Reduce client services to better compete
Customer loyalty, in insurance and elsewhere, is an oxymoron. Buyers shift allegiances faster than a [reader: fill in your own metaphor]. Still, even in these increasingly cutthroat times, most property/casualty agencies hold on to 80 percent or more of their client base. But, what happens tomorrow? Unfortunately, the future promises less loyalty, not more. So in response, agents must reconsider how they serve their increasingly fast-footed clientele.
The place to start is by recognizing that quality client service isn’t important to every personal and small commercial prospect or insured. Besides, what is quality service, really? If it’s enough to keep the majority of your insureds on the books, then is the quality adequate? There is no absolute standard to compare among agents and carriers, while price is a standard by definition. So, how do you determine who values your services? Rapt personal attention simply is not of paramount importance to a growing the number of insurance buyers. [See my column “Attract high-end sales with personal insurance shoppers,” Nov. 20, 2006.]
Many individuals and small business owners gladly exchange higher-priced local insurance services for a perceived lower premium from national marketers. Why? One reason is because independent agencies, as well as some captives and exclusives, have been portrayed as middlemen who add only premium, but not value. Consequently, agents must evaluate which of their accounts deserve attentive local service and which warrant something less. All insureds are not equal. Don’t waste resources on those who value only the bottom line.
Reduce selected services
Actively look for ways to reduce agency services to consumers and small businesses who don’t appreciate their import. Naturally, you can’t just stop providing them. There are legal and ethical considerations. Make any permitted cutbacks gradually, over time. Initiate the process by reviewing the client services that you routinely provide. Some, you will discover, are outdated or ineffective, and should be eliminated or cut back; others have some value but are costly to administer.
Here are a few examples. Look at the venerable personal lines renewal form letter. In theory, it seems helpful. But in practice, many go unread because they serve the agency’s needs (protecting against an E&O claim) more than they inform the insured. Furthermore, this correspondence is costly if it is sent to every client annually, for every policy on the books.
Another potentially expendable activity is telephoning personal lines clients at renewal times. These calls are time-consuming and unprofitable, as the effort frequently results in complaint venting, renew-as-is instructions, or worse: coverage and limit reductions.
Both of these 20th century renewal actions, still performed by more agencies than you may think, can be supplanted by e-mails, electronic newsletters, Web-based information, or more effective written communications.
Another questionable client service is explaining, in writing, minor premium increases. Personal lines clients are seldom surprised when their renewal premium rises by a modest percentage. Most probably don’t even notice the change. So, why bring it to their attention, unless the action is legally required. Also, make sure that your staff refers any service center clients who call your office for assistance to the 800# (or transfer them).
Make up for some or all of your cutbacks by emulating what the major marketers do: provide as many 24/7 services online as your budget allows. For instance, explore the viability of adding real-time rating, payment and claim status inquiries, ID-card and certificate of insurance issuance plus other self-service Internet-based customer care options to your site. Artizan’s www.CSR24.com is a good place to start your search.
Conclusion
Consumerism, skepticism, and technology have fueled rapid growth in the direct marketing of insurance policies. To better compete with the top players, absorb selected qualities and business habits of these low-cost market leaders. Reducing services to some insureds is just the beginning, but an important first step. Appreciate everyone, but lavish attention only on clients who place a premium on it. These are the people who reward your extra efforts with loyalty and referrals. Use the time and resources that your changes free up to bring in new business. Position yourself for the future before the competitive pressure becomes too great.