Thinking broadly, what would our society look like without insurance? This is the very first question risk advisors at Ledgestone, a leading risk management organization based in the Midwest, are taught to ask of prospective clients. According to Ledgestone’s CEO Austin Endress, “Throughout our organization’s history, we have yet to find any individual or business concede that insurance is a detrimental mechanism to our society. The simple truth is, without the mechanism of risk-transfer, our society would look starkly different than it does today. We ask clients all the time: would you drive a vehicle, purchase a home, or start a business if you didn’t have the ability to insure against loss? Without fail the answer is always no.” Thus, we have an answer to part one of our initial question. No, people aren’t frustrated with the mechanism of insurance. So, what therefore is the root of the dissatisfaction?
According the Austin, the driving factor behind our displeasure is the current agent force. “We as consumers don’t have an insurance problem. We have an insurance distribution problem.” He goes on to explain that insurance policies are simply legally binding contracts drafted by lawyers. Thus, clearly defined within the policy are the provisions around what specifically is and is not covered, under what circumstances coverage applies, and how much will be paid in the event of a loss. Austin continued by saying, “In today’s marketplace, there is essentially nothing that coverage couldn’t be secured for.” To illustrate, back in 2010, Pittsburgh Steelers safety Troy Polamalu, famously known for his long flowing black locks, purchased a policy on his hair for $1 million dollars. “Thus, when you as a consumer experience a loss that isn’t covered, the source of your frustration shouldn’t be the policy or the insurance company that provided the policy. Your angst should be directed toward the agent or broker who failed to provide you the correct coverage.”
So, if distribution is indeed the primary constraint, what is the root cause behind the problem and how can it be remedied? Austin goes on to explain, “The primary issue stems from the lack of training and education requirements set forth for aspiring agents. In Illinois, all you need to become fully licensed is two days in an approved class and a score of 70% or higher on the licensing exam (which takes about 2.5 hours). Contrast this with other industries deemed essential to society. To become a doctor, we make you get undergraduate degree, score well on the MCAT exam, endure the rigors of medical school, and complete a three to seven-year residency period.” While Austin admits the doctor may be an extreme, albeit necessary, example, there are countless other industries that have thorough “weed-out” mechanisms that prevent individuals from entering a practice unprepared.
Accountants are required to get 150 college credits and pass the 4-part CPA exam. Lawyers, who draft insurance contracts, must obtain both an undergraduate and graduate degree. Almost every essential trade involves years of training and testing prior to being approved for action; every trade except insurance.
Our efforts are solely focused on reducing the client’s risk profile and the underlying exposures driving it
“Again, consumer don’t have an insurance problem. The mechanism isn’t broken. What we do have is an immense shortage of qualified risk advisors who can adequately assess an individual or businesses’ needs and construct a program that will adequately cover them in the event of a loss.”
“The world around us is constantly changing, bringing with it risk exposures that are increasingly more dynamic and complex. The scarcity of time is becoming an unfortunate reality. Business owners don’t need poorly trained and under-educated insurance agents giving them insurance bids. What they do need is proactive and knowledgeable risk advisors who possess the expertise to mitigate and manage their risks. They need people whom they trust who enable them to take off the risk management and insurance hat and redirect their efforts toward growing their business. They need a true partner who will diligently work on their on their behalf and identify exposures they may not otherwise see,” adds Austin.
This realization has led Austin and Ledgestone to create RiskPoint360, a proprietary risk management platform which accelerates the client experience well beyond insurance. “Our efforts are solely focused on reducing the client’s risk profile and the underlying exposures driving it.” Thus, Ledgestone’s first step is a comprehensive business assessment, that includes facility inspections, program analysis, employee and management interviews, etc. Following the assessment, Ledgestone, in partnership with their vast third-party vendor force (i.e. safety consulting, occupational health, fleet telematics, etc.) develop a comprehensive risk mitigation strategy, with the intended purpose of reducing the potential impacts of risks currently facing the organization. Next, Ledgestone and their strategic partners work in collaboration to implement this plan and set-up varying mechanism to track KPI’s. “Our hope, is that by providing our clients the level of service and expertise they should expect, we can create a paradigm shift in the minds of all consumers, thereby ushering in a new era of for the insurance and risk management industry.” Thus, it will be seen if Ledgestone’s efforts can indeed create a new standard an expectation for an industry that sorely need it.