Conflict of Interest Question?

[williamthomas]

Any advice on this would be appreciated. I am an insurance agent and am currently in the process of trying to land a good size Commercial insurance account.

I have run into one obstacle that I am trying to navigate around. Here is the situation. The organization we are seeking to insure, the founder of that organization is the father of my business partner. Because of that some of the people on the board are stating that they need to get a quote from two other insurance agencies in order for there to not be a "conflict of interest".

Obviously, we have a competitive advantage because my business partner is the founders son and we are close friends with the organization. Yet, I do not see a problem because we will be quoting them to four or five different insurance companies who set the premiums and limits of coverage.

Having other insurance agencies quote along side of us just causes things to get messy. Once you quote thru one company you automatically lock the other agency out from getting a quote thru that company. The other insurance agency quotes thru the same companies.

I have talked to lawyers and they have said that there is no conlfict. I wanted to bounce this one off of you guys to see if you have any thoughts.

Thanks!

 

[leevena]

I would disagree with you on this. You probably do not have a conflict, but the other side might. To begin with, competition should not messy anything up. Secondly, look at it from the perspective of the board of directors...if in fact you do have the best to offer, it will come out in the presentation process. If they did not take this route and something went wrong, they would have opened themselves up to criticism, liability and who knows what else.

 

[DHK]

There is no professional "conflict of interest".

What you need the board to do is DEFINE what THEY THINK a conflict of interest really is. (There's got to be some young punk attorney on that board who is trying to show off and prove himself to be worthwhile to stay on the board.)

As long as the transaction is done as an "arm's length" transaction... there is no conflict of interest.

Now, there WOULD be a conflict of interest if you were recommending one insurance company over another PURELY for the difference in additional compensation.

You should be able to explain that the product (insurance policy) is a COMMODITY. The pricing of the insurance is the same regardless of which agent is shopping it around for you. The difference is SERVICE and ensuring that the proper amount of insurance is obtained.

Since the founder of the company is your partner's father, you have an additional vested interest to ensure that the job is done right.

You must show that you are the LOWEST RISK provider for your service. You may not necessarily recommend the lowest COST, but you will be the LOWEST RISK CHOICE for that company to choose.

 

[Guest]

There is no conflict, but here is what I would do, since you have options as a broker, then create 4 or 5 quotes yourself, present them all to the board, and YES, YOU should present to the entire board, and give them the options and let them see what you are trying to do for them.

To make it fair, and I dont think there is anything wrong with this, have a couple of your friends run quotes and present those also and let them see for themselves that other companies and agents quoted it also.

 

[b61mack]

you better get your quotes done in a hurry! once you get a quote from company x.. you locked that company in. and they won't quote another agent. if you lock in the most competitive carriers. the rest of the agents will come in a lot higher than you..

 

[williamthomas]

Dhk thanks for the response.

 

[djs]

Sorry, but the board is asking for the right thing. Conflict of interest isn't what you think, it's what someone else will think once something goes wrong. Face it, other quotes will help you, not hurt you. Of course, if you don't have the best deal, then you don't deserve the business.

Most people don't understand that insurance rates are 'fixed' and not negotiated. Of course, that isn't true with commercial accounts, especially larger commercial acounts. You can negotiate with underwriting to get better credits, unlike most personal lines (or health) accounts.

Anytime family is involved, the relationship should be treated as a possible conflict of interest and normal due diligence should be done to protect everyone from questions in the future.

Face it, there are threads even on here where family didn't do the right thing for family. It happens. Let the board go off and ask for other quotes.

Dan

 

[williamthomas]

Dan

That's a good perspective.

Would it be ok to ask the board for a few weeks head start?

 

[Guest]

Dan

That's a good perspective.

Would it be ok to ask the board for a few weeks head start?

Well, no, I would call that favortism.......

You already have an inside track, dont push it