AIG Crisis Highlights the Need for Insurance Professionalism
By Christopher J. Boggs, CPCU, ARM, ALCM
American International Group’s meltdown may serve at least one (if not more) positive purpose: spotlighting the difference between the insurance professional and the non-professional.
Insurance professionals will have the necessary knowledge and even wisdom to respond calmly and rationally to the current market and do what is best for their clients. Non-professionals will panic and make bad decisions because they lack knowledge of the insurance mechanism and the difference between low price and good coverage.
The End of Professionalism
Statutorily mandated insurance continuing education and a lack of commitment to insurance’s purpose triggered the end of the true insurance professional. To be considered a “professional” in today’s insurance environment requires only the completion of a pre-licensing class or training school and the ability to endure continuing education classes. Participants are not required to prove any learning occurred nor must they be able to apply the information; the sole requisite is to stay awake and feign attention for a certain number of hours. This does not a professional make.
A “profession” is a calling that requires specialized knowledge, has legal and/or educational barriers to entry, requires the practitioner to be dedicated to the vocation itself and necessitates a commitment to continual study and the increase in applied knowledge with the goal of protecting and/or bettering society. This intimates focused attention on the profession’s depth and details; a passion to be better tomorrow than today; and surrendering to the fact that the well of knowledge is infinitely deep and its waters are not adequately explored shy of ongoing, personal study. Delivering a paycheck is not a requirement of a profession, only the result of being a member of a profession.
True professionals accept the challenges of the calling, dedicating themselves to studying and understanding the industry, the client and the mechanism. An insurance professional is always researching, reading, observing and asking questions toward the goal of doing and being their best. Notice again that taking home a paycheck does not make a person a professional.
Insurance as a Profession
First, is insurance a profession when compared against the above criteria? Each requirement made of a profession is compared to the vocation of insurance:
Is specialized knowledge required? Yes. There is a body of knowledge and language unique to insurance. Understanding it and applying it requires study and experience;
Are there legal and educational barriers to entry? Yes. To legally practice, agents and brokers must attain enough knowledge to pass required licensing exams. Effective underwriting requires enough training to understand the basic concepts of insurance. Claims people must have a basic understanding of the policy language and how to interpret policy language; and
Does insurance protect and/or better society? Yes. Without insurance America would not be able to be what we are or have what we have. Insurance allows for creativity, innovation and the pursuit of the American dream. Without insurance: you could not get a home mortgage, get a loan for or drive a car (in most states), create any new products (self-insuring liability would be too expensive), start a business, hire employees nor do or have anything to which we are accustomed. This is not hyperbole; insurance is integral to this nation and its economy (unless we want to be a state-run, communist country).
Insurance, then, qualifies as a profession so its ranks should be staffed by committed professionals at all levels; but here is where the industry is lacking. Occasions to find and work with insurance professionals are disappearing at an increasing rate. Each successive generation sees fewer and fewer professional insurance practitioners who realize the need to focus on the intricacies of insurance nearly to the exclusion of extraneous products, and with the desire to dedicate themselves to understanding all facets of the insurance (pure risk) mechanism.
Professionals Focus on the Main Purpose
Insurance professionals should focus on – insurance. The creation of financial service companies combining insurance with other financial products and services dilute professionalism.
General practice physicians can diagnose a problem, but they are not necessarily the best at providing the treatment and care. Specialists are the most current in their area of expertise and know best how to treat a particular condition. In the same way, insurance professionals are better at handling insurable risks (pure risks). AIG and some other financial institutions stepped outside of their specialty and practiced in areas at which they are not adept.
The consequences are dire for the company and the public which it is supposed to be helping. Only by focusing on the main purpose can an insurance company, agency or broker be truly professional.
Insurance Professionals and Education
Don’t confuse ignorance (lack of knowledge) with lack of professionalism. No one knows it all when he enters the insurance profession, nor will he know it all when he leaves. Professionalism is evidenced by desire and passion. Professionals desire to discover what they don’t know and passionately pursue the information necessary to fill that knowledge gap; not just for the short run, but as a building block for the future.
Neither should a lot of education and/or designations be equated with professionalism. Yes, advanced degrees (MBA, Ph.D., etc.) and designations (i.e. CPCU, ARM, CIC and others) require time and dedication, but it’s not the accomplishment that reveals professionalism – again true professionalism revolves around desire and passion. What was the basis for the desire to garner the education, to improve the resume or to improve the ability to help the client and society? Is there passion for education in general or only when tied to letters? It seems odd for me to write this considering the list of designations that follow my name (CPCU, ARM, ALCM, LPCS, AAI, APA), but my passion is not the designation; it was and is the desire for the information so that I can be better for my clients.
Clients, by and large, don’t care about the letters following the agent’s name, only how that agent can help them. A CPCU without the passion to immerse herself in continual study is little better and maybe not as good as the newbie who desires to learn what she doesn’t know, pursue the knowledge and apply it to her client’s needs. Designations will never put a dime in your pocket; but your desire to continually learn so that you can do the best for your client will.
Lest you be confused by these last two paragraphs clarification may be in order. Insurance education leading to a designation is absolutely essential or exceptionally useless based on the desire and passion of the participant. Pursuit of a CPCU, CIC or any other designation or advanced degree is admirable if the reason is the desire to advance yourself as a professional and the profession itself with the ultimate goal of increasing knowledge and helping your clients. Otherwise it’s just fluff that looks good on a resume.
A professional’s insurance education comes in many forms: reading industry magazines, attending forums and association meetings, knowing how to use the Internet for research (i.e.. which sites provide the best information), building a reference library, developing a group of like-minded insurance professionals with whom you can converse and debate on a regular basis and even pursuing designations with the right motive. Professionals do not ask how many continuing education hours are involved; they don’t care. The question professionals ask when attending a class, lecture or online study is, “Will this make me better at what I do?” If the answer is “yes,” then CE is just a bonus; but if there is no CE credit, the professional doesn’t care – it’s about the desire to be the best. Professionals make their good, better; and their better the best through study.
The Current State of Continuing Education
Continuing insurance education today is passionless and lacking in desire. Those who attend do so because the law requires it; they have no desire to learn anything new, they only desire to get the completion certificate; and there is no passion for the information. Rarely, also, do continuing education providers teach with passion or creativity. Insurance continuing education, as an industry, has pooled at the bottom of the proverbial barrel with low cost providers offering low quality material to non-professional insurance people only interested in the hours.
This creates a real quandary for insurance professionals who would call for an end to required continuing education except that we feel that at least these non-professionals are required to hear something about insurance on a regular basis. Non-professionals can’t be run out of the business; there’s too much money to be made and these “hacks” will certainly not leave that behind. Worse, clients (especially less-sophisticated consumers) do not really know the difference between an insurance professional and an insurance hack and they may not care as long as the PRICE is lower.
One question can indicate whether you are an insurance professional or an insurance hack. If required continuing education laws were repealed, would you make it a PRIORITY to attend educational classes (includes high-quality online education and seminars) every year? If you own the business, would you make it a priority for your employees?
Professionals make it a priority regardless of the law. Hacks go because it is required.
The Question of the Day
So what, if anything, can be done to return to professionalism, rid the industry of non-professionals and improve education? Please share your thoughts and ideas.