The Insurance Price Wars


The market is soft, hard or weird depending upon the geographic marketplace in which your business resides. We have noticed that the companies are once again providing substantial price leeway on selected product lines in order to gain a market share. However, “Price Chopping” is always expensive to the agents – sometimes a double whammy. The company may offer to trim premiums to get or save an account, thereby lowering the net commissions available to the producer and graciously offers to trim the commission rate as well. That queer animal “Boobus Agentus” still believes that accepting a lower commission rate on a lower premium base is “better than nothing.” Those agents either feel that their services are worth next to nothing or, like a famous west coast auto dealer, they claim they can “lose a little on every sale but makes it up in volume.”

The smart agent recognizes his cost of doing business and the value of the services he can provide to his clients. He refuses to take commission cuts and will begin advertising the Value of Quality aspects of his business. Since most of the current rash of advertising extols the message, “Let us quote your insurance – we can write it cheaper,” the Value of Quality agent stresses the “You Get What You Pay For” theory. The exhibit below illustrates an advertising piece we created for a client and this seems to work exceptionally well, to both maintain current clients and attract new ones. Try using a similar approach and let us know how you fare.