Communicating and guiding
It is by applying what we know to the customer’s best interests that earns our wages.
By Paul Martin, CIC, CPCU
There are a lot of stories being shared today of insurance customers becoming frustrated at the increases in premium they are seeing on renewals. It’s impacting both personal lines and commercial customers.
It’s clear that the insurance industry is going through an interesting period. Some insurance companies are struggling to underwrite their books to profitability.
There are many possible causes—in the economy, lower returns in the investment marketplace, reinsurance costs increasing, and increases in losses of certain types. None of this is unprecedented, but it may be new to the younger generation who have grown up during a long relatively stable period of carrier profitability.
To younger customer service professionals working in insurance agencies, there are some things they can do to better manage the process of helping the customer look for more affordable insurance protection while not sacrificing the insurance protection that they need.
So, here are five suggestions to help your customer shop for replacement insurance when facing an increase at renewal.
Don’t judge. When customers receive notification of their renewal premium, they may overact emotionally, but that perspective is one of an inexperienced insurance consumer.
As agents, we understand the market cycle. We hear what is impacting carrier results. We have enough information to digest the news that carriers don’t want to insure electric vehicles. But the customer doesn’t. The customer doesn’t know what we’ve heard: A minor fender bender involving an EV can cost the physical damage insurer over $40,000.
As customer service professionals, we need to be prepared to adjust our attitude and empathize with customers who don’t understand what is happening around them. We need to stop, breathe, and help. It starts with our attitude.
Let’s remember the role we play: to help, not to condescend. Our job is to educate the customers without needlessly confusing them.
Know your markets. Before you can begin to help the customer shop with replacement coverage, the account manager must have a firm understanding of the insurance markets that are available and their criteria for new business.
This isn’t just about standard pricing. It’s about discounts available, territories the carrier is comfortable writing, roofing limitations, updates, and companion policy discounts.
Consider the roof underwriting issue. Most agency consumers don’t understand that having a “30-year” composition shingle roof doesn’t mean that the roof will last for 30 years. Not even close. Most roofs are damaged by weather long before that time has passed.
In many parts of the country, once a certain number of years have passed, a roof on a house is one thunderstorm away from needing replacement. That’s a $10,000 to $20,000 loss from the perspective of the insurance company.
Who knows what a company’s modern algorithms are telling them about weather patterns and the impact on their bottom line in the long run?
Discounts can add up when placing new business—but maybe not. Sometimes the jump to a new company to save a little premium here or there may not compensate for the stability of an insurer over the long term. Are the discounts still available? Or, has the carrier changed things recently?
Here’s where the customer service representative’s experience with their carriers can pay off. If they know the carriers can be relied upon at claims time, great, but what if they are not sure? Doesn’t the customer deserve to benefit from the account manager’s experience without impugning the insurance company?
Perhaps the company offers military discounts; that’s great, but will it work in the long run for this customer?
Consider the roof underwriting issue. Most agency consumers don’t understand that having a “30-year” composition shingle roof doesn’t mean that the roof will last for 30 years.
What about the property? Insured properties change over time, both in personal and commercial lines. We mentioned the roof, but it’s more than that.
Has the use of the property changed? Have what were once serious hazards been eliminated? Think of a homeowner who was surcharged every year for having a trampoline. Is it still there? The kids are much older now. The trampoline is disassembled and rusting at the side of the house. Does that make a difference?
In a commercial setting, is what was once a serious hazard for the underwriter still there? Has property been sold? Have operations been eliminated?
What about the replacement value of the dwelling or the building? Has it changed dramatically? Inflation has no doubt raised values, but is the insurance company overdoing it on the increase? A discussion with the customer and the underwriter could change things.
In some markets, inflation may be increasing replacement expenses, but is that true everywhere? And consider, was the original replacement cost realistic in the area? In some parts of the country, replacement cost estimates take into account the cost of union wages. That can be inflated based upon the amount of work done on federal projects—very different from local market economics.
What else has changed? Families evolve. Children grow up and move on. Is the auto coverage designed as it should be for a family that is launching its children into adulthood away from home? Maybe it will increase the premium, but maybe it won’t.
A customer won’t know what is important about coverage or the premium they are charged. If the kids are still driving autos owned by Dad, perhaps their age and driving record could mean that they could see savings if insurance was purchased on their own.
Consider this: The insurance company doesn’t care who is paying the bill, just that the bill is paid. If grown children are better off getting their own insurance—whether auto insurance or a renter’s policy—the insurance company will cash the check from anyone.
A professional account manager will keep these details in mind.
Other considerations. There are other matters that the account manager must consider when shopping for a distressed client. Are there coverages that the customer no longer needs? Are there endorsements that were attached years ago to cover a college student and that are no longer relevant?
And what about deductibles? That can be tricky. Yes, premium savings can come with higher property deductibles, but a discussion with the insured may uncover the level of comfort they would have paying out certain amounts at the time of loss. The smart customer service professional will talk to the customer to find a common-sense solution.
Finally, consider the various packages that carriers may offer. Are they really delivering the protections the customer will value? They may. Or perhaps they are window dressing on what they have always had at a higher price.
Conclusion
Customer service representatives have an enormous responsibility during a volatile insurance market. They need to educate their customers without leading them. They need to be empathetic to the pressures the customers are feeling while showing wisdom guiding their decision-making.
In these times, it is best for the agency professional to show humility and confidence. The customer is under pressure. Feel it and empathize. Then offer the best solution options in the best interests of their family or their business.
It is by applying our knowledge to the customer’s best interests that earns our wages. Let’s never forget it.
The author
Paul Martin, CIC, CPCU, has over three decades of experience in the insurance and risk management industry.
