What is your agency doing to retain its current business? This is a very valuable question and the answer is even more valuable. First of all, you always need to be doing something to keep the current business that has already been written. This is easier said than done though, as the business climate has changed over last five to six years, moving from a soft market to a difficult, hard market. In our agency, our strategy has changed due to this cycle, and we are in the process of changing it once again.
Make The Situation Understandable
Our clients, just like everyone else throughout the country, are experiencing upwards of double digit increases in their premiums. Furthermore, many of these cases involve clients who have not filed claims. Obviously frustrated, these individuals call and ask why their premium has increased so drastically, even though they haven’t filed a claim. This question can be answered in several different ways, the first of which is due to all the claims over the past three years from weather patterns that have caused some serious storms and millions of dollars in claims. Now there are other reasons as well, but in most cases clients find it difficult to accept a double-digit premium increase. However, over the past ten years, increases overall have been in the low single digits and/ or none at all.
The Value In An Independent Insurance Agency
Getting back to our strategy discussion though, we need to look more closely at today’s market. The first strategy that I would recommend is to reach out and make contact with our current clients. Now some would argue against this idea by relating it to waking a sleeping giant, but I believe that in today’s market, this is a recipe for disaster. The second part of retention that I would recommend is once we begin to reach out to our current clients, we need to educate them and make sure, as an independent agency, that we are offering other options so they understand exactly what an independent agent can do for them. By offering them a second option, you’re allowing them to understand that they have more options for their insurance, and through sound explanation on our part, they will realize that these options are what is key. The third action I would recommend is discussing the insurance threshold for a higher deductible. In many cases I have found homeowners who have filed a few claims in the past three years, and these claim payouts were $1500 or less. These low payout claims are costing our other clients well-earned income because they are not being renewed with their present insurance company. Additionally, we have found that very few insurance companies are stepping in and writing policies for these clients who have had two or more claims in the past three years. These are the individuals who are experiencing premiums for three, four, even five times more of the cost the previous year. That’s why it is so critical for an independent insurance agency to first contact our current clients and secondly take the time to educate them on their coverage and/ or their deductibles.
Retention in many insurance agencies are decreasing because of the billions of dollars that is being spent by direct writers. Direct writers will continue this spending, so it is up to us, the independent agency, to put a strategy together to retain our business and with this, growth will occur. The only question I ask you to review is this: make sure that your growth is not only coming from higher premiums. When calculating your actual growth, make sure to back out the average increase of premiums in your area. Your agency’s future depends on the strategy you put together for your retention.