3 Ways to Compete in Personal Auto

Usage-based insurance. In-car telematics. Ride- and car-sharing. Lower frequency. Higher severity. Declining auto ownership.

Trends aplenty are shaking up the personal auto market. As the pool of auto risks transforms and independent agents continue to face serious competition from the direct and captive channels, the pressure’s on from every angle to compete for a piece of the insurable pie.

“Auto rates continue to be incredibly competitive, and people are significantly more price-sensitive to their auto insurance rates as compared to homeowners, umbrella, boat or even flood pricing,” says Laura Sherman, founding partner of Baldwin Krystyn Sherman Partners and an instructor with the National Alliance for the Certified Personal Risk Manager designation.

What can you do to up your sales game and convince your customers that price isn’t all that matters? Here are three ways to compete in personal auto:

1) Customize: A direct or captive agent may have a clear advantage when it comes to easing the insurance-buying process for consumers—they only have one market to keep straight. “But they certainly find themselves limited in choice, and that has always been the hallmark of the independent agent,” says Jeff Ogard, vice president, agency relations for Safeco Insurance.

He means more than just choice between companies. Many carriers—Safeco and Selective Insurance Company of America included—offer various tiers of personal lines coverage in order to cater to a wider spectrum of clientele.

“If you picture a continuum where on one extreme you have customers that only care about price and on the other extreme they only care about being well protected, obviously most people are going to fall somewhere in between,” Ogard explains. “And even those who really value being protected don’t want to pay more than they need to.”

Tiered personal lines coverage options give independent agents the ability to “match product offerings with the primary objective of their client,” Ogard says.

2) Educate: When clients asked Ogard, an independent agent for 13 years, why they don’t see advertising about the markets he represented, his response was simple: “I would just ask the consumer to consider the value of the independent agent.”

“When companies invest their dollars in the independent agent—through agency compensation, resources and other support—the agent can better serve the client, advocate for the client and translate what can be a confusing purchase,” Ogard points out. “In the end, that offers them a significant value.”

Translating the value independent agencies and carrier partners bring to the personal auto sale requires being proactive. “We try to educate our clients on the front end before we ever sell them on the policy,” Sherman says. “We show them multiple options and try to tell them we’re a resource for them, we work for them and we represent their interests with the insurers. That way, they understand we do represent a multitude of insurers, so if they ever are dissatisfied, that they’ll come back to us if they feel like have to shop on behalf of their families.”

But remember: Education efforts must be a continual process. “It’s not one and done,” says Sherman, who serves on several insurer councils, including the Advisory Board of the Council for Insuring Private Clients, AIG Private Client Group National Broker Council. “People get busy. They don’t remember what you’re telling them. Oftentimes it’s not until the fourth renewal that they say, ‘Oh I remember now, you told me this policy has agreed value.’ It can take time to sink in.”

That’s why Sherman contacts all her personal auto clients before every renewal. “We tell them ‘Hey, we’re in the process of reviewing and analyzing your program from a coverage, pricing and marketplace perspective,’” she says. “We also try to find out their specific client needs. Do they need extended hours because they can only call you at lunch or after work? Or is it that they want online access? A lot of times you can provide them with those tools by leaning on the insurer’s capabilities.”

3) Round: You’re probably already cross-selling most of your personal lines accounts. Maximize your account-rounding strategy wherever possible. If you don’t have the client’s homeowners business in addition to their auto, you’re missing out on a huge opportunity.

“Homeowners is where the risk is, it’s where the volatility is, it’s where the uncertainty is,” says Allen Anderson, senior vice president of personal lines at Selective. “And whether it’s a $150,000 home or a $3 million home, it’s your most important, most valuable asset. The independent agent channel is head and shoulders above the rest when it comes to the homeowners product offerings they have to offer their customers.”

Steer the conversation away from price by focusing on placing all personal lines coverage with one company. “If you have a loss that impacts both your auto and your home, you can deal with one adjuster and you can often pay one deductible for that type of claim,” Anderson says. “That isn’t going to happen if your auto is with one of the direct writers that’s focused solely on saving money.”

“You really need to oversee the home as well as the auto, the personal umbrella and all the ancillary lines,” agrees Ogard, who notes that cross-selling often gave him the opportunity to restructure personal lines coverage in a way that dramatically improved value. “Very often, we could go from a $100,000 cap on per-person liability to at least $1.5 million—and in many cases still save them premium dollars. To be a professional risk advisor, you can’t be just a part-time advisor.”

Jacquelyn Connelly is IA senior editor.