Face it: Most personal lines clients are functionally illiterate regarding insurance.
It’s not that your insureds lack intelligence. The issue is most have never been taught insurance fundamentals.
Even clients who bought their first insurance policy 40 years ago only know what they see on commercials, read on the internet or hear from friends and neighbors who are just as illiterate as they are. The result: Most of what your personal lines clients think they know is actually misinformation.
For insurance professionals who wallow around in insurance muck every day, it’s easy to forget that insurance is a unique and foreign language to our clients. We fail to realize our insureds don’t know the basis of the insurance contract they purchased. They only know they bought the policy because someone or something made them buy it—contract, statute, mortgagee.
Without the correct information, only price matters. Directs and captives spend $6-7 billion each year on television advertising confirming that myth. That’s a lot of dollars behind a dangerous lie.
When you work to replace misinformation and lies with knowledge and truth, the insurance purchase centers more on protection than price. Give buyers the correct information that’s necessary for them to feel empowered, and they feel better about not only their decisions, but also the person who gave them the information.
What better reason to teach your clients’ kids about insurance?
Every parent worries about their kids. Are they eating well? Getting enough sleep? Studying like they should? Dating the right person—or not dating the wrong person? Learning how to be an adult?
Part of becoming a contributing member of society is learning how to properly manage financial affairs. And although it doesn’t always get the attention it deserves, insurance is a key piece of personal financial management.
The key to getting and keeping the parents in the room is a good topic and “hook.” Want the parents to stay? Conduct a class about the realities of personal auto coverage for new drivers. Discuss the insurance implications of a child going away to college, getting their first job or first apartment, or whatever else may change in a family’s life. Parents will gladly attend because they feel they’re helping their kids, not because they don’t know much about these topics themselves—even though they don’t.
It’s a sneaky way to develop an arsenal of loyal, well-informed clients: When you teach your clients’ kids about insurance, you’re doing more than helping your clients prepare their children for life. If you do it right, you help prepare your clients, too—without even making them ask for help. No 42-year-old will go to a homeowners or personal auto training session on their own, because they don’t want to appear uneducated themselves. But tell them the class is for their kids, and you’ll gain their accidental attention as well.
Bonus: Educating kids and their parents about the realities of insurance also creates and cements long-term relationships with your current clients while concurrently developing contacts with future clients—the kids who will one day grow up and buy insurance of their own. Insurance is a relationship business, so build the relationship before the kids are in the market for insurance.
And considering the looming perpetuation gap the insurance industry faces, we’re in dire need of fresh talent. This exercise may trigger some kids to explore insurance as a career.
How to Do It
Use the information in your agency management system to run a list of your clients’ children. Remember, the personal auto policy application reads, “RESIDENT & DRIVER INFORMATION [List all residents & dependents (licensed or not) and regular operators]”—which means insureds are required to list all residents of a household on the application, not just drivers. Although the ACORD homeowners application does not include the same requirement, proprietary applications may ask for such family information.
Invite teenagers ages 14-19—the ones who are learning to drive, just beginning to drive, getting ready to graduate high school, headed to college and looking toward their futures. Because no kid wants to go anywhere without a friend, encourage them to bring their friends and their friends’ parents.
Print personal invitations—kids rarely get personalized mail, so the invitation will be special to them in a strange way. Send a separate letter to the parents explaining the topic or topics you plan to cover, and personally invite them to attend alongside their children so they can “continue the conversation at home.”
Then, post open invitations on your website and Facebook page, as well as in your agency e-newsletter or any other media platform you use. Ask for an RSVP so you know how many attendees to expect.
And make it a big deal! Provide snacks, drinks and even a door prize if you’re feeling fancy. Consider offering a certificate of completion to each attendee. If you host multiple sessions [see sidebar], indicate the level completed: “John Doe has successfully completed the Masters Training in Personal Auto Protection.” You get the idea.
Just remember: Your goal is to teach, not sell.
Parents want their kids to be prepared for life, and insurance is an important part of life—especially when something bad happens. As independent agents, we strive to help our communities through coaching, volunteering and more. Why not use our knowledge to increase our entire community’s insurance IQ?
Chris Boggs is executive director of the Big “I” Virtual University.
What to Teach: the PAP Outline
Initially focus on the personal auto policy. Parents always feel the economic pain of a new driver; the new driver, meanwhile, hears about this pain frequently from their parents. Plus, personal auto coverage is the focus of most of TV advertising’s half-truths and neighborhood lies.
Every state Department of Insurance provides some level of basic personal auto training for consumers. Notice that the level of detail and focus varies by state.
If you want to provide more detail than your state or you’re interested in developing your own outline, use this template to start brainstorming how to build your own personal auto education program.
I) Help me understand my personal auto policy coverages
A) Liability coverage
1) Who or what is protected?
2) Minimum limits: Are they enough?
3) 100/300/50: What’s with the three numbers?
B) Medical payments coverage
1) Coverage for an “insured”
2) Coverage for others
C) Uninsured/underinsured motorist coverage
1) What is an uninsured motorist?
2) What is an underinsured motorist?
3) Is this coverage required?
D) Physical damage coverage
1) Comprehensive coverage: aka “other than collision”
2) Collision coverage
E) Personal injury protection: “no fault” coverage
1) Who/what is covered?
2) When does it respond?
3) When is it not enough?
4) Is this applicable in every state?
II) Who does my policy cover?
A) Who is a “you”?
B) Who is an “insured”?
III) What happens if I hit someone and it’s my fault?
A) Liability coverage
B) Limits of coverage
IV) What happens if someone hits me?
V) How do I keep my premiums low?
VI) How to evaluate coverage
VII) Special situations
A) Renting a car
B) Driving in another country
C) Uber, Lyft and other ridesharing services
D) Out-of-state coverage while at college
Whether you use your state’s resources or an internally developed outline, limit the class to no more than 90 minutes, and be sure to schedule a 10-minute break in the middle. There’s a lot of ground to cover, so consider holding two sessions over a couple weeks—perhaps a basic “Beginners” class followed by a more advanced “Masters” session. —C.B.