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more on home office contract approval and training your sales reps and is First Mercury really the worst?
June 6, 2017
more on home office contract approval and training your sales reps and is First Mercury really the worst?  from May 29, 2017 article
    You must be getting ready for a venture into politics.  I haven’t seen this much side-stepping since the Governor sang in “The Best Little Whorehouse in Texas”!  I do see your point about a residential only contract not having much leeway, so that a signed altered contract might not need to be reviewed by the home office. (notice emphasis on “might”)  But your solution: “train you sales reps better”, is at best naïve.  I would venture to guess that virtually all sales reps in our industry lack the legal background to make a decision on what to do when a form contract is altered.  Nor are they in the position decide whether a requested price reduction is acceptable or is so steep that it makes the job not financially worth taking.  
    Again, a sales rep’s job is to bring in a sale.  If confronted with walking away or taking a questionable contract, the sales rep will…in fact should…take it and bring it in for ultimate review by the home office.  It might be accepted, it might not.  But to let the sales rep make the ultimate decision, whose primary (sole?) motivation is (and should be) the commission, is lunacy.  Gee, walk away and get nothing, or give the customer what he wants regardless of effect on the Company and get a commission: I wonder what the sales rep will choose every time?
    For the record, we actually do try to educate our sales reps as to what the various contract provisions mean, and why they are in there.  This has served to successfully prevent some of the alterations at the early stages of contract negotiations.  We even give them a list of certain provisions that we will routinely allow to be modified or deleted.  That said, they are not in a position to make final decisions on a risk/reward basis as to whether or not to agree with all customer suggested changes. (in particular those involving pricing and/or the protective provisions we value so highly)   That should be left to the business owners, period. 
    As for our case last year that you are apparently still trying to litigate in the court of public opinion,  I did not mean to intimate that you aren’t a strong advocate for the industry.  I raised it only to point out you have made exceptions, and that case was a big one.  Oh, I am glad your client in that one was happy with the “settlement”.  However, you could have gotten that settlement without putting him through the expense of litigation, since he lost and the “settlement” was total capitulation, giving us everything we sought.  Obviously, I was happy with that “settlement.”
    Finally, you aren’t on a crusade against First Mercury???  I think that’s news to your readers.  Based on our own experience with them in prior years (we haven’t used them in a while) they ARE the worst.  This has to be the first time someone disagreed with me after I agreed with him!
Bob Kleinman
    There are what, perhaps 15,000 alarm companies in the US?  Most are one or two man operations, some without any employees.  The owner does sales.  He doesn't need to bring the contract back to the office to sign it.  Most alarm companies with one or a few more sales people can train them properly.  Even the bigger or big companies can train their sales people if they take the time and realize the importance of training on several issues.  Sure, promoting product and services is key to the sale, pricing is significant and proper negotiation and execution of the contract should not be overlooked as an essential sales training requirement.  
    As an aside, I will conduct private training webinars for your company and sales people.  It runs about an hour and there is sufficient time for back and forth interaction, questions and answers.  You [and I am not just speaking to Bob now, who would prefer cutting off one of his fingers to paying me for a webinar but to everyone.]  To set up a webinar contact our Contract Administrator Eileen Wagda at 516 747 6700 x 312
    What negotiating authority a company gives the sales people depends on the operation.  Home sales permit less negotiating, especially if its mass marketing.  Higher-end home sales will generally mean more negotiation, but contract changes shouldn't be too challenging.
    Here is the crux of the sales training exercise, at least for the contract issues.  Your sales help are not attorneys and even if they are, they are not the subscriber's attorney.  While it is important for them to understand what provisions are in the contracts, and why, it is not the sales persons obligation to explain the meaning of the contract to the subscriber.  Engaging in that discussion cannot lead to anything positive.  The fact that the conversation took place at all is a problem unless it's recorded, which it never is.  Once it's established there was a conversation, what was said by whom becomes a battle of memories, persistence and acting skills, not necessarily the truth.
    Why would a sales person explain the Exculpatory Clause or the Limitation of Liability Clause?  I have no issue with the sales person reading it to the subscriber, verbatim, or suggesting that the subscriber seek counsel from someone else before signing, but what's to explain.  If the contract wording requires explanation then I [or the draftsman] hasn't do my job.  The contract terms need to be clear and unambitious or the terms will lend themselves to disputes, litigation and perhaps won't be enforced.  Request for explanation should illicit the following response:

  • This is an industry standard contract and we don't change the terms
  • This is the same contract signed by many of your neighbors
  • This contract is prepared by our attorney and required by our insurance company; we don't make changes
  • I am not a lawyer and I am not authorized to explain the contract terms, but I am happy to read them to you if can't read them yourself
  • You should be comfortable with the contract terms and you are welcome to seek advice from whoever you trust and like, including an attorney 

    I think it's fair to say that subscribers would understand the contract terms if they took the time to read the terms, but that doesn't mean they will like them.  Understanding and likely are not the same.  Once we get to the bottom-line, that's it's all about not liking the terms, the sale person's job is to understand why the contract is written the way it is.  Most subscribers will more readily accept the terms once they understand why they are there [again we are not talking about what the terms mean].  Some explanations are

  • We are not an insurance company and cannot assume liability for a loss
  • Alarm systems and services are not designed or guaranteed to prevent loss
  • We can offer additional equipment and services that will further reduce likelihood of loss, but there are additional costs involved
  • This contract has accomplished its purpose, providing you notice that you need to obtain insurance to protect your interests, that we are not insurers and our system and services will not prevent a loss
  • Our basic system, installed free of charge, does have additional option for relatively small additional charge, a of pair of pit bulls, but you still may want smoke detectors.  Yes we do offer patrol service that includes walking the dogs.

    Maybe I am too close to the industry, but as a consumer, how difficult is it to understand that I am not contracting for round the clock security guards, mission impossible electronic devices and on-site fire watch services.  Maybe you should have a package for $35,000 a month available.  Who knows, maybe you'll sell the package.  
    As far as First Mercury being the worst, I don't know.  There is a lot of competition for that covenanted spot.  Next and next with Hartford and others.  I think that Crum and Foster is now managing or owns First Mercury.  Maybe it will handle the cases differently.  Not likely and probably has nothing to do with underwriting.  No one from First Mercury or any broker who pushes First Mercury has chosen to respond or comment on this forum.  
    As far as that one case my office opposed AFA,  geez.  How about telling everyone about the cases where I represented AFA, did great job and met even your high standards?  Ha ha, you don't really have to.  Reminds me of my club where the waiters should be asking "is anything all right"?


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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
516 747 6700
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