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Agency-Insurer Productivity The chicken and the egg Slow and steady education of clients produces results By Scott M. Primiano I still chuckle every time I hear the story, even though it’s as old as dirt. It’s the one about the chicken and the pig discussing their respective contributions to breakfast. The chicken boasts that the chickens contribute their eggs each morning. To which the pig replies, “Chicken, that’s mere involvement. We supply the bacon. That’s real commitment.” You may think I’m going to preach about the worthiness of the pig. Not so. I’m actually more inclined to admire the chickens. After all, the pigs die, and this is not a fitting moral to my twist on the story. The chickens, however, contribute consistently and proactively in measured amounts over time—and they prosper. It’s much more appealing to be the bird. Of course, if they fail to produce, the chickens go the way of the pig faster than you can order fries with your nuggets. So, staying out of the “Happy Meal” of the insurance industry is simply a matter of contributing something of value, evenly and proactively over time, right? I’m not so sure. The ongoing spate of bad press and the numbers of lawsuits coming from the Gulf States in the aftermath of Hurricane Katrina cause me great concern regarding our level of commitment. At press time, the courts have ruled that insurance carriers are not liable for damages caused by circumstances that are expressly excluded from the policies, mainly flood, storm surge, standing water, levee breaches, etc. Though this is a correct and somewhat obvious conclusion, it is not playing well in the minds of clients, the press, state legislatures, or Congress. Once again, we are the bad guys. Do a Google on “Katrina lawsuits” and you’ll see what I mean. How in the heck did this happen … again? For the past decade carriers, industry associations, and insurance commissioners have been combing over this exclusion language, grooming it and re-grooming it to make sure that it is crisp, clear, and easy to comprehend. The Feds have spent gobs of money marketing and building consumer awareness about flood insurance. Still, we discover, most haven’t gotten the message. The vast majority of Katrina victims did not have federal flood insurance. They were living on the coast, at or even below sea level—and no flood insurance. Who’s to blame? Who is to blame? Clients? Carriers? Agents? The Feds? The lawyers? The press? The economy? Not the banks or reputable mortgage companies—they are making a reasonably aggressive effort to require flood insurance on their deals. So, who’s the bad guy? None of the above. There are actually two bad guys at fault and they are things, not people. They are selling methods and buying habits. Yes indeed, these evil twins have created more chaos and misunderstandings in the market than any other segment of the industry possibly could. They have done so by patiently and shrewdly depersonalizing our connection with the market and commoditizing not just our products and services, but the entire insurance buying experience. In the name of advancement and efficiency, they have cut The People out of the profession and replaced them with processes, policies, and price. Needs-based selling, client consultation, and ongoing client education have steadily disappeared as a business practice while client, agent, and carrier apathy, ignorance, and mistrust have skyrocketed. Are we to give up and give in, or can we fix this mess? Yes we can fix it. Can one person—a producer, an underwriter, a CSR— make a difference? Can you? Yes they can and yes you can. In fact, the only fix that can be had—will be had—one person and one client at a time. The fix? Become a chicken. Selecting an insurance program Here’s how: According to Carolyn Gorman, vice president of the Insurance Information Institute, there are three common mistakes that home owners (and, I submit, small business owners) make when selecting an insurance program. The first one is not buying flood insurance. The second one is not insuring a home to its full replacement cost value. And third is not having a home inventory. (You can get free home inventory software for your clients through the Insurance Information Institute; www.iii.org.) I suggest adding a fourth mistake: failing to buy umbrella coverage. We can safely assume that the major reasons for these failures fall into three categories: Let’s handle these one at a time. “The client can’t afford it.” This response is often given as a rationale for mistakes one and two. That being said, there are many people on fixed and/or shrinking incomes for which this statement is a reality. The heartbreaking truth is that many people are struggling to keep their homes, let alone insure them properly. Still, we can help. Make sure they view their entire insurance program holistically and do the same with their cost of insurance. Rather than focus on a single line or on beating the current price, see if premium dollars can be reallocated from potentially overinsured lines and used to fill any gaps in coverage. Look also to premium financing options if appropriate and check with community groups for advice and assistance. We do it for utilities, food, and clothing; why not for the potential loss of home and property? If we think long and hard on this one, I’ll bet we can solve it. (I’d love for you to send me your thoughts on assistance ideas so that I can share them. Send them to scott@gopolestar.com). At the very least, do what you can. Make sure that your clients have a disaster recovery plan, have protected their important documents, and have inventoried their property. And while you are at it … bring by a smoke detector and a fresh battery. This is what the chicken would do—the best she can with what she has to work with. “The client doesn’t want it.” My wish is for all clients to someday recognize that their insurance program is like every other major purchase and many minor ones: You get what you pay for. It is our responsibility to provide all clients enough information to make an educated decision about their coverage and the risk they are willing to retain. To fulfill this responsibility, we must accurately assess each client’s total risk. How many times have you been asked to just quote an expiring policy, focusing only on what is insured, without also investigating what isn’t? Too often, I suspect. Many clients bristle at the mention of a complete insurance assessment, while others absolutely refuse. Still, we should stick to our guns. Pure price buyers spoil the integrity of the independent agency system and the carriers that support it. If by chance you are lucky enough to be in a position to turn away these clients and send them to the online quote shops, by all means do so (they’ll be back after their first claim); however, do so only after making a solid, sincere effort to inform and educate them. If you are in the business of writing this kind of business, thinking you’ll go back and round out the account later on, it’s time to take a hard look at your true capability. Do you really return to these clients with a structured method for coaching, supporting, and educating them about the other lines so they have enough information to make an educated decision? Or do you, like most agents, find yourself too busy to take anything other than a random and haphazard look at the other lines? If you are the former, I love you. If you are the latter, I love you, too, but I’ll love you a whole bunch more if you either formalize your program or account—round from the start. A quick look at your existing book will tell you which group you belong to. How many of your clients have flood and umbrella coverage? Enter the chicken. She knows she can produce only one egg at time and therefore doesn’t try for an entire year of production in one sitting. The same is true of you. Assume for a moment that clients forget everything you teach them. It would stand to reason that one discussion at time of sale or at time of renewal, one single attempt to inform and educate, would not be of lasting value. Since we already know that most clients learn about their insurance program only after a claim (“what does ‘deductible’ mean?”), let’s proceed down the path of forgetfulness. Our strategy for combating this condition is a logical one: If clients are forgetful, let’s keep reminding them. Not by pestering them for more business but by chickening them with creative, visible, and effective mailings, newsletters, e-mails, seminars, and the like that inform and educate. Our goal here is not to tell clients what to buy, but to tell them why to buy. Set up a program that “lays one out there” on a monthly basis, and your clients will be thinking about their insurance program and their needs once a month. “The client is ignorant or apathetic.” Want to be a hero, save the world, and sleep well? Find these clients and work with them. These poor folks are the way they are for one reason only: No one has ever taken the time to assess their needs and teach them how an insurance program should be designed to work. They know they have insurance, but they don’t know what they have or why they have it. Worse yet, they are completely unaware of what they don’t have and why they might need it. Wait, it can get even worse—many clients do not even know who their agent or company is. You know them when you meet them—they are the people who squint when they speak with you. They are guarded and skeptical. They view insurance as a necessary evil and believe everything bad that is written about us. You are insurance salesman Ned in “Groundhog Day,” and they cross the figurative street when they see you coming. They trust the fact that you can do the insurance thing … it’s you they don’t trust. They also represent the vast majority of insurance buyers in the market today. That’s bad news for those who want to quote policies and sell price. But it’s great news for chickens. These clients can and will learn to trust you and your recommendations; however, they will do so only after multiple demonstrations of your trustworthiness over time. After being educated by you, they will prefer to make a value buy rather than a price buy because this group inherently knows that you get what you pay for. They have been conditioned to believe that all agents are the same, all policies are the same, and that spot pricing is the only variable. They are this way because selling habits and buying practices have taught them to be this way. Chickens, we can un-teach them. Start by going out to meet them. Earn their trust by taking the time to get to know them and by offering a free and thorough review of their insurance program. They’ll still squint, so back up your commitment by helping them before they become clients. Become active in the community, give your best ideas away using newsletters, workshops, and seminars, and keep treating each one like a person rather than a policy. Go and find them, earn their trust, live long and prosper. So, my fellow chickens, can we say goodbye to the bad guy? * The author |
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