Recession-Proof Retention
By: Hodges
Frugality is the new chic—that’s the overriding consumer sentiment in this recession, and recent surveys indicate that philosophy might continue long after the economy has turned around. But some consumers are making choices that could cost them far more than they save, and slashing insurance coverage is one of them.
In an effort to save money, insurance customers around the country are raising their deductibles, lowering coverages and switching carriers and agencies to save a few dollars in premium—sometimes as little as $50 per year. Customers are attacking their insurance coverages with chainsaws in a desperate attempt to reduce expenses, and many are exposing themselves and their businesses to colossal risks in the process.
There have been numerous reports of individuals who slashed their homeowners coverage, only to experience a devastating fire, and self-employed professionals who canceled their disability insurance to save $100 a month and later were diagnosed with a debilitating illness. The good news is agents can retain their customers, and often save them from bad decisions, by offering them money-saving choices that don’t compromise their coverage.
Decrease Premium, Increase Coverage
In a time when insureds are mindful of every penny, The Partners agency in upstate New York is making an effort to help clients understand their coverages. They’re also looking harder for ways to reduce customers’ premiums, and rewarding employees who do it successfully. Many times, these premium reductions are found in the form of policy upgrades.
“Upgrades don’t always cost more,” explains Bill Soprano, director of personal lines at The Partners’ three-office agency. A customer who has historically carried $100,000 in liability coverage for a home purchased years ago, and has since added on to it, may now be able to purchase a high-value home endorsement. Such an endorsement “can increase liability coverage to $300,000 and add other important coverages, such as guaranteed replacement cost,” says Soprano. But because the endorsement also carries a higher deductible, the client’s premium actually shrinks.
“When customers give us the chance to compare coverages, even if we’re not the lowest price, nine times out of 10 they’ll stay with us,” Soprano adds. “But if they just move because of price, they generally don’t get the same coverage.”
Bill Oliver, CEO of The Partners, says his agency also guides customers carefully through the claims process to ensure proper resolution. “If we have a major loss, Bill Soprano goes to the site as soon as possible to meet with the clients and tell them what to expect,” he says. “We also check in with them two days, eight days and 12 days afterward to be sure the claims check has arrived and that all has gone well with the carrier.”
Soprano says this is a procedure that takes the agency above and beyond the carrier process. “We follow up to make sure nothing falls between the cracks,” he says. “Especially for larger losses, it’s worth a million dollars to clients to know you’re there to help them.”
Round Out Accounts
Tim Dyer, president of Dyer Insurance Agency in Clarksburg, W.V., knows what Soprano is talking about. He and his employees have stepped up the number of contacts they make with clients, and are working to identify policy-packaging opportunities. “Once you have two or three policies with a client, you know more about them, and they feel comfortable with that,” says Dyer. And when clients have more than one policy with an agent, “they don’t necessarily move,” says Dyer. “But they may ask us to shop around and make sure they’re getting the best deal.”
In fact, Dyer says, his agency is getting more requests for quotes as insureds from other agencies do their own shopping. For each request, an employee shows the customer or prospect options from four companies and explains where they can cut costs if they wish. And sometimes, $50 or$100 less in premium is the deciding factor. “When we don’t think it’s in their best interest, we’ll tell them,” says Dyer. “But we’ll do it if they want to.”
The fact that customers ask Dyer to shop their insurance instead of doing it themselves demonstrates strong trust in this two-office, 113-year-old agency. But Dyer doesn’t take it for granted. Thanks to an agency savings account, the firm is now advertising more while continuing its charity contributions. Dyer also recently invested $100,000 in technology upgrades, paying for them with contingency income.
Why is technology good for client retention? “Because if it’s up to snuff, you can collect e-mail addresses for your insureds and easily communicate with them,” says Dyer. You can also find answers for clients on your agency management system, usually during their first call. “And you have their X-dates right there in front of you,” he adds.
Occasionally, surprises can happen on the commercial side when a producer has quoted a policy mid-term and the carrier assigns new, lower rates near the end of the term. “Then you look bad to your insured,” says Dyer. However, this doesn’t happen often, and when it does, clients rarely leave—perhaps because Dyer and his team take pains to explain how an underwriter may have arrived at the new rate.“We’re very customer-service-oriented,” says Dyer, “and we think it helps.”
Manage Customer Expectations
Rick Higginbotham also believes strongly in frequent customer contact, and his agency has plenty of opportunities to stay in touch. George H. Freidlander Co. of Charleston, W.V., specializes in construction insurance and surety for all types of contractors. It’s a niche that creates multiple service opportunities throughout the policy year, since each construction job has unique insurance requirements. “We’re as much involved in our clients’ businesses as their accountants or lawyers,” says Higginbotham, agency vice president.
Even so, he and his 12-person staff contact customers an additional time each year to advise them on managing their insurance costs. “Cost is always a consideration,” Higginbotham says. “(But) it’s critical to meet with them three or four months before renewal to tell them what we see in the marketplace and identify factors that could affect their renewal.”
Friedlander Co. employees also inform carrier underwriters of safety improvements their clients have made to lower exposures. “Everyone in our shop started their career as an underwriter, so we hope we know how underwriters will look at certain issues,” Higginbotham explains. With both clients and carriers, Higginbotham emphasizes honest communication. He says, “If you manage expectations, even during a hardening market and other situations, you often create even more trust.”
The Friedlander Co. has maintained a97% customer retention rate “for years,” Higginbotham says, and it doesn’t show signs of dropping. “We all service what we sell,” he says. “We just need to be always cognizant of how we handle our business, and stay level with our own expectations.”
Continually Educate Staff
To meet expectations at the Arndt-McBee Insurance Agency, Inc., in Berkeley Springs, W.V., Principal Steve McBee requires his employees to be “as educated as they can be, not only with insurance in general, but with the particular carriers we represent.” The goal is to answer customers’ questions correctly and quickly—or know where to find answers if they’re not immediately available. Problems are more likely to occur when an agency employee doesn’t know the answer, but thinks he or she should and gives the wrong response.
“I’ve seen (agents) who, having someone on the other end of the phone, will tell them their premium should be a certain amount, because they’re assuming the prospect’s home is 1,000 feet or less from a fire hydrant,” McBee says. But for those who live in rural areas, that’s not often the case, and an uninformed answer can send clients and prospects elsewhere. “I’d rather tell a client up front that I’ll find the answer instead of giving them something off the cuff that may come back to bite me,” McBee says.
Often, more education helps insurance employees be more attentive to details, because they better understand the serious consequences of an error. Sometimes it’s a matter of helping a client after a loss when an adjuster hasn’t looked at the policy as closely as he or she should have. “The loss may actually be covered when an adjuster has said it’s not,” says McBee. “You can keep a client that way.”
In other cases, premiums have increased for Arndt-McBee customers, but most have remained loyal. “We’ve been able to explain to them why their premiums are the way they are,” he says. “Even when the premium increases, about 70% will stay with the same carrier.”
Overall, though, McBee says he’s seeing more loyalty to agents these days than to carriers. But at the same time, his agency is experiencing an influx of customers formerly insured by direct writers. “Five or 10 years ago, if you were with State Farm, that’s all you had to say,” he recalls. “Now folks are less concerned whether they know the company and more concerned that they’re getting the best deal in the market.”
Are new customers satisfied when they do business with McBee? “They’re very pleased,” he says. “They may not be familiar with the carrier we suggest, but when we can show them what that insurer will do to protect them, it really helps.”Are your customers convinced that you’re doing all you can to find them the best coverage at the best terms? If not, watch out—some of them may close their wallets on you.
Hodges (hodgeswrites@aol.com) is IA senior writer.
Emphasize Value, Not Access
Matt Josefowicz is director of insurance at Novarica, a New York City-based research and advisory firm focused on operational and technology strategy for insurers. And he has a message for independent agents: “You won’t be able to justify your existence much longer just for accessing various carriers and getting quotes. You need to deliver expertise and guidance to achieve client value, as opposed to relying on access to information.”
Ten years ago, thousands of travel agencies succumbed to the Internet’s ability to provide consumers with do-it-yourself travel reservations. Traditional stock brokerages suffered similarly in the wake of Charles Schwab first, and then E*Trade and other online firms that enable customers to make trades without an intermediary. Josefowicz believes the same fate awaits independent agents who don’t demonstrate their value through expert knowledge and counsel.
“There are still travel agents who’ve survived because they can provide a level of expertise and concierge service that people are willing to pay for when things get complicated,” says Josefowicz. Full-service brokerages that have been able to prove the value of their assistance also still exist. “So it’s really about relationships with customers,” Josefowicz says. Insurance agents whose customers continue to think of them as trusted advisors will likely keep their business. For others, “You’d better have a way to keep customers who keep hearing that Geico gives a better deal.”
It’s not that a better deal will automatically drive customers away. The key, Josefowicz says, is agents need to look for better deals for their customers regularly, and then notify them promptly when they find one. “If a customer finds a better deal, he’s going to wonder why his agent didn’t find it first,” he explains. “So reach out to customers and make those offers—before they call you.”
—S.H.
In an effort to save money, insurance customers around the country are raising their deductibles, lowering coverages and switching carriers and agencies to save a few dollars in premium—sometimes as little as $50 per year. Customers are attacking their insurance coverages with chainsaws in a desperate attempt to reduce expenses, and many are exposing themselves and their businesses to colossal risks in the process.
There have been numerous reports of individuals who slashed their homeowners coverage, only to experience a devastating fire, and self-employed professionals who canceled their disability insurance to save $100 a month and later were diagnosed with a debilitating illness. The good news is agents can retain their customers, and often save them from bad decisions, by offering them money-saving choices that don’t compromise their coverage.
Decrease Premium, Increase Coverage
In a time when insureds are mindful of every penny, The Partners agency in upstate New York is making an effort to help clients understand their coverages. They’re also looking harder for ways to reduce customers’ premiums, and rewarding employees who do it successfully. Many times, these premium reductions are found in the form of policy upgrades.
“Upgrades don’t always cost more,” explains Bill Soprano, director of personal lines at The Partners’ three-office agency. A customer who has historically carried $100,000 in liability coverage for a home purchased years ago, and has since added on to it, may now be able to purchase a high-value home endorsement. Such an endorsement “can increase liability coverage to $300,000 and add other important coverages, such as guaranteed replacement cost,” says Soprano. But because the endorsement also carries a higher deductible, the client’s premium actually shrinks.
“When customers give us the chance to compare coverages, even if we’re not the lowest price, nine times out of 10 they’ll stay with us,” Soprano adds. “But if they just move because of price, they generally don’t get the same coverage.”
Bill Oliver, CEO of The Partners, says his agency also guides customers carefully through the claims process to ensure proper resolution. “If we have a major loss, Bill Soprano goes to the site as soon as possible to meet with the clients and tell them what to expect,” he says. “We also check in with them two days, eight days and 12 days afterward to be sure the claims check has arrived and that all has gone well with the carrier.”
Soprano says this is a procedure that takes the agency above and beyond the carrier process. “We follow up to make sure nothing falls between the cracks,” he says. “Especially for larger losses, it’s worth a million dollars to clients to know you’re there to help them.”
Round Out Accounts
Tim Dyer, president of Dyer Insurance Agency in Clarksburg, W.V., knows what Soprano is talking about. He and his employees have stepped up the number of contacts they make with clients, and are working to identify policy-packaging opportunities. “Once you have two or three policies with a client, you know more about them, and they feel comfortable with that,” says Dyer. And when clients have more than one policy with an agent, “they don’t necessarily move,” says Dyer. “But they may ask us to shop around and make sure they’re getting the best deal.”
In fact, Dyer says, his agency is getting more requests for quotes as insureds from other agencies do their own shopping. For each request, an employee shows the customer or prospect options from four companies and explains where they can cut costs if they wish. And sometimes, $50 or$100 less in premium is the deciding factor. “When we don’t think it’s in their best interest, we’ll tell them,” says Dyer. “But we’ll do it if they want to.”
The fact that customers ask Dyer to shop their insurance instead of doing it themselves demonstrates strong trust in this two-office, 113-year-old agency. But Dyer doesn’t take it for granted. Thanks to an agency savings account, the firm is now advertising more while continuing its charity contributions. Dyer also recently invested $100,000 in technology upgrades, paying for them with contingency income.
Why is technology good for client retention? “Because if it’s up to snuff, you can collect e-mail addresses for your insureds and easily communicate with them,” says Dyer. You can also find answers for clients on your agency management system, usually during their first call. “And you have their X-dates right there in front of you,” he adds.
Occasionally, surprises can happen on the commercial side when a producer has quoted a policy mid-term and the carrier assigns new, lower rates near the end of the term. “Then you look bad to your insured,” says Dyer. However, this doesn’t happen often, and when it does, clients rarely leave—perhaps because Dyer and his team take pains to explain how an underwriter may have arrived at the new rate.“We’re very customer-service-oriented,” says Dyer, “and we think it helps.”
Manage Customer Expectations
Rick Higginbotham also believes strongly in frequent customer contact, and his agency has plenty of opportunities to stay in touch. George H. Freidlander Co. of Charleston, W.V., specializes in construction insurance and surety for all types of contractors. It’s a niche that creates multiple service opportunities throughout the policy year, since each construction job has unique insurance requirements. “We’re as much involved in our clients’ businesses as their accountants or lawyers,” says Higginbotham, agency vice president.
Even so, he and his 12-person staff contact customers an additional time each year to advise them on managing their insurance costs. “Cost is always a consideration,” Higginbotham says. “(But) it’s critical to meet with them three or four months before renewal to tell them what we see in the marketplace and identify factors that could affect their renewal.”
Friedlander Co. employees also inform carrier underwriters of safety improvements their clients have made to lower exposures. “Everyone in our shop started their career as an underwriter, so we hope we know how underwriters will look at certain issues,” Higginbotham explains. With both clients and carriers, Higginbotham emphasizes honest communication. He says, “If you manage expectations, even during a hardening market and other situations, you often create even more trust.”
The Friedlander Co. has maintained a97% customer retention rate “for years,” Higginbotham says, and it doesn’t show signs of dropping. “We all service what we sell,” he says. “We just need to be always cognizant of how we handle our business, and stay level with our own expectations.”
Continually Educate Staff
To meet expectations at the Arndt-McBee Insurance Agency, Inc., in Berkeley Springs, W.V., Principal Steve McBee requires his employees to be “as educated as they can be, not only with insurance in general, but with the particular carriers we represent.” The goal is to answer customers’ questions correctly and quickly—or know where to find answers if they’re not immediately available. Problems are more likely to occur when an agency employee doesn’t know the answer, but thinks he or she should and gives the wrong response.
“I’ve seen (agents) who, having someone on the other end of the phone, will tell them their premium should be a certain amount, because they’re assuming the prospect’s home is 1,000 feet or less from a fire hydrant,” McBee says. But for those who live in rural areas, that’s not often the case, and an uninformed answer can send clients and prospects elsewhere. “I’d rather tell a client up front that I’ll find the answer instead of giving them something off the cuff that may come back to bite me,” McBee says.
Often, more education helps insurance employees be more attentive to details, because they better understand the serious consequences of an error. Sometimes it’s a matter of helping a client after a loss when an adjuster hasn’t looked at the policy as closely as he or she should have. “The loss may actually be covered when an adjuster has said it’s not,” says McBee. “You can keep a client that way.”
In other cases, premiums have increased for Arndt-McBee customers, but most have remained loyal. “We’ve been able to explain to them why their premiums are the way they are,” he says. “Even when the premium increases, about 70% will stay with the same carrier.”
Overall, though, McBee says he’s seeing more loyalty to agents these days than to carriers. But at the same time, his agency is experiencing an influx of customers formerly insured by direct writers. “Five or 10 years ago, if you were with State Farm, that’s all you had to say,” he recalls. “Now folks are less concerned whether they know the company and more concerned that they’re getting the best deal in the market.”
Are new customers satisfied when they do business with McBee? “They’re very pleased,” he says. “They may not be familiar with the carrier we suggest, but when we can show them what that insurer will do to protect them, it really helps.”Are your customers convinced that you’re doing all you can to find them the best coverage at the best terms? If not, watch out—some of them may close their wallets on you.
Hodges (hodgeswrites@aol.com) is IA senior writer.
Emphasize Value, Not Access
Matt Josefowicz is director of insurance at Novarica, a New York City-based research and advisory firm focused on operational and technology strategy for insurers. And he has a message for independent agents: “You won’t be able to justify your existence much longer just for accessing various carriers and getting quotes. You need to deliver expertise and guidance to achieve client value, as opposed to relying on access to information.”
Ten years ago, thousands of travel agencies succumbed to the Internet’s ability to provide consumers with do-it-yourself travel reservations. Traditional stock brokerages suffered similarly in the wake of Charles Schwab first, and then E*Trade and other online firms that enable customers to make trades without an intermediary. Josefowicz believes the same fate awaits independent agents who don’t demonstrate their value through expert knowledge and counsel.
“There are still travel agents who’ve survived because they can provide a level of expertise and concierge service that people are willing to pay for when things get complicated,” says Josefowicz. Full-service brokerages that have been able to prove the value of their assistance also still exist. “So it’s really about relationships with customers,” Josefowicz says. Insurance agents whose customers continue to think of them as trusted advisors will likely keep their business. For others, “You’d better have a way to keep customers who keep hearing that Geico gives a better deal.”
It’s not that a better deal will automatically drive customers away. The key, Josefowicz says, is agents need to look for better deals for their customers regularly, and then notify them promptly when they find one. “If a customer finds a better deal, he’s going to wonder why his agent didn’t find it first,” he explains. “So reach out to customers and make those offers—before they call you.”
—S.H.
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