How to Take Control and Lead Your Clients With Confidence
Niki Henley, owner of Extra Mile Insurance Solutions, talks about how quickly she sets ground rules and commands respect.
What if this one conversation could reduce your client's cost of doing business?
What if it were also an area a lot of business owners overlook and plenty of agents don't talk about enough?
That's a dangerous combination that comes with a lot of opportunity attached to it.
You might be surprised just how many accounts you have that could use the extra coverage.
Brendan Neligan, RPS broker and resident cargo expert, talks about all the ways you can strap down a cargo policy.
Joey Giangola: Mr. Brendan Neligan, how you doing today, sir?
Brendan Neligan: I'm fantastic, Joey. Thanks for having me.
Joey Giangola: Brendan, I got into this before we really get into anything too serious. What's one thing, maybe a common item that you, for whatever reason, hesitate or maybe have a little extra anxiety when you're transporting yourself?
Brendan Neligan: I don't know if it's about transporting myself, but I thought about this. Do you ever go to the post office or a shipping center to ship a present to a cousin for a birthday, or even just pay a bill via the mail? I don't know. I have severe anxiety. How is that good? How's that check, how's that present going to get there? You always follow up with your brother or sister to make sure that they got it, and somehow everything always miraculously arrives, right? They debit your account and you're on your way. So for me, that would be a personal kind of thing that I go through, where that's what gives me anxiety, the simple mailing of a check.
Joey Giangola: A hundred percent Brendan, and I never think I'm doing it right, so I don't think you're alone in that. I don't know if I know how to properly work the mail. But ultimately for me, it's as simple as a watermelon. It's oddly shaped, it rolls around, and it can potentially leave a mess if you don't secure it. And I don't know, for whatever reason, it feels like it's heavier than it's not. I've dropped a watermelon and it's just not a good scene when you're like in a parking lot and you just got a watermelon on the floor in the front of your car. It's one of those simple things. I like to buy them, but I just don't like to put them in my car.
Joey Giangola: Let's move this over to the actual world of professionally transporting things and covering them. From your experience, what's one of the biggest maybe misconceptions that agents have around cargo coverage, be it land or sea, and the stuff that they might not be paying attention to right away?
Brendan Neligan: Well, the first thing to remember is that I would deem cargo to be a non-core coverage of an insured's kind of suite of insurance products. A lot of focus gets put on large property and their casualty programs, and even some of their professional programs, and sometimes cargo is forgotten about, for lack of a better word. It's a specialty cover. It's a niche cover. And a lot of times from what we hear, if we talk to agents or we talk to some businessmen is, "Oh, well, my carrier covers it." "Oh, we have that coverage already through our courier." And okay, sometimes you do, but there are some nuances to that contract that they may not realize they're missing by not having their own cargo program.
Joey Giangola: It's long been the struggle to fight against the check box, whether it be life insurance, any of that extra coverage. Usually if you're checking the box, it's probably more limited in a way that you want to accept, but again, you can't discount the placement of it all. But I guess when agents maybe want to approach that niche, let's say, like you said, it's more of a specialty thing, how do they maybe get ... What gets somebody into wanting to dive into that a little bit deeper than maybe what they've just again been accustomed to, having people check boxes? Well,
Brendan Neligan: Well, for me, I think it starts with a conversation, and the easiest way that I would put it is, when you're dealing with goods that are normally manufactured overseas or offsite here in the States, you have an ownership of those goods. Those goods are equity to your bottom line. So, we sit there and we talk equity, ensuring that your money and finances are covered, your real property is covered. We ensure that all those insurance is in place, but sometimes what we forget is that we own goods that maybe we don't even have custody of yet. We have an ownership, so we have an insurable interest in those goods that maybe we have not received yet. So, if something was to happen to those goods, that is a financial pitfall that they possibly run into.
Joey Giangola: Yeah, actually, I didn't even think about it. When you bring it that way, how many agents do you think out there have clients who are receiving things that are probably not protected to the level in which they might want them to be, if something were to happen?
Brendan Neligan: Joey, I think it would be safe to say that every property and casualty agent out there has some type of insured in their portfolio that doesn't have proper cargo insurance. And again, that's a buying decision that a lot of times sits with the client. If they're comfortable with the courier's insurance or the vessel carrier's insurance, then that's a risk management decision that they decide to make. By going out and getting their own ocean cargo insurance, they control the script, and many times it'll save them money in the long run.
Joey Giangola: Yeah. Have you seen that where it is actually a factor where ... I guess maybe a better question is, what limitations do you think agents should be aware of if they're going in looking to maybe sell against the check box? What are some of the big key areas that they want to highlight in terms of coverage that really could benefit them in the long run, like you mentioned?
Brendan Neligan: Well, I think the first thing that agents need to go out and realize is, listen, they know their client's business inside and out. They need to know normally where their goods are manufactured. We use the word ocean cargo, right? A high percentage of the goods that are manufactured here that end up here on shelves in the United States are manufactured somewhere else.
Brendan Neligan: I think that this gets even highlighted more in the last two or three years with what we've gone through with supply chain management and what have you. It is more and more vital to ensure that your clients are covered for their goods as they make their way here overseas. And essentially, that just really basically starts with a conversation, and kind of laying out the groundwork of, what do you have? Is it covered? Are you comfortable with that? Would you like us to pursue another option? It's really just some basic questions.
Joey Giangola: You mentioned that it's likely that an agent has a client somewhere that probably isn't doing what they could to ensure goods that are coming into their business. Do you have any good sort of, I guess, industries ... as I'm assuming they're scrambling, thinking, "Oh, man, who do I have insured?" What are some good industries that they should be going to first and thinking about, "Man, this is something I might want to bring up next time I talk to these guys"?
Brendan Neligan: Really anybody with a manufacturing risk, so to speak. But a lot of times, a lot of the business on our books, chemicals, construction materials, building materials, energy and utilities, food and beverage, any consumer good, any machinery, those are a lot of times kind of the main classes of business that we see coming to us for cargo insurance.
Joey Giangola: I guess, is there something that you generally see in terms of the coverage itself that is lacking, from even just their conversation? Let's say they have approached the conversation with the client and they've got them sort of interested in it. Is there something that maybe is overlooked that agents could ... What it the simplicity of it, whether it's the limits or something like that? What are some general guidelines for agents to follow when they're actually getting into these conversations?
Brendan Neligan: Well, I think the main thing that people have to look at is, what's the relationship between the buyer and the seller? When do the goods become yours? When are the goods theirs, for the seller? The other interesting thing which I always bring up to people is, standard carrier cargo liability, meaning you put your goods on a vessel going from Taiwan to the United States, and you say, "Well, my vessel has it." Per bill of lading, the standard indemnity payment on that would be $500. My question is, if you have $100,000 worth of goods on that ship, we're talking about a serious underinsurance there. Carrier's liability is limited when it comes to shipping goods, and frankly, it would behoove people to protect their assets, get an option, see what it's going to cost, and take it from there.
Joey Giangola: Take me inside, I guess, maybe the claims end of it. Let's say something does happen to ... because I mean, obviously, damaged goods is a pretty likely occurrence in some form or fashion. What can agents expect to communicate to their clients when dealing with actually making good on some of this stuff and needing to actually use the coverage?
Brendan Neligan: What we see a lot of time ... And let's just talk about the supply chain in general. Normally, it starts foreign manufacturer into a warehouse, into a port, onto a ship, into a warehouse, into an intermediary warehouse, to the client, to the shelves. There's a lot of points along the supply chain that really make it challenging. What's the biggest kind of claim out there that occurs on any given day? And that would be rough handling. Anytime somebody is handling a cargo container and it's being picked up and drop shipped and picked up again and moved around, there's goods in there. They're not all secure. We've all packed the moving truck before we, and we have anxiety about that. Well, that's no different than what it is here. There are many steps along the supply chain where goods are mishandled or rough handling damage and what have you. So, a lot of times those are what we see from a claims perspective.
Brendan Neligan: Beyond that, some of these ships, if they're coming from far East Asia to the United States, they're spending six to eight weeks on the water, and so you have the perils of the sea, whether it's rain or it's large waves or what have you. So, we also see a significant amount of wetting claims of goods that have that.
Brendan Neligan: And then on top of that, I think that what people have to realize is, when these goods are coming over on the ships, they talk in what's called TEUs, right? And essentially a ship these days carries 15,000 cargo containers. So, if you could just imagine your standard tractor trailer on the road, just the back end of it, that's one tractor trailer. That's one trailer. These are carrying 15,000. So, if a fire is to break out in one because, let's say, it's carrying something that's flammable or it's carrying batteries or what have you, it could affect all the cargo around it. So, a lot of times, it's just smart business practice to ensure that your goods are covered.
Joey Giangola: Maybe walk me through a little bit the timing of, let's just say, we're dealing with some damaged goods here and we need to make a claim. Again, in the check box scenario versus the vessel's coverage or versus going the extra mile and doing the legwork yourself, what's the sort of turnaround time on actually being up and running back with the inventory, or I guess replaced inventory? What does that whole process look like?
Brendan Neligan: Well, replacing the inventory, that's not something that we don't control. Our carriers will make an indemnity payment for the cost of the goods so our insured will be made whole financially. It's then incumbent upon them to remanufacture the goods, resend them, re-put them on the truck, re-put them on the sea, bring them into the warehouse and bring them onto the customer's shelves. However, from a financial perspective, they are made whole.
Brendan Neligan: Many times these claims, relatively open and shut. Open the container, goods are obviously damaged, not saleable, and normally a claim could be open and closed in a matter of a week. Don't get me wrong. There are more complex claims out there, right, hidden damages. But a lot of times, you start dealing with your general cargo claim, rough handling, you're looking at a week's time.
Joey Giangola: Maybe this might be an unfair question, Brendan, but I'll give it a shot. Do you think maybe there's an acceptance to just the amount of damages that sort of go into the overall cost, the spoilage, if you will, that maybe are just maybe accepted, potentially we'll say falsely?
Brendan Neligan: Yeah, I mean, some people are willing to just kind of say, "It's the cost of doing business. Don't need to buy the coverage. I'll pay the claims when they occur." And for some people that works. To those people, I challenge them and say, "Let's just show you what a cargo program would look like," and then run that number over two to three years, and see if there's any savings, or see if there's something that doesn't keep you up at night knowing that your goods are financially sound in the event of a loss.
Joey Giangola: If you had to boil it down to one piece of advice for an agent to maybe get a little more serious about that cargo conversation with their clients, what do you think is holding them back a lot of times from maybe going into this area more in-depth?
Brendan Neligan: I think at the end of the day it's agents are always being defensive about the relationships that they have in place already. With that being said, and I get it, the more new stuff we introduce, the more it might rock the boat, ironically, what we're talking about here. But what I would encourage them to do is to really just have a conversation.
Brendan Neligan: I spent 15 years on the underwriting side. When I was on the underwriting side, people, "What's the biggest thing of client retention?" For us, it was the most lines of business that you could possibly write, and I think that that sticks true here. I think the more eggs you have in your basket with your client at the end of the day, provides you a stronger retention, and really, you're putting yourself out there as the best person for their job.
Joey Giangola: All right, Brendan, I got three more questions for you, sir.
Brendan Neligan: Bring it.
Joey Giangola: The first one is, what's one thing you hope you never forget?
Brendan Neligan: Can I say my kids' names?
Joey Giangola: You certainly can.
Brendan Neligan: There you go.
Joey Giangola: No judgment here.
Brendan Neligan: Yeah, I think that would be my children's names, so long as I live and [inaudible 00:13:46] always want to keep Duke, Hannah, Haley, and Jordan top of mind.
Joey Giangola: Now, on the other side of that, what is one thing you still have yet to learn?
Brendan Neligan: How to put down a crying baby, how to stop a baby from crying.
Joey Giangola: You had a couple chances. I think you might have done all right, Brendan. Maybe not too hard on yourself.
Brendan Neligan: All right.
Joey Giangola: Last question to you, sir. If I were to hand you a magic wand of sorts to reshape, change, alter, speed up, really any part of insurance, what's that thing? Where is it going and what's it doing?
Brendan Neligan: Yeah, so for us, it's all about efficiency, right? I'm only one person. Insurance is a people business. For us, it's being able to use technology to our benefit, and be able to use the world of bots and data learning to be able to provide solutions for our clients that are meaningful.
Joey Giangola: All right, Brendan, I'm going to leave it right there. That was fantastic, sir.
Brendan Neligan: Thank you. Appreciate your time, Joe.