Facts of Life about Personal Lines Insurance

Once upon a time, insurance buyers who wanted auto and homeowners policies found it necessary to visit their insurance agents (or be visited by them in their homes) in order to properly insure their property and liability. Once upon a time, you had to visit a travel agency to arrange for a vacation. Once upon a time, the airlines had local offices to permit travelers to purchase, pay for and pick up tickets.

Like most other fairy tales, the days of visiting airlines, travel agents OR INSURANCE AGENCIES are fast disappearing. Why? Airline tickets, vacation packages and personal insurance have become commodities, available in similar fashion from many vendors. Does that mean that personal lines agencies will soon be defunct? MAYBE, BUT NOT NECESSARILY. The determination of where people will get their airlines tickets, make vacation plans and buy personal lines insurance will depend on how easy it is for them to get the desired services. If you can make the quoting and purchase of auto or homeowners insurance as easy as getting reservations and tickets on an airline, your agency will succeed. If not, you will lose market share to those who make buying insurance as easy as possible.

I can get airline tickets by phone as easily from my travel agent as I can from the airline. And my travel agent GUARANTEES the lowest available rate. The best will even monitor the rate until flight time to determine if a lower rate becomes available. I will certainly continue to use my travel agent because, unlike the airline itself, he can check on all airlines and represents my interest as much as he does that of the airline. I could use the Internet, but, frankly, its too much trouble and my travel agent can do it faster and more efficiently – it’s his business, not mine.

Vacation packages are complex and changing. Yet, they too have become commodities. I use travel agents for this purpose, as well, because I assume they have access to all of the most recent vacation programs, while I would struggle to find them on-line.

Insurance agency operations are similar to both the ticket agent and the vacation planner. Insurance can be as simple as a competitive quote or as complex as designing a program to fit my special needs. The decision regarding what I need is MINE (not the insurance agent’s). The faster the agents can understand this, the faster they will write my insurance. Similarly, if I just want a ticket to Miami, my travel agent will not try to convince me to create an entire vacation package. Yes, I may need more or different coverage. Yes, I may even have been told that before and had forgotten (or disregarded the fact due to the extra cost). But, no, I neither need nor want a lecture from another agent about things that I should insure. All I want is a comparative quote with as little pain as possible. If I want more, your prompting questions will open the arena for me to ask and for you to provide more information. That is how tailored insurance programs (like vacation plans) can mature.

Here are some of the issues that will determine if you will survive the next ten years in the personal lines business.

1. Automation – The airline ticket industry has succeeded in making reservations and ticketing a totally painless and seamless process, regardless of what vehicle I choose to use for the service. The insurance companies are struggling to advance their automated systems for quoting and for policy generation. The insurance agency industry is also struggling to gain efficiencies in the handling of their personal lines. As we all know, while our intent is true and pure, the outcome of our efforts in this arena leave a great deal to be desired. The industry (carriers and automation vendors) have not made it easy to rate and update policies over different systems through a single, integrated program. The rating vendors, sometime owned by either insurance companies or by automation vendors, are complex and difficult and time consuming to use and to understand. While progress is being made and while some of these problems are out of the control of the individual agent, the survivors are becoming much more proficient and proactive in their automation efforts. For instance, some agencies are “live-testing” a variety of rating vendors each year to determine which are easiest to use. The employees, not the owners, decide the ease of use. They know that they (the employees) have the choice of moving to another vendor if they don’t get the service, speed and quality they need to accomplish their jobs. Agencies involved in personal lines must evaluate inter-connectivity between automated systems and their major carriers whenever they are looking to upgrade their system. Some systems are better than others with specific carriers and those relationships are fluid. You must test them each time you are ready to upgrade. Finally, it has become as important for your personal lines staff to understand and be competent on your system as it has always been for them to understand the insurance products. Unfortunately, systems training has always been a ‘hit-or-miss’ process that is learned “on the job” for most employees. But they only learn what they have to know to get by, not all they need to know to manage the system competently. The systems vendors are as guilty as are the agencies, but the agency owner must take final responsibility for this problem. Time and money are never set aside to train, re-train and refresh the systems knowledge of your employees. Once each year, every employee should be tested by the most competent systems person you have (on staff or from the vendor’s training group). The best test is to sit with the employee and watch them function for a day or two. The trainer will quickly identify soft areas that have been circumvented by “short-cuts” that often have serious ramifications elsewhere in the systems or customer service process. An alternative is to provide annual refresher training on both the rating system and on the agency automation system.

2. Once upon a time, we could boast that the telephone solicitors for the direct writers were not as knowledgeable as our agency staff with respect to asking the right questions and providing personal lines quotes. Every year, we (Agency Consulting Group, Inc.) blind call to a number of direct writers (and agency companies who have direct writing facilities) to get quotes on our homeowners and auto policies. You should try this – it would be an eye-opener.

Yes, there are still many direct response representatives who are still not as knowledgeable or sales-motivated as our independent agency owners. But there is a growing number who are as competent, professional and knowledgeable as any Personal Lines agency staff. Some are more knowledgeable than the independent agents because they are responsible for and understand (through systems programming) more states and coverage than the local agent. The last quote we solicited was from Liberty Mutual (direct). The young lady spent over an hour with us quoting personal auto, homeowners, umbrella and taking information to provide a manual quote on a condo rented to others. She was pleasant, knowledgeable and patient. She was able to ask us all of the necessary questions to both comparison-quote our policies and to assure that no needed coverage was omitted. She even asked about boats and airplanes! She was able to draw MVRs while I was on-line (it took about two minutes). How many of us can do that in our agencies?

Now, the knowledge gap may be widening in the other direction. Our friends in the direct-writing business have shared their training programs with us. Their Sales Representatives must, not only pass the licensing course, but must also take and pass refresher courses in each prevalent line of business annually. How many of us have continuing education requirements (outside of the State requirements)? This must become an area of concentration if you are to remain a viable personal lines market. Direct professional management must include monitoring occasional calls (for content), refresher courses in all lines of insurance and testing for knowledge every year. Keep the insurance skills honed if you want to stay in the game.

3. Sales skills and telephone skills have always been a ‘hit-or-miss’ proposition for insurance agency staffs. We have always hired for presumed insurance knowledge – rarely for sales and telephone personality. The direct writers are far ahead of independent insurance agencies in this arena. They have always recognized that if they couldn’t be physically in front of the client, they can’t risk losing a sale because of poor telephone skills or because the representative never asks for the close.

Since insurance agents used to visit clients and many still require clients to visit the agency, physical presence often supplanted sales skills in the sales process. If they were in your office (or, especially if you were in their home) the customers would more likely buy insurance unless they were motivated NOT TO BUY. On the other hand, telephone solicitors had to give the customers reasons they should buy because of the lack of intimacy in a call versus physical visits.

Few agencies have given their personal lines staff professional sales training. Even fewer spend regular time role-playing to familiarize the staff with all of the possible objections and the best responses to each. Yet that is exactly what needs to be done to make the staff comfortable with anything that may be thrown their way by prospects.

Even more shocking than a lack of sales skills are the abhorrent telephone skills that can be heard in many insurance agencies. The staff often treats a potential customer as an inconvenience and an interruption to their busy day. That attitude comes across loud and clear to the customer who is deciding whether to spend their insurance dollars at YOUR agency or elsewhere. What do you think they are going to do? If you have ever been frustrated by the number of calls that you get for quotes compared to the number of policies written, a part of the problem is certainly telephone attitude. Why do you think that independent agencies are successful with approximately 10% of their personal lines telephone quotes versus 40% for direct writers – price alone? I assure you that a rude, unpleasant representative with low rates will sell as well as a pleasant, helpful representative with moderate rates. Many of us have experienced the result of a pleasant, sales personality. Have you ever ended a sales situation actually WANTING to do business with the salesperson? Perhaps you felt bad if the sale could not be made. You may even have helped search for ways to convert the sale. Certainly you know the feeling of a customer telling you that he was going to stay with you even though the other agent was a little less. You know that something in your relationship transcended the sales efforts of the other producer. While this doesn’t work if the other agent offers 30% or more discounts, in many cases the money is secondary to the personality (if the difference is not huge).

The point is to provide professional telephone skills training to both management and to the line employees in your personal lines departments. Then, keep those skills honed by permitting monitoring of sales calls for evaluation purposes. Those messages you hear about a call potentially being monitored is not done to criticize employees. Those calls are monitored to identify and remedy any soft spots in the training program and to provide consistently high professional sales and telephone skills to all clients.

The generation of personal lines as a viable part of your agency will be dependent on three things, 1) a variety of markets in the mid-price range or below, 2) the ability of your staff to sell and close, and 3) the knowledge base of your staff and how they manage customers on the telephone. If you can not monitor or manage your personal lines staff’s telephone and sales skills, you may want to consider Agency Consulting Group, Inc.’s Sales Skills Test. For a small fee, we will call your personal lines department quarterly for a quote on a variety of personal insurance products. A report back to you each quarter will identify sales and technical skills gaps that need to be addressed in order to further develop your staff’s skills. Call our office at 1-800-779-2430 for more information about this service.


This program is designed to test the sales and telephone skills of insurance agency staff. The best way to accomplish this is to call for a quote and to monitor the sales process and record the strengths an weaknesses accordingly. We strongly urge agencies to develop this program in house. Agency Consulting Group, Inc. will teach owners and managers the monitoring devices that it uses if the agency would like to manage this process itself. Agency Consulting Group, Inc. can also train staff in the sales process and in significant telephone skills required to properly deal with personal lines customers.

Many agents have found it useful to have an objective, third-party conduct the monitoring sessions and evaluate the employees with management using the feedback reports to conduct specific or general training to hone the sales and/or telephone skills of the employees.

Agency Consulting Group, Inc. will call your agency four times each year (randomly) for quotes on auto, homeowners, and other personal lines of insurance. The areas tested are technical knowledge (does the employee know the coverages), sales skills (does the employee SELL the policies, or simply quote them) and telephone skills (does the employee manage the client properly).

Technical Skills – Qualified Agency Consulting Group, Inc. staff determine if the employee understands the coverages of both basic needs clients and the more complex accounts. This process aids the agency in its E&O defense through education.

Sales Skills – We will provide a number of challenges and objections to overcome and will critically analyze the employee’s ability to ask for and close the sale.

Telephone Skills – We will closely monitor the employee’s telephone attitude and demeanor as the call progresses. We will measure and report the telephone strengths and weaknesses encountered to permit the agency to institute further training as necessary.

Costs: Quarterly calls with reports to the agency owner will cost $500/year (prepaid). If multiple calls are desired (i.e. to test multiple or specific employees), the costs increase accordingly. If the agency owner prefers to administer the tests locally, Agency Consulting Group, Inc. will provide the screening tool used by us in our standard evaluation for $1,000 (unlimited use by the licensed agency only).

The SALES SKILLS TEST is provided by Agency Consulting Group, Inc. as a tool to help insurance agency principals to identify skills areas that require further training. It is not intended to be a personnel evaluation tool and should never be used as such.


Technical Knowledge

1. Ask the employee to explain what the policy does for you

A. Does the employee understand the basic product?

2. Ask the employee to explain the primary coverage provided?

A. Can the employee simply explain the coverages offered in the products?

3. Did the employee offer alternatives to coverages that may have choices for the client?

4. Did the employee ask about additional coverages that may be needed by the client?

5. How long did it take the employee to do the quote?

6. Did the employee have to call the client back?

7. Did the employee miss asking any questions that would have altered the quote or underwriting decision?

Sales Skills

1. Did the employee point out the benefits of purchasing insurance from the agency?

2. Did the employee differentiate the agency from direct writers?

3. Did the employee ever criticize the client’s incumbent agent or company or the competition?

4. Did the employee probe for the client’s “hot buttons”, those needs or specifics about which the client was particularly interested?

5. Did the employee explain and offer a variety of payment programs?

6. Did the employee ask how much the client was currently paying for the product (before offering the client the agency’s price)?

7. Did the employee try to close the sale? How often?

8. Did the employee respond well to objections?

Telephone Skills

1. Was the employee pleasant on the phone?

2. Was the employee smiling?

3. Did the employee ask probing and leading questions?

4. Did the employee permit the client to ask questions?

5. Did the employee express any negativity?

6. Was the employee sensitive to the needs of the client?

7. Was the employee helpful?

8. Did the employee make you want to buy from him/her?