Condo Media - February 2012 - 34

COVER STORY

His question was, “Why [didn’t the agent] do it? I’m not the insurance expert, he is.”

A Lost Art
Client service is becoming “something of a lost art” in the insurance industry, Grosser agrees. He thinks that is particularly true in condominiums, where “a high level of service is required.” The frustration expressed by the manager struggling with the FEMA maps is understandable, Grosser says. “Managers have to deal with a lot of people and a lot of issues,” he says. “When they don’t get the service they need from their insurance agent or from any other [service provider], it complicates the manager’s job.” A good agent, Grosser says, “should provide solid back room support for managers; the agent should be a resource for everything related to insurance.” If boards or managers aren’t getting the service they want from an agent, the solution is to find another one. Even if they are happy with their agent, some boards and managers bid their insurance policies frequently, because they think the competitive pressure prevents complacency and keeps their agent sharp. An agent who knows the policy is up for grabs “may push a little harder” on the community’s behalf, one manager suggested. But that appears to be increasingly a minority view. More managers are recognizing that forcing agents to be competitive pushes them to submit the lowest bid, not to recommend the best coverage. Largely for that reason, the Dartmouth Group, Inc., AMO, is moving toward a “trusted advisor” model, Robert McBride, CMCA, AMS, PCAM, the company’s president, says. The goal, he explains, is to develop a long-term relationship with an agent who comes to know the community, who understands the industry, has a broad selection of markets to approach and whose only objective is to find the

best coverage [at the best price] for the community. “You know the agent doesn’t have to offer watered down coverage in order to get [the association’s] business,” McBride said. A board shopping for insurance through a single agent can be reasonably confident the agent will be submitting the same information about the community to all the companies the agent approaches, McBride points out, eliminating much of the confusion that comes from comparing proposals from different companies. Garrett also sees advantages for communities in selecting a single agent “and growing with them.” He says he tries to “bundle” as many communities as possible with the same agency. If an agent is writing several million dollars in business, he explains, “you know that agent is going to take good care of your clients.” Like Garrett and McBride, Levy encourages his communities to work long-term with a single agent. He thinks boards should view insurance brokers not as vendors selling insurance products, but as professionals providing insurance advice. “[Boards] don’t go out for bids on law firms regularly,” Levy notes. He doesn’t think they should change agents either, absent a “precipitating event,” such as a denial letter from an incumbent carrier, a change in management companies or dissatisfaction with the service the agent is providing.

When to Bid
Even in those circumstances, allowing other brokers to bid can be “a waste of time,” Levy says, producing proposals that aren’t significantly better than the incumbent agent can offer. “But once in a while, it makes a difference.” When one of his associations received a non-renewal notice from its carrier following a major fire, Levy convinced the board, which liked its incumbent agent, to let another agent bid. The new agent came back with a new policy offering comparable coverage at the old premium rate.

The same property suffered another major fire six years later (a “statistically rare” occurrence, Levy observes) and once again, the incumbent insurer refused to renew. The agent was able to find a new policy, but with a premium—more than three times what the association was paying. Levy went back to the former agent, who lost the contract after the first fire, and this time was able to place the policy with another carrier at the old pre-fire claim rate. Levy’s experience illustrates the need for managers to recognize when it makes sense to stick with a trusted agent (most of the time), and when it might be in the community’s interest to consider other options. Like the relationship with an agent, a long-term relationship with an insurance carrier can be beneficial, providing a level of attention and consideration the community might not get otherwise. For that reason, and because some carriers will ignore bid requests from communities that shop too frequently, industry professionals generally advise boards to revisit the market no more often than every three years. They also suggest that boards have their incumbent agent solicit bids, bringing in other agents only if they can offer policies from companies the incumbent agent doesn’t represent. Circumstances may change that “every three years” rule-of-thumb, however. If the insurance market shifts dramatically, for example—from hard to soft, or soft to hard—or if the community’s risk profile changes, competitive bidding might be a good idea even if the policy has been in place for only a year or two. That was the case for one of Levy’s clients, burdened with a high-cost premium because the community had aluminum wiring—a risk factor few companies were willing to insure. After a fire unrelated to the wiring, the association did what Levy says it should have done long before—obtained a loan and replaced the wiring with a safer alternative. Although the existing carrier refused to renew because of the fire claim,

CONDO MEDIA • FEBRUARY 2012

Condo Media - February 2012

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