How One Agent Ended Up Servicing The Affluent Market
It may sound like an easy niche to be in, but according to one insurance producer specializing in personal lines for the affluent, a client's demand for attentiveness may give some agents second thoughts before entering this high-end business.
Shelly Kozel, president of New York-based insurance agency Lezok Ltd., did not find his niche immediately when he started in the business more than 20 years ago. In the beginning, he handled everything. Eventually, he found himself writing an increasing number of professional liability policies for attorneys. Being their agent led to referrals to other professionals, and that helped grow the business.
Soon, professional liability policies became his loss leader, leading him to diversify to meet the growing insurance needs of his high-net-worth professional clientele. As they became more affluent, he found himself working increasingly with carriers that specialize in this market.
"I got to a point where I had to make a decision," he said of discovering his niche. "You can't be everything to everybody."
The result was elimination of other lines to concentrate on fulfilling the insurance needs of his affluent clients. "If you handle high-end clients, that is what you have to do because it requires a different expertise," said Mr. Kozel, who is a past-president of the Professional Insurance Agents of New York.
Today, the two major carriers he works with are Chubb and AIG Private Client Group. He also deals with some small mutual carriers, but relies primarily on Chubb and AIG for their servicing expertise and understanding of the needs of high-end individuals. It also helps that they have national and international coverage available for customers, whose property holdings can be global in naturea convenience that some regional carriers do not readily offer.
Having a major carrier behind you, he noted, is one of the primary advantages a high-end agent needs to provide the service affluent clients require when they call about insuring a Ferrari in California, or covering a second home in Paris. "You've got to be prepared," he observed. His business card reflects this philosophy with the tag line, "We cover your assets."
To properly handle the affluent market, a producer must have a thorough understanding of the risk appetites of the underwriters they work with, which makes placement easier and faster. It helps to keep all of a client's insurance with one carrier because it gives that customer leverage in future placements, he noted. Some carriers, he warned, shy away from insuring celebrity clients.
Being an agent to this clientele also means going above and beyond placement, he noted. His clients have his personal phone number to contact him at any time for a claim or with a question.
Keeping the relationship intact might mean conferring with another agent or managing agency on the customer's behalf to make sure a particular coverage is in place. Or, in some cases, it may mean writing coverage for a client's sisters pizzeria that she just opened up. Such favors may be outside the usual duties of a personal lines agent, but it is a courtesy he extends to maintain his special relationship with the affluent.
The producer should know the client well enough to recommend the type of insurance they may need. If a client travels, there may be a need for kidnap and ransom insurance, for instance. Equally important, however, is that while a close relationship must be maintained, the agent should not socialize too much with their clients, according to Mr. Kozel. "You have to know the boundary, but also know the needs of the client," he observed.
Agents in this niche should have multiple state licenses, he advised. The producer may consider getting a wholesaler's license as well, because there may be occasions where appropriate coverage is only available in the excess and surplus markets.
Agents lacking the minimum premium volume carriers seek should at least have relationships with managing general agents to offer the widest possible choices to an affluent client.
Because of the size of the premiums involved, producers should make sure they have very high errors and omissions coverage limits, he advised, should there ever be a problem with a customer complaint. He noted that his highest premium client is $100,000.
However, no premium is too low to handle, as long as it is an account with the potential to grow. He cited the case of a client's sons auto insurance needs, placed for a mere $500. However, as that young client grew and took on a profession of his own, he needed more insurance. Eventually, that account grew to $25,000 in premiums, and continues to increase as the clients wealth and assets grow. "No business is too low to ignore the future," he noted.
Reproduced from National Underwriter Edition, December 3, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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