Insurance customer retention can improve with more than one carrier

Were you ever a captive agent before working with an independent insurance agency? Independent insurance agents have the freedom to work with any carrier they want, yet many limit themselves to just a few options.

Having limited options will lower results!

Let’s talk about results. I hear stories about direct writers having a quote to bind percentage less than 20% (1:5 ratio) and wonder how that can be profitable when the average independent agencies have a 40-50% close rate (@ 1:2 ratio).

Limited options can also translate into lower yearly average retention rate, requiring more energy to replace lost revenue each year before you have the chance to grow. Retaining customers is more important than ever, and to get that profitable customer loyalty you need to give the best customer service and be able to offer the insurance products your clients need (health insurance, life insurance, or whatever your specialty is).

The changing insurance landscape is unpredictable!

Carriers are constantly looking for ways to remain profitable and relevant in the long term. This means that rates must be increased or reduced to produce reasonable profitability. Carriers routinely review coverage forms, the legal environment or loss conditions affecting profitability, and will make the adjustments necessary to address a changing insurance climate.

When you manage a client with a single carrier, these changes have a direct and meaningful impact on your operations and customer experience. Unless you have multiple carriers in which to place a client, when a carrier makes a rate or policy form change, you will be at the mercy of your carrier - and your existing customers may suffer financially for decisions out of your control.

Insurance is a relationship business!

When I worked for a direct writer, it was frustrating to spend the time I did making phone calls and building up the prospect/clients trust... and then not being able to help them due to my carrier limitations. Moving to the independent agency model, I was better equipped to build relationships with a high degree of confidence that I could earn a prospect’s business through multiple carrier solutions to meet their specific expectations. I also substantially improved my policy issuance as well as retention percentages. A prospect will work with you and a client will stay with you if they trust you. Although, they will not do business with you if you cannot offer a reasonable solution to address their needs.

Not all carriers have a right solution

Carrier appointments come with some level of production expectations, and it is critical that you know who you will be targeting or prospecting with your marketing. Selecting the right carrier for you or your clients cannot be about price alone - you must work on improving customer satisfaction, for example with a smooth onboarding process, and focus on your retention strategies beyond price. If your sole sales pitch is that you will save them money, when a carrier pricing conditions change, you will lose that client.

Relationships with carriers must be beneficial to all parties to make them successful. It is important to have a marketing plan in place that addresses your expected premium growth goals and how you expect to reach those goals through marketing your agency.

Increase your options and improve your profitability

Selecting the right number of direct carrier appointments that is aligned with your business goals will improve your agency's binding and retention percentages. It will also increase your productivity, profitability and agency value.

The name of the game is to build revenue in your agency annually - retain as many of your existing customers as you can, and then add more through word of mouth and smart marketing. But keep in mind that insurance customer retention is key to survival and success in our current market. Simply working each year to replace business that you have lost, due to carrier pricing or other limitations, is not a sustainable business model.

Being in control and independent to make your own business decisions means having viable options that meet your clients expectations and not relegating your financial future to any one entity. You are not captive, you are independent! Make the most of it!