Maximize Personal Lines Profit With Best Practices Tips

1. Make the commitment to be in Personal Lines. Convey to everyone in the agency that Personal Lines is an important source of revenue for the agency-not a line of business that must be provided as an accommodation. Work with your staff to develop a clear vision of success by defining your target markets, sales goals, strategies, and profit expectations. As the agency principal, demonstrate your commitment through your personal involvement in planning, allocation of resources, and holding everyone accountable for their part of the vision. Most important, be willing to think long-term. Success will not occur overnight.

2. Understand what it takes to satisfy your target market. The secret to Personal Lines profitability is to give customers everything they want, but nothing more than they're willing to pay for. Find out what your targeted customers expect of the agency and how they prioritize the importance of each expectation. You might discover that in your targeted group, professional advice ranks higher than lowest price. Understanding these expectations allows you to determine effectively the proper systems, procedures, products, and personnel needed to support your effort. An excellent resource to assist you in this effort is the IIAA's Quality Customer Service Idea Book. Based on Personal and small Commercial lines consumer research findings, the book defines the expectations of various customer segments and provides sample surveys, letters, and guidelines to help an agency understand and service its customer base.

3. Put the right people in place to do the job. Train and reward them appropriately. New sales development can be achieved through a dedicated outside producer, a designated inside salesperson, or an internal sales process using customer service representatives (CSRs). Regardless of the method you choose, remember that the person succeeding in a 'sales' role will probably have different aptitudes and characteristics than those fulfilling a 'service' role. This difference will require different approaches to training and rewards. Generally, the successful sales personality will be motivated by competition and financial reward. Utilize third-party screening or testing to find someone with a good fit for the sales role, then establish individual production goals, with compensation directly tied to sales.

If you ask CSRs to fill the sales role, make sure you train them appropriately. Detailed instructions or a list of questions to use when interacting with the customer are helpful. Use role-playing to practice what the person needs to say. Provide noncritical feedback, since the service personality generally has a strong need to please. But team objectives and rewards are better motivators because the CSR prefers being part of a team. One advantage to the team approach is that team members tend to push poor performers to do better or face being thrown out.

4. Streamline systems and procedures with the customer in mind. Try to make every customer contact as positive and easy for the customer as possible. Have your CSRs record every customer interaction over the course of one or two weeks to identify patterns. (Make it simple. Just create a list of interactions that are typical-for example, change requests or billing questions-and then have the CSR put a check next to the item each time it occurs. Add new items to the list as needed.) Use the tracking record to determine the most common customer interaction, and look for any nonproductive or negative elements associated with the interaction-for example, calling back to gather additional information. Develop or redesign any supporting procedures or processes to eliminate these elements, and insert any value-added features the customer would find beneficial. If you need help in redesigning work flows, the ACORD Power of Change seminar teaches a five-step process for doing so.

Because of the great number of variables, no standard or benchmark exists for the number of Personal Lines accounts a CSR should handle. But the agency can establish standards defining what it means for a CSR to be 'caught up' or current. For instance, an agency might require the processing of all renewals 60 days prior to the expiration date or premium-bearing endorsements the day of receipt. To confirm that standards are being met, incoming mail can be date stamped, prioritized (A = high, B = medium, C = low), and sorted by activity into color files. Audit activity files occasionally to see how current each CSR is. If the date stamps indicate that the CSR isn't current by agency standards, perhaps the CSR is being asked to handle too many policies or isn't being as productive as possible. Compare the number of policies (not accounts) being serviced with other CSRs' loads to determine what's appropriate. Often productivity can be improved with additional training, reinforcement of agency procedures, or a clarification of the agency's expectations. Departmental productivity can be improved by developing processing teams that divide work between sales transactions (cross-selling, upgrades, renewals, and premium-bearing endorsements) and processing. Or consider having all new business transactions booked by one CSR who then hands the account off to someone else for servicing.

5. Manage your Personal Lines carrier relationships. Start with the careful selection of company partners. Make sure the company has an appropriate fit with the agency-not just products and pricing that fit the agency's targeted client base, but companies that have similar visions, view the agency as a strategic partner, and will provide the service and support necessary to sustain a win-win partnership. Use the IIAA's Agency Joint Planning Tool to develop clear performance expectations for the agency and the carrier. Monitor and expect companies to keep their commitments to the agency, proactively working with company contacts when this isn't the case. Take on new markets only when the carrier is able to fill an unmet need.

By limiting the carriers to those that specifically meet a need, you can streamline operations, maximize bonus and profit-sharing arrangements, gain access to better products and pricing, secure additional help in advertising or other services and support, and qualify for better contracts. During the joint planning sessions with your Personal Lines companies, find out what it takes to qualify for the best agreements and then negotiate terms for the coming year based on realistic goals for new business growth and retention. Although you should monitor your production commitments and loss ratios throughout the year, be especially diligent during the last quarter and at year's end. Make sure submitted business gets booked in time to qualify for profit sharing. Try to get reserves reduced on larger claims that have been closed, if appropriate.

This article was originally published in The National Underwriter and is reprinted with permission. Shirley Lukens can be reached at Reagan Consulting, Inc., 7 Piedmont Center, Ste. 417, Atlanta, GA 30305, (404) 233-5545, fax (404) 237-5996.