Visitors to www.ebix.com, an insurance portal Web site, were asked what their top concern was in purchasing insurance. As many as 56% of respondents said it was paying too much. In a related poll, 47% said they shop for cheaper rates at each renewal period. As many as 66% said they use their current premium as a benchmark for buying insurance from a different source.
These polls make it seem as if consumers only care about low prices. However, other recent surveys have shown that price isn't quite so important to the consumer. The ebix poll results may only be applicable to a specific set of consumers. I've noticed that various e-retailers are conducting selective polling. The e-retailers probably know ahead of time the demographic of the people they are polling and the answers they're likely to give. They may also be phrasing the questions to elicit certain answers. This is very smart marketing because it makes for powerful advertising.
Do you really want customers who only care about price? I don't! Independent agencies don't represent the lowest priced carrier year after year. Also, these people are going to be shopping, so they'll probably go elsewhere before you can make a profit.
They don't care about coverages or claims service until it's too late and then they become your worst nightmare - a nightmare so bad, you'd rather have Freddie Krueger as a client. In fact, 90% of respondents said they don't want advice from their agent when it's time to renew their policies.
WHAT CAN WE LEARN?
First, independent agencies should avoid advertising in the Yellow Pages, doing phone quotes, and soliciting business from strangers over the Internet. Using the Internet for sales is another story.
Second, identify the people who want your advice and make sure you provide it. These are the valuable customers. They're not as numerous, but they're more profitable.
Third, almost all customers associate having a choice of companies with getting a good price. This is why Progressive's TV ads have been so successful. Their ads say, 'If you call Progressive for a quote, we'll quote you three other companies too and tell you who has the best rate - even if it's not Progressive!'
Having a choice of companies to work with explains why people are so drawn to buying insurance over the Web. They can get quotes from a bunch of companies and choose the lowest rate. Independent agencies have had this ability for a century and yet, when surveyed, fewer than half of independent agency customers said they knew their agents represented multiple companies. Independent agencies have failed to capitalize on the one benefit so many customers want.
Fourth, most consumers don't know there are differences among insurance companies other than price. While some customers will never care, others will be grateful to find out. Let your customers know about differences in claims practices and services.
Fifth, as difficult as it may be, teach your customers the importance of periodic coverage reviews. Accounts change with time, which usually results in inadequate insurance coverage. Think of the times customers have forgotten to tell you about tractors, cars, jewelry, art, buildings, and building additions. Let your clients know the risks associated with being inadequately covered.
Sixth, insurance is complex. I think 99% of consumers should be troubled about understanding what is or isn't covered in their policies. The people who think they don't need help buying insurance have either had lousy agents that didn't provide adequate advice (think about whether your CSRs and producers fall into this trap) or they're truly overconfident.
Independent agencies should treat their customers well by providing advice, discussing differences between companies, explaining which coverages are important, reading the fine print for them, and making sure they know they'll get quotes from multiple companies. Independent agencies should avoid a customer who's only looking for a low price.