In many agencies, 'small' Commercial accounts get over-serviced while larger accounts are under-serviced because both are treated the same. Small accounts take the same amount of paperwork and processing time as larger accounts yet produce less revenue. They're more numerous and require more time keeping track of expiration dates.
Because producers make less commission on small accounts, they usually leave them to the care of customer service representatives (CSRs). It's not a case of being unable to see the forest for the trees-it's a case of knowing how to care for select trees in the forest.
With systematic, specialized care, CSRs can ensure that these 'select trees' are not a drain on the agency's profitability. To make a a profit on small accounts, CSRs must isolate and care for them properly. The two steps involved are identification and efficient management.
IDENTIFICATION
Identification includes finding the criteria by which to isolate and pinpoint small accounts.
1. First, the agency needs to define precisely what a 'small' account is, based on premium generated or commission income as the financial measurement. (Large agencies use income or commissions as financial criteria rather than written premium or volume.)
2. Then calculate the amount of income used to define the small account- for example, less than $500 in commissions or less than $2,000 commission. This identification depends on the makeup of your agency's Commercial Lines book of business.
In many agencies, Business Owner policy and monoline coverage accounts generating less than $500 in commission or $3,500 in premium are considered 'small.' A listing of these accounts should be generated by the agency's accounting/database reporting procedure, in descending order by size of account, in commission income or premium volume.
3. Next, determine the percentage of revenue that the identified small accounts generate. As defined above, small accounts usually comprise 35% to 50% of an agency's Commercial clients while typically generating only 5% to 15% of total Property/Casualty (P/C) commissions. If this average applies to the book of business in your agency, it will probably be worthwhile to focus specifically on streamlining small account service and handling procedures. (If the percentage is less than 5% of the agency's revenue, it may not be time- and cost-efficient to establish separate handling procedures.)
EFFICIENT MANAGEMENT
Efficient management of small accounts will enhance the accounts' profitability to an agency while increasing a CSR's personal productivity. Though there are several suggested methods for implementing small account management, the focus of this article will be on establishing a small accounts team.
The small accounts unit or team should consist of an internal producer (an experienced customer service agent [CSA] or a recently hired producer), a CSR, and an administrative assistant. This team can improve profitability of small accounts by handling both the production and the servicing of the accounts within the unit. Modeled after the Personal Lines sales and servicing process, the small Commercial accounts can maximize service efficiencies while developing and expanding the accounts.
Some profit-enhancing advantages of creating a special small Commercial accounts team include:
- an introduction and transition by one team member to the other team members once the account is written so that all are familiar with any idiosyncrasies.
- minimal involvement by any producer compensated with a commission percentage of 35% or more.
- policies issued on a direct-bill basis, which saves time and money.
- working with a limited number of companies (no more than three) who'll do an excellent job for these accounts.
- maintaining authority to nonrenew (1) an account not connected to a large account, (2) an account with a late or nonpay problem, or (3) one that has no potential for future development.
- establishing regular service contacts with these accounts to help them become big accounts.
- automating as much of the database information flow as possible.
- providing a built-in process for review and referral requests with each account.
Each member of the team handles his or her portion of the service and handling process. By identifying, organizing, and caring for small Commercial accounts-and leaving larger accounts to producers-the agency maximizes the talents of its work force and gains a greater return on its investment of time on these accounts.
Please refer to the supplementary materials for examples of two letters - the Client Relationship Building Letter and New Style Endorsement Letter - that are useful for managing small Commercial accounts.
May 1, [YEAR]
Mr. John Bates
11 Butter Lane
Salem, Massachusetts 02234
Dear John:
You are very important to us and I wanted to let you know that we appreciate having you as a customer of our agency. I am writing you today to say, quite simply:
- If you have complaints about our service, we'd like you to let us know about them.
- If you don't have any complaints about our service, we'd like you to let our friends, relatives and associates know... about us, that is!
Here's how: I have enclosed two easy to complete forms. The first one (printed on the yellow paper) is a customer survey. Please be frank in expressing your opinions - we can only improve with your honest feedback.
The second one is a recommendation form. If there is anybody you think we might be able to help with a 'second opinion' on their current policy coverages and costs - whether for their business insurance or for their personal insurance - we'd love to know about them!
I've enclosed a postage paid, preaddressed envelope for your convenience. Thanks again for being such a valued customer of the All American Insurance Agency.
Sincerely,
[NAME]
President
All American Insurance Agency
HOW DO YOU FEEL ABOUT THE SERVICE YOU RECEIVE FROM THE ALL AMERICAN INSURANCE AGENCY?
Please rank us on the eight points listed below. If you have additional comments you would like to make, we welcome you to do so on the back of the page.
Please use the following scoring system:
- 1....................Disappointing
- 2....................Less Than Expected
- 3....................Average
- 4....................Better Than Expected
- 5....................Always Terrific
1. Are we courteous when we call you on the phone or when you come to see us in our office?
2. Do we take enough time with you and do we explain things thoroughly enough for you to understand what coverages you have?
3. Have we handled your claims (if you have had any) in a timely and fair manner?
4. Are you secure in the knowledge that we have provided you with best coverage for you needs at the best price?
5. Do our people come across to you as competent, professional and concerned with you as an individual?
6. Do you feel that you receive helpful insurance information and tips from our agency on a regular basis?
7. Have we consistently done what you wanted us to do when you've had a specific request, change or billing concern?
8. Can we be counted on to give you choices and suggest alternatives when you come to us with new or different insurance concerns?
Thank You!!
Recommendation From:_______________________________ (Your Name)
I think that the following people might like to hear from your agency for a 'second opinion' on their current policy coverages and costs:
1. Name:___________________________________________
Street:______________________________________________
City:_______________________________________________
State:____________________ZIP:_______________________
Phone:_____________________________________________
If this person would be interested in business insurance, what kind of business is he/she in? _________________________________________________________________________
2. Name:___________________________________________
Street:______________________________________________
City:_______________________________________________
State________________ZIP:____________________________
Phone:______________________________________________
If this person would be interested in business insurance, what kind of business is he/she in? ________________________________________________________________________
3. Name:___________________________________________
Street:______________________________________________
City:_______________________________________________
State:____________________ZIP:_______________________
Phone:_____________________________________________
If this person would be interested in business insurance, what kind of business is he/she in? _________________________________________________________________________
NEW ENDORSEMENT STYLE LETTER
December 7, [YEAR]
John Bates
11 Butter Lane
Salem, Massachusetts 02134
Dear Norman,
Here's the change to your policy.
We hope you find your coverage is spelled out in 'plain' review and highlight with you exactly what is covered and what is not.
I'll be in touch with you periodically over the coming year to make sure we're doing everything possible to serve your insurance needs.
Sincerely yours,
[NAME]