Being an insurance broker is a tough job. You have to keep up with the latest industry news and developments. You also need to make sure that you’re providing your clients with the best possible service. On top of these responsibilities, you also need to ensure that you’re providing value for your client’s money.
To say that a role of an insurance broker is hard would be an understatement. Did you know that 90% of new agents quit within their first year in the business? This shows just how stressful the job can be.
However, know that there are things you can do to make your newfound career a success. In this article, you will learn about the five costly mistakes new insurance brokers commit, which you should avoid at all cost.
Not Developing a Niche
When starting out as an insurance broker, trying to be everything to everyone can be tempting. With all the areas of insurance experience, why not explore your options, right? However, this is generally not a sustainable or successful long-term strategy.
Failure to develop a niche will make it difficult for you to stand out in a crowded marketplace. It will also make it harder to attract and retain clients. Not to mention, you’ll likely spend more money on marketing and advertising because you’ll have to cast a wider net.
So, what’s the solution? Since you’re still a newbie, put your focus on developing a niche and become an expert in a particular area of insurance first. This will make it easier for you to get ahead of your competitors while providing a higher level of service to your clients.
Not Getting Enough Education and Training
Getting started in the insurance industry with only a high school diploma can be possible. However, with the proper education and training, you will be at a distinct advantage compared to those who failed to continue their education. Many states also require insurance brokers to complete continuing education courses on an ongoing basis to maintain their licenses.
The first step is to get your insurance license. Depending on the state you’re in, this process can vary. In some states, you may be able to complete an online course and pass the state exam. In others, you may need to complete a classroom-based program.
Once you have your license, you can start taking courses to earn professional designations. This includes the Chartered Property Casualty Underwriter (CPCU) or Associate in Insurance Services (AIS). These designations will not only make you more marketable, but they will also give you the skills and knowledge you need to be successful in this industry.
Don’t forget to train your staff as well. Many insurance companies offer training programs for their employees. By taking advantage of these programs, you can ensure that your team is up-to-date on the latest industry trends and developments.
Skipping Insurance Yourself
Even if insurance brokers know the importance of getting the right insurance, many new brokers make the mistake of not insuring themselves. One reason is that they simply don’t think they need it. But remember that you’re now offering consultancy services. If something goes wrong, your clients could sue you for negligence, resulting in a costly court battle.
Insurance brokers are also most likely working with commercial clients. They will likely require that you have insurance before they do business with you. Without one, you can end up losing big clients. So, make sure you have the right insurance policies before starting your business. This will protect you from any potential legal problems down the road. One good example of an insurance policy worth investing in is Errors & Omissions insurance for insurance agents. E&O insurance will protect you from any potential legal problems that could arise from giving faulty advice, making a mistake in your work, or even if a client accuses you of something you didn’t do. This type of liability insurance is crucial for any insurance broker as it will help you avoid costly lawsuits. For instance, if a client sues you for $500,000 and you don’t have E&O insurance, you will be responsible for paying the entire amount out of your own pocket.
Find a reliable insurance provider to avail an E&O insurance policy. The right insurer will be able to customize a policy that meets your specific needs and budget. It would be best to find one with no aggregate program limit, offers affordable premiums, and allows flexible payment plans.
Not Keeping Up with Technology
The insurance industry is constantly evolving, and new technologies are popping out every now and then. If you’re not keeping up with the latest trends, you will fall behind your competitors.
One of the most popular technology trends in the insurance industry is artificial intelligence (AI). Many insurance companies are using AI in automating tasks, such as claims processing and customer service. By utilizing AI, you can save time and money.
Another tech trend that’s taking the industry by storm is big data. Insurance companies are now using data to better understand their customers and create more personalized products. By harnessing the power of big data, you can better serve your clients, which, in turn, will help you close more deals.
Not Putting Your Client’s Best Interest First
Putting the client’s best interest before anything else is one of your responsibilities. This means giving them unbiased advice and steering clear of any potential conflicts of interest. Ignoring this responsibility can put your business at risk.
For example, let’s say you’re trying to sell a life insurance policy to a client. However, the policy you’re selling has high fees and commissions. If you’re not upfront about this and push ahead with the sale, your client could lose a lot of money. This will damage your relationship with the client and lead to legal trouble.
To avoid such problems, remember that your client’s best interest should be your top priority. Listen carefully to identify your client’s needs. Once you know what they’re looking for, you can start recommending the right products.
By avoiding these four rookie mistakes, you can set yourself up for success as an insurance broker. Just remember to get the proper education and training, insure yourself, keep up with technology, and always put your client’s best interest first. Do all these, and you’ll be well on your way to a successful career in insurance brokering.