KEEPING ACCOUNTS
You work for maximum efficiency. You spend a lot of effort on improving service and getting leads, and you streamline your time by discarding dead-end business, such as cancellations. But are cancellations really a dead letter? Are you tossing out business along with the trash?
Since it's been proven, time and again, that keeping an account is far less expensive than finding a new one, it helps to look at your daily cancellation procedures from the standpoint of retention. Retention focuses on one question: 'Can we keep the account?'-or, more usefully, 'How can we keep the account?' But before you can answer that question, you must ask yourself who is canceling the account, and why.
Reasons The Agency Cancels:
- can't get along with customer
- failed to receive payment
An agency that chooses to cancel an account had better have a very strong reason for doing so. Usually, there's no reason for trying to retain an account that the agency is canceling. The client must have done something pretty awful for the agency to want to cancel in the first place.
Reasons The Company Cancels:
- changed underwriting criteria
- endured too many losses
- failed to receive payment
When a company cancels a policy, you should evaluate why. If that company's underwriting criteria has changed, perhaps another carrier represented in your agency will be willing to insure the risk. Talk to the producer or, if you're the producer or it's a house account, review the underwriting information. Go over the risk information you have on record with your client. Call your other companies to explore the possibility of insuring with them. Basically, you will be re-underwriting and re-marketing the account.
Before submitting a proposed applicant, call the underwriter(s) of your other companies to determine the carriers' willingness and ability to handle the account.
If the insurer is canceling because of losses, ask yourself whether the agency has done all it can to help the client be a better (safer) risk for the company. Might it be worthwhile to develop a more effective risk-management program with the client?
Also determine whether coverage can be modified to save the account. Perhaps high deductibles or additional limitations can be endorsed to reduce the company's exposure while retaining the account in the agency. When nonpayment of premium is the reason for cancellation, it's important to identify whether you've made appropriate payment plan options and schedules available to the insured. Perhaps their business or household budget is such that the premium due date(s) coincide with sizable tax payments or other major bills. Rather than simply allowing the account to go by the wayside, talk to the client. Determine if premium financing due dates at another time of the year or smaller but more regular payments would be easier for them to handle.
Now for a look at the biggest reason of all for losing an account: customer cancellation (by design or default).
Reasons The Insured Cancels:
- consolidated policies
- found a better price elsewhere
- went out of business
- moved from the area
- sold the home (or car, business, building, etc.)
- failed to pay installment or renewal premium
- became dissatisfied with company
- became dissatisfied with agency
- family member went into insurance industry
- died
A customer might cancel because he or she is consolidating accounts -- for instance, when businesses merge (in Commercial Lines) or when two clients marry (in Personal Lines). The bad news is that you will have a cancellation to process; the good news is that the account can be saved! Be sure to re-underwrite the new combined risk to determine which type of policy will best protect your client(s).
Price might be an issue if you used it as your selling point in the first place. An important lesson here is to modify your sales process to incorporate finding a reason (or two or three) besides price that will encourage a prospect to do business with your agency. What are your service variables? What do you offer that your competitors don't? If your agency has no answers to these questions,start building some -- this will make accounts more cancellation-proof in the long run.
If an account goes out of business, you can't do much about it. You can, however, contact customers periodically to see if they have any new endeavors in the works.
If an account moves from the old neighborhood (but stays in the geographic area you work in), make every attempt to insure the new location. The customer who moves out of your region can be asked to refer someone they're leaving behind who might be interested in insuring with your agency or a company you represent.
If the client has sold his or her home, car, business, building, or whatever, ask to be introduced to the new owner(s) so you have an opportunity to provide protection for them. Also, remain in contact with the previous owner to insure any new purchases.
When a customer cancels a policy after failing to make a payment, find out whether the customer simply missed the premium due date or there is some other reason they didn't pay. It's usually not because the customer didn't have the money. Several years ago, the standard procedure was to give up on late payers. Not anymore. Because it costs so much more to write a new account than to save an existing one, you should write and/or call these customers. Don't keep coddling customers - - but until they're used to a company's direct billing procedure, you might want to stay in closer contact with them about premium payment.
You might wish to discuss a customer's financial situation thoroughly to determine the most appropriate premium payment plan. Many companies offer payment options, so why not make them available to your clients? There are also several insurance specialty financing companies willing to fund a client's premium. Check with them on options when costs are unacceptable to your customers.
Dissatisfaction with the company or the agency might be a valid reason for clients' cancellation. Have the CSR find out exactly what the company or agency did or did not do to drive them away. More specifically, find out if a particular person or procedure caused the dissatisfaction. Once a true problem has been identified, steps can be taken to improve the situation so it doesn't happen again or, worse, become a chronic problem.
If you discover that a particular person caused the customer's dissatisfaction, it's important to identify the offending behavior or action. Perhaps a different approach would have avoided the problem. Maybe another person on the staff can get along better with the type of customer you face losing. Who says the alphabet assignment split is the best way to divide customer service anyway?
If a family member went into insurance, there's probably not a lot you can do except to stay in touch with the client and to be sure the new agent (and agency) offers the same value to your customer as you do.
If a client dies, keep in touch with the heirs.
Conclusion
Retaining canceled or non-renewed customers takes an extra effort, but the effort can be readily adapted to daily CSR and producer duties. Keep an eye out for those cancellations. If you can't do anything about it at the moment, make a note to yourself to do something -- a follow-up phone call or letter, an internal investigation, or any of the other procedures described in this article-- before the day is out.
At first, this might seem like a lot to keep you, your producers, and CSRs busy, but be patient. After the novelty of these procedures wears off, you (and they) will be more comfortable performing them as different activities find their way into different time slots. At that point, these new procedures will seem inevitable and right.