ACG - Agency Consulting Group

The PIPELINE

A national monthly newsletter for agency principals dedicated to agency management topic

MOVING CUSTOMERS

Agents are prompted to move customers for two reasons, remarketing and book movement. Both imply work efforts beyond the normal transactions generated by the clients or carrier. But both are often necessary and the real reason that you have been selected as their agent by your customers.

Individual Re marketing:

Re marketing is done specifically to better serve the client from a pricing or coverage standpoint and is done based on the needs of the client. The two great mistakes made by most agencies when re marketing a customer is a) failure to communicate, and b) waiting until the customer’s complaint or prompting to do the re marketing.

Failure to Communicate – many agencies have established procedures to remarket accounts based on renewal pricing. If the cost to the client increases by some significant amount (determined by agency tolerance) the account is automatically re marketed with both price and other considerations taken into account. However, very few agencies tell the customer of the additional work being done on their behalf. Insurance customers are often suspect of the work effort of their incumbent agency after the sale. If they don’t hear from you when they get an indication that their insurance costs are rising they might succumb to the incessant direct writer advertising to test the waters. Even if you pay attention to the customers’ renewal costs you must tell them of your actions to show them that you are fulfilling their charter to you as their agent. This will likely stop them from shopping independently because you are doing the job for which they hired you – protecting their assets.

Waiting for the Customer Complaint to remarket – Once the customer believes that he must complain to get action from you, your role as their agent has diminished. You have diminished the emotional bank account – the trust relationship – that you may have built with your client. If you haven’t created a renewal procedure that checks renewal pricing (for increases above tolerance levels) as well as other changes in coverage, deductibles, etc. that changes the customer exposure, please do so this year. This is precisely why the client made you his agent – to protect his assets from exposure.

Book Transfers:

Book transfers can be done at the prompting of a carrier or because it’s the best thing to do for the clients of an agency. Either way, it’s time consuming and painful, especially when you are re-underwriting the book as you move it.

Two Ways to Move a Block of Business

1. CRASH AND BURN –

A. Clients are put in expiration date order. Any policy that is not subject to short rate penalties are moved for a client based on the date of the first policy expiration. If any short rate provisions are in place, that policy is withheld from movement and diary until it can be moved at renewal.

B. A grid is created for each policy for each carrier considered for re marketing indicating coverages provided (including endorsed coverages available), limits available, exclusions, deductibles and pricing placement of the carrier compared to the others for that policy type (general order with lowest, moderate and higher pricing tiers).

C. A procedure is established to review coverage, limits, deductibles and pricing for each policy for each client as their account rises to the top of the list in X-date order.

D. All available staff are enlisted to do the account reviews based on the desired speed of the re marketing.

i. Divide the total number of accounts being considered by the number of people or teams that will do the re marketing project.

ii Divide the accounts per person by the number of days allotted to the remarket (from 30 days to 365 days). Depending on the size of the book of business to be moved we often see total conversions in 90 to 120 days.

iii. The results are the number of accounts that must be done daily by each person/team to achieve the desired result of the Re marketing Project for the agency.

Overtime, if necessary, is used to accomplish the project. Some agencies hire or move staff to the project on a temporary basis in order to accomplish the goal – re marketing an entire book of business to the best product/carrier for each clients.

In cases in which a book of business is being moved from one carrier to another the time needed to accomplish that task may be calculated and may be assisted by carrier representatives or may be paid for by a special fund from the carrier to do so for the agency. In those cases, the agency should negotiate with the carrier to re-underwrite each policy as a renewal (since it has been a renewal to the agency) instead of as new business. In this way there is a minimum of disturbance to clients who may not qualify as new business but would be retained by the carrier if they were a long term client.

2. Staged conversion at renewal – the least impactful way of moving a book of business is for each policy to be moved (to a single carrier to re marketed to the best carrier available to the agency) at the policy renewal. This implies that each service representative, marketer or service team will do their normal work each day plus one day’s worth of renewals (scheduled 90 days from the current date). Obviously not all renewal underwriting will be done for every client every day but many will be normally processed and the others will be integrated into the normal work day for processing to conclusion.

Work with the carrier underwriters if a ‘block move’ to accommodate renewal underwriting for the new carrier and raise specific issues if coverage, limits, deductibles or pricing is different in the new policies than in the old that negatively impact the customer.

Communicate with the client – There are ways to communicating to clients that you wish to re market their accounts that are truly positive and customer oriented. Our studies have proven that most clients believe that you are reviewing and re marketing their accounts annually, anyway (which isn’t true in most agencies). By informing them that you intend to review their account this year gives them the ability to tell you of their wishes if they have loyalty to their existing carrier. Even if they don’t respond, you are telling them that you are doing your job for them.

If you intend to move a block of business from one carrier to another state the benefits of the new carrier to the clients and tell them that you will address each coverage, limit, deductible and pricing and will advise them of the best service and product for them. And then do exactly that – inform the client before the conversion of your decision and allow them the time to ‘opt-out’ by phone or email if they don’t want the benefits afforded by the new program.

Moving business, individually or by block, is not pleasant and is expensive in both time and cost. But it is sometimes a necessary activity to properly service your clients. Treat it positively and both they and your carriers will appreciate your efforts.