RISCARIO INSIDER: May 2014

May 24, 2014

IS YOUR INSURANCE POLICY AN ABANDONED ORPHAN?

It’s not your fault.

If your insurance advisor becomes unwilling or unable to provide service, you have an orphan policy. What happened? The causes vary. Advisors might:

leave the business: do something else or retire
switch firms: prohibited from taking the clients
stop doing business with an insurer: might lose their contract
have poor processes: makes servicing more difficult
avoid conflicts: the policy may have under-performed and created friction
prefer selling: dislike providing service

Whatever the cause, you pay for service you no longer get.

An Overlooked Cause

Your advisor may be active in the insurance world but is that enough? You might be on the path to the orphanage without knowing. The changes take place gradually as the service you get drops and possibly stops. You’re not alone.

Since life insurance usually pays most of the compensation at the time of sale, there is no strong financial incentive for advisors to provide ongoing service. Some products are “lapse-supported”, which means the insurer makes a profit when you cancel. Who’s on your side?

Another complication

Some insurance policies are “vested”. That means the old advisor keeps getting paid even if they tell the insurer that they won’t provide any more service. This arrangement protects that advisor at your expense. Why would another advisor help you for free?

There’s another possibility. Your old advisor may sell policies to another advisor (e.g., for two or three times the renewal compensation). Now your new advisor has more incentives to pay attention to you.

What Makes You Valuable?

The main reason you’re valuable to a new advisor is for new business. That’s reasonable. Beside life insurance, people often need more protection against the costs of

disability (unless you’re retired)
critical illnesses
long-term care (especially during retirement)

Even if the advisor isn’t paid, you may like the service enough to provide referrals.

Tip: Be wary if the new advisor attempts to replace your current coverage with new policies. That leads to more compensation but you may get better results by modifying your current policies.

The Transition

If you’re transferred to another advisor, how would you know? The insurer and your old advisor may not inform you. If you get a letter from a stranger claiming to be your new advisor, how can you be sure?

You can check them out online (e.g., LinkedIn) and chat on the phone. You might phone the insurance company. When you’re satisfied, why not meet? Insurance requires maintenance. Your new advisor may be more diligent and consistent than the old one.

May 17, 2014

HOW TO GET A BETTER PRICE: THE FUTURE SHOP CASE STUDY

Since prices fluctuate, you might get stuck paying more than necessary unless you:

Collect evidence: take screenshots when you’re shopping even if you’re not ready to buy (e.g., with Evernote or Snagit). Otherwise, what proof have you got?
Make your case: give plausible reasons for your request
Ask in writing: gives you time to refine your arguments and leaves a record
Deal with reputable vendors: they’re more likely to make exceptions

Last time, we looked at not-so-good service from Petro-Canada. A week has passed and I still don’t have a replacement for my car wash season pass. This time let’s look at amazing service from Future Shop.

Why Future Shop?

If I can’t buy from Costco, I turn to Future Shop next. They have a wide selection, good inventory levels and great sale prices. Plus, you can visit a physical store (though I rarely do). Best Buy owns them but feels more corporate. Dell feels inflexible and doesn’t have physical stores. Staples has helpful staff but limited selection. Amazon has credible customer reviews but apparently treats workers worse than Walmart.

You might be able to get a price match but I prefer rewarding the retailer with the better price.

The Letter

Here’s my email to Future Shop about a price increase on a lens for a mirrorless camera.

Dear Future Shop, on Friday night I was looking at the Panasonic Leica DG Summilux 25mm Lens (HX025) and the price was $413.98 as this screenshot shows:

There was no mention of this being a special price or a time limited price. When you have conditions, you always show them. Here's a typical example which shows the discount and expiry date:

In the morning, I asked my wife about ordering the lens. She agreed. I didn't notice that the price had jumped to $524.98! That's a big increase — completely unexpected.

If you showed that the original price was time-limited, I would have ordered on the spot. Rather than order on a whim and return the order — costs you money — I waited. Can you kindly refund the difference? My wife and I would really appreciate your help.

Thanks!

The Reply

Here’s the nearly instant reply:

Dear Promod,

I’m happy to inform you that a credit in the amount of $111.00 has been applied to your Futureshop.ca order.

Please allow 5-7 business days for your credit to reflect on your credit card statement.

Thank you for choosing Futureshop.ca!

The Reaction

What’s not to like when you get the outcome request quickly?

Even the current Future Shop price of $525 is the best around. Some companies are charging the full list price of $649.99 — not even a penny off. Here’s a comparison on PhotoPrice.

The Steps To Take

You might get better results if you place an order first (provided you can return the item).

Links

PS This week, I also got amazing customer service from Mercedes, so-so service from Starbucks and horrible service at Ginos Pizza. Those may be stories for later.

May 10, 2014

THE DIRT ON PETRO-CANADA’S CAR WASH SEASON PASS INSURANCE

A clean vehicle is important because I meet lots of clients. Since handwashing is inconvenient, we have a SuperWorks Car Wash Season Pass from Petro-Canada. This card gives you a SuperWash once a day for 90 days. You choose the vehicle and could even lend your card to a friend. The pass launched in 2008 for $149+tax and has crept up to $179+tax. You save $10 by reloading online.

If you register your card with Petro-Canada, you get free insurance: they’ll replace a lost or stolen card without charge.

Great Need

I’ve been doing highway driving and have bugs splattered on the windshield. That’s where a squeegee and car wash help. Besides, tomorrow is Mothers Day. Getting a car wash is easier than vacuuming the house.

I was about to get a SuperWash but couldn’t find my Season Pass. I looked and looked. Now’s the time to see how they handle claims.

The Expected Process

I figured that I’d

Go online to report the card was missing
Print out a form authorizing a free replacement
Get a new card at a Petro-Canada location

In the background, they’d cancel the old card. Quick. Simple. Wrong.

The Real Process

The actual process is much more cumbersome.

A whole network for customer service? That looks impressive. I phoned and listened to their menu options (which have changed to serve us better). Once I got to the right spot, the recording says:

“Our office is currently closed. Please contact us Monday through Friday from 8 AM to 8 PM Eastern Standard Time. Thank you for calling Petro-Canada.”

Why doesn’t their website say they have limited operating hours? It’s a warm, sunny Saturday. I’ve got an unwashed car for the weekend, including Mothers Day. I don’t want to vacuum the house.

Another Path

Twitter allows companies to provide excellent customer service (four examples).

Petro-Canada started @petrocanada in January 2009 but has only has 669 tweets. The latest is more than two months old. I didn’t get a timely response.

Too Demanding?

If I can’t find my car wash card, is that Petro-Canada’s fault? Not really but they offer replacement insurance. We live in a world of 7 days-a-week shopping. Why is their Customer Service Network closed when their car washes are open?

Besides, I’m paying a premium because they keep sending me emails to read. I’m also spending extra time filing a claim.

Links

PS Now to find the vacuum cleaner …

May 4, 2014

SHOULD YOU BUY INSURANCE FROM AN ADVISOR FROM ANOTHER PROVINCE?

We explored the merits of changing advisors when you move to another city. Let’s look at something more extreme: buying life insurance from an advisor in another province. That’s possible since licencing is province.

Why Would An Advisor Bother?

The advisor might live in a place where the opportunities seem limited. Acres of Diamonds (speech or book) tells us about a traveller seeking riches who finds them after returning home. Why would an advisor who knows the story look for clients far away?

The advisor might be marketing across provincial borders. For instance, an advisor who targets prospects at national conferences meets people from across the country. When a prospect shows interest, it’s difficult to turn away. Getting licenced where the prospect lives is an easy solution.

Mystique

Distance intrigues us. I got invited to a local event with a cross-border speaker — even though experts live locally.

An advisor from afar may have different perspectives and make suggestions that look more innovative. This assumes there aren’t making blunders because they aren’t familiar with valid reasons for differences (e.g., in tax laws).

Moving

You might have moved to another province. If you’re a big client, your insurance advisor might get licenced where you now live to sell additional coverage to you and your new connections.

If your advisor visits, expect them to see other people to spread the costs over more opportunities.

Limited Selection

The more experienced advisors tend to live in larger cities. If you live in a small place, you might not get the optimal advice or service. If you’re forced to look outside, an advisor from another province may seem like a reasonable choice.

The Costs

When dealing with a distant advisor, will you get the same level of service you get locally? It’s tough to know. Technology makes staying in touch easier and you probably don’t have many in person meetings with a local advisor either.

An advisor who does business elsewhere incurs higher costs (airfare, food accommodation). What do they do to compensate?

sell products with higher margins?
sell larger amounts of coverage?
place more implied pressure on you to buy now?

There’s also the personal costs. When you travel on business, are you more productive than at your normal office? What about the advisor’s family? They pay a high price too since they aren’t together as much. The extra revenue helps offset the pain and missed school performances. That revenue comes from you.