn in your insurance cap and take the advice we gave the clueless back on the playground when we were kids:

There's a five o'clock stage. Be under it.