There is no cost to discuss strategies with clients
Proactive/preventative systems often have a cost associated
with them, but when you discuss the alternative with your clients, they
might just change their mindset.
By Marc McNulty, CIC, CRM
Cheryl Koch and Mary Belka recently provided Rough Notes readers with a two-part series that addresses a challenge every agency is facing: unnecessary remarketing. They offered excellent strategies on how to retain—and possibly even grow—your book of business during this difficult hard market.
A quote that stuck out the most to me was from their August 2023 piece “Breaking free from unnecessary remarketing—chapter one: personal lines”: “If all carriers are increasing premiums, remarketing is pointless, much like rearranging deck chairs on the Titanic.”
While this is absolutely true, we all have clients that still expect us to “shop the market” every year, regardless of market conditions. However, as Cheryl and Mary noted, if we engage in slightly different messaging and shift our renewal conversations as a result, we can focus on more than just price.
For agents who are newer to the insurance industry, this may be a difficult task to undertake, as they will want to ensure they are doing everything they can in the eyes of their clients to earn their keep. This often means unnecessary remarketing (also known as practice quoting) to assure clients that they are getting the best deal.
There are other ways to demonstrate value, though. One such tactic involves discussing ways to proactively reduce personal risk—and potentially earn premium discounts as a result.
Carriers are changing mindsets
Speaking of proactive, many personal lines carriers are starting to provide greater rewards for proactive and preventive behaviors and/or systems that lead to reduced claims exposures. Homeowners insurance discounts for central station burglar and fire alarms have been around forever, but now you can find homeowners insurance discounts for permanently installed backup generators, temperature monitoring systems, leak detection/water shut-off systems, and explosive gas leak detection systems.
On the auto insurance side of things, almost every carrier is pushing telematics. While some auto insurance companies offer only a participation discount for signing up and utilizing the app-based service, others are aggressively rewarding good driving behavior with deep discounts.
What does this mean for you and your clients? Your conversations can shift from reactive (limits of insurance at the time of a loss) to proactive (how to help eliminate losses from occurring in the first place). And, of course, the discussion can include available discounts that your clients’ current carriers offer for implementing proactive processes.
The costs of not being proactive
In this crazy time of double-digit rate increases being the norm, conversations will inevitably focus on cost. Proactive/preventative systems often have a cost associated with them, but when you discuss the alternative, clients might just change their mindset.
For instance, identity theft coverage has been available for quite a while and many carriers have also introduced personal cyber coverage in recent years. However, this doesn’t mean your clients should forgo an identify theft prevention service (such as LifeLock) or anti-virus/anti-malware software (such as Norton, McAfee, Bitdefender, etc.). Remind your clients that their identity theft and cyber insurance coverages are reactive, meaning they only apply once the damage is done. However, for added peace of mind, they should implement their own proactive risk strategies to help reduce or eliminate the threats in the first place.
While these services cost money, do your clients want to go through the hassle of restoring their identity after it has been taken or going through steps to rectify a personal cyber breach? That’s up for them to decide, but at least you can do your part and suggest some risk mitigation processes that reduce their exposures.
While neither of these examples offers a homeowners insurance premium discount, the aforementioned permanently installed homeowner systems can most certainly have a positive impact on your clients’ homeowners insurance costs.
More and more carriers are offering discounts for leak detection/water shut-off systems and in some cases are partnering with vendors to provide homeowners these systems at a reduced cost. There’s good reason: Chubb noted in their 2022 Market Trends presentation that non-weather water losses account for 48% of their claims; the Insurance Information Institute ranks water damage and freezing as the third most frequent type of homeowners loss behind wind and hail and fire and lightning.
Similarly, temperature monitoring systems can assist with preventing freezing pipes, especially for any clients who travel to warmer climates during the winter months. Finally, back-up generators can prevent several types of losses, including water backup, food spoilage, and frozen pipes.
While your clients will be happy whenever their insurance programs appropriately respond to covered claims, most will tell you that they would have preferred not to experience the claim in the first place, especially if it leads to increased premiums—or worse—a non-renewal. However, I can assure you that all will be happy to accept any applicable discounts that are available for implementing proactive/preventive measures.
Check with your companies to see what discounts they offer and, depending on the number of carriers you represent, it may make sense to create a grid that shows what discounts are offered by carrier.
Not everything has a cost
The good news is that not all proactive/preventative measures come with a price tag. Let’s revisit telematics, for instance. Most auto insurance carriers offer this for free, and there can be sizeable discounts for those who drive safely and avoid hard braking, speeding, and mobile device usage while driving, and who demonstrate non-aggressive turning and acceleration.
And, of course, don’t forget to talk to your clients who have drivers in high school or college. Good student discounts are still alive and well, as are discounts for college students away at school without a vehicle (typically 100 miles or more).
A newer program I’ve seen involves homeowners policies written through a small mutual company we represent. They offer a free plug-in electrical sensor device that monitors electrical activity within homes for power quality, micro-arcs and other issues that can lead to electrical fires. While they don’t currently provide a premium discount for clients who use the device, I wouldn’t be surprised to see more carriers begin to offer similar devices along with corresponding premium discounts for the usage of them.
At the end of the day, there isn’t a cost for you to discuss proactive risk mitigation strategies—and the corresponding discounts that come with some of them. In fact, you may find that clients appreciate the change of topic and respect how you’re trying to help them by not selling them more insurance.
Marc McNulty, CIC, CRM, is a principal at The Uhl Agency in Dayton, Ohio. He divides his time among sales, marketing, technology and operational duties. You can reach Marc via email at firstname.lastname@example.org