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Assigned Risk Plans
Coverage for individuals who cannot obtain Auto insurance through regular channels, usually because of adverse driving records, find coverage in assigned risk plans, a residual auto insurance market that exists in every state. Insurers are assigned to write insurance for these individuals at higher prices, based on the amount of premiums they write in the conventional market in the respective state.
Insurance Industry News from ProgramBusiness.comDon’t Let the Market Disrupt Your Marketing
The long awaited hard market is like a good news/bad news story. The good news is higher prices and the eventual return to profitability for both agencies and carriers. The bad news is the credibility issue with clients and the time it takes to renew accounts. First you have to explain things like capacity and reinsurance and market cycles. Then you have to deliver renewals with premium increases of 50% or more – and that's if you can even find a market.
Your relationships with your clients are as at risk as they have ever been. After all it's our nature as humans to shoot the first messenger. The second messenger is usually perceived as an expert.
Most agencies I talk with tell me their commercial lines client retention is somewhere around 85% or 90%, which means that 10% or 15% of customers move their insurance coverage each year. Most insurance decision makers don't really understand or want to deal with the insurance product and as a result their motivation for shopping is usually to make sure what they have is okay – as opposed to actually wanting to make a change. However, when there is a crisis such as huge price increases and or non-availability of markets, those numbers change and a window of opportunity opens that provides the possibility of getting front of decision makers who usually aren't open to appointments.
That brings me back to the second messenger. Delivering the news of premium increases is going to be perceived much differently by non-clients than by clients. There is a tremendous opportunity to displace the incumbent agent that occurs when there is a shift in the market. Especially when prices rise. This is an ideal time to start a marketing effort that can get you in front of prospects who are truly interested in talking to you because their livelihood is at stake.
Our experience in the last year has seen a lot of activity from large national firms such as Brown & Brown and Gallagher. These firms have the infrastructure, service people and markets in place to take advantage of the current market conditions. As a result they are seeing growth in the number of clients in addition to the hard market premium increases.
Don't be lulled into a secure place because of large premium increases. It's critical to grow the number of clients you have because whatever growth a cyclic market gives it can just as easily take away. You might think you can get around to marketing when the market starts to soften. In fact it's much more difficult to displace an incumbent who has just delivered a price decrease. Now is the time to market because decision makers have a reason to see you now. All you have to do is know who to call and when to call them.
Start building a database of prospects today. Identify the SIC codes, counties, and minimum employee size of the businesses you want to target. Purge the business names you don't want called and then either hire an in-house staff or outsource the calling. The primary objective of the initial call is to set an appointment. The secondary objective is to identify the expiration date and the decision maker. Most decision makers want to deal with insurance issues at renewal time. The only objective of the second contact, at 90 days in advance of the x-date, is to set an appointment.
Start out small. For example, if you begin with 1,000 business names, you’ll likely wind up with 300 x-dates, 45 appointments and 10 sales. The remaining business names stay in a database for mining later. With practically no time investment on your part – or disruption of your current staff – you can see three or four new prospects each month and enjoy real growth that will protect you from the next turn of the market.
Amidst all of this the most important thing to remember is this: It’s difficult for everyone. If your clienClick for the whole story...