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The attempted commoditization of property and casualty insurance is something that we have seen taking place more and more over recent years, especially in personal lines. Our clients are bombarded with an incredible amount of clever advertising messages saying that they can save money on their insurance in just a few minutes. It is more than just an innocent oversight that coverages and quality of service are nowhere to be seen in these massive marketing campaigns that push the lowest-priced insurance product.
Unfortunately, this commodification of the insurance industry, which was once considered to be noble and a truly lifesaving resource for people during times of heartache, resulted in insurance being considered by many to be a necessary evil, something not worth paying any more than the bare minimum.
Rising above the “Bare Minimum” as Agents
How have we, as insurance agents and professionals, met this challenge? Well for many, if not most of us, the marketing message did turn us into price sellers. We are trying to play the same game as the companies that started this, but we’re dealt a losing hand.
Selling on price only leads to our demise. Inevitably, we will have claims that go uncovered because of that coverage we chose not to offer, we make less money (because lower premium means lower commission), and we probably lose the client in the long term because when a low price is the only thing we can offer, there’s always someone who can beat us with a lower one.
So, how do we win the game? We win by not even playing. Don’t get down in the mud with the price sellers. We must rise above the “bare minimum” and return to selling value.
What Does “Selling Value” Mean in a Price Conscious World?
You might think: “Selling value” is a great, two-word phrase, but what does it mean in a price conscious world?
Educate your prospects and clients. Teach them why insurance is so important and why it’s worth investing in a good product that will protect them when tragedy strikes. Explain the claims process and how your agency can help. Teach them that it’s more than just paying for cracked windshields.
Whenever you go to an E&O prevention training, how does the instructor drive home the point? With stories! They tell you E&O horror stories so that you understand it’s not worth the risk. Why don’t we do the same thing?
Educate Your Customers with Real Life Examples: Teach and Tell
An agency helps guide customers so they make the best decisions. Teach your clients and back it up with a story that really illustrates why that extra coverage is worth it.
It was when I realized that this exact sales strategy had been so effective on me that I became such a believer in it. I was finally getting off my parents’ insurance as a young, single guy living with a few roommates, and I was talking with one friend, Richard, about not thinking I needed renter’s insurance because I don’t own enough stuff.
“If the house burns down, I’ll just replace my stuff,” I said. Richard then explained personal liability coverage and told me a true story about a young man, not a homeowner, who was downhill skiing and accidentally ran into a woman on the slopes while he was going at a high speed. This woman ended up in the hospital with significant medical bills, which led to a lawsuit.
Because this was a non-vehicular accident, his auto policy did nothing. This young man, just like me, did not think he needed renter’s insurance just to cover the stuff he could cram into his 10x10 room in the house he was sharing with friends. If only he had known that without renter’s insurance, there would be no recourse to pay any judgement against him for all of the injuries to this woman and to pay her medical expenses. If only he had known that renter’s insurance covers more than just the stuff in his closet. Then maybe at less than 30 years of age, he wouldn’t have had to declare bankruptcy. If only he had an agent who cared to be more than an order taker.
After Richard told me this story, I immediately realized how worth it a renter’s policy would be. The peace of mind alone was worth it. By the way, I’ve had several opportunities with family and friends who were renting a home and didn’t have renter’s insurance to explain personal liability and tell this story face to face.
Without fail, this “teach and tell” strategy has convinced each person to contact their agent about renter’s insurance. Why hadn’t their own agents already done this? That’s poor customer service!
Stop Selling and Losing on Price: Be a Different Kind of Agent
Tired of selling on price? Tired of losing on price? Then stop doing it. Start teaching your clients how insurance will protect them when some of the worst and least expected things can happen to them. Some of your clients won’t care. And some people don’t need to be your clients. Be a different kind of agency by being a different kind of agent. You’ll be amazed at the loyalty and the increase in sales, especially from more referrals, when your clients learn from you and feel like you are actually trying to protect them.
Brett Skinner, SIAA – Regional Vice President