Your Client’s Insurance Grade Matters!
How many reading this go to the gas station and pay for the premium gas? Let’s see a show of hands. I guess that while some do, most of us reading do not. Last year my wife and I purchased a used car. This car called for a higher grade of gasoline. The manufacturer said using the higher-grade gasoline would, in the long run, prevent the engine from knocking.
So what does this have to do with commercial insurance? Well, the same can be said for using the correct ISO classification when rating a risk. If the correct code is used, it will prevent the audit from “knocking your insured over” with a possible additional premium audit.
ISO is an abbreviation for Insurance Services Office, which is an organization that collects data, and develops standard policy forms and various other services for the insurance industry.
The purpose of the ISO classifications, according to ISO, is “to group insureds into classifications so that the rate for each classification reflects the hazards common to those insureds.”
As a retail agent, do you consider yourself to be a translator? You may not translate another language but you do ask your clients about their business and by doing so you can translate what they do into various ISO class codes.
I had an agent call the other day and say they needed a quote for a painter. So I asked what type of painter? Is it interior only, do they do exterior? If they do exterior, do they work only under 3 stories or do they paint structures higher than 3 stories? Do they paint boats? The questions go on and on. All of this information allows me to properly translate and rate the risk so we can avoid an audit issue down the road. I’ve found if I match up a risk with the ISO definition and down the road, the carrier’s audit department questions the exposure, I have that ISO definition to fall back on.
So the next time you’re filling up your gas tank, think about what “grade” of service you’re giving to your clients. Are you properly translating the work they do onto the policy that you write? If not, the carrier’s auditor will most likely, as we say in WV, “come a knockin.”
