Life Guide For P/C Agencies Introduction

LIFE GUIDE FOR P/C AGENCIES

INTRODUCTION

This Guide has been created to help you, the P/C agent, establish a systematic, profitable marketing program for Life insurance and related products and services. It encompasses a wide variety of information and marketing tools that will be updated for you on a continuing basis.

This Guide has six major components that work together to help you profit from Life insurance and financial services sales:

1. Life Operation Options-your five major options for establishing a Life insurance operation in your P/C agency. This module provides a means for comparing these options so you can make an intelligent choice.
2. Marketing Plan-the information you need to determine which option can be made profitable in your agency, including cost and revenue analyses of various possible scenarios for your Life department.
3. Life Personnel-a comprehensive guide to recruiting, interviewing, compensating, training, supervising, and motivating your Life insurance department personnel, be they P/C staff who will be selling Life insurance as well or new people hired to sell Life insurance only.
4. Sales and Marketing-proven, fieldtested 'Action Steps' to the Life insurance sale. You'll learn what these steps are, and how to perform them, including the language to use over the phone and during presentations. Modules include: Overcoming Objections; The Dominant Needs Sale; Transition from the P/C to the Life Sale; and The Business Life Sale.
5. Sales Campaigns-specific coverage, prospecting, and marketing information for various popular lines of Life insurance. You'll get the sales strategies you need to launch a campaign to sell these products, sample sales letters that can be adapted for your agency (subject to any required carrier approval).
6. Idea Center-this is your section! It's a compilation of successful Life insurance marketing and sales ideas that come straight from the P/C agents who are out there selling. And feel free to send in your own successful samples! We welcome them.

WHY A LIFE DEPARTMENT?

So you have an idea that selling Life insurance in a P/C agency can be a profitable enterprise! And now you have to make your Life department work. Work it will, but work it will take. Establishing and maintaining a Life department isn't easy, and we'd like to reinforce your reasons for doing so, in case you falter along the way. If you begin to doubt, look back on these advantages:

Profit

• 'A Property/Casualty agency has a virtually unlimited opportunity to profit from selling Life insurance.' That's the conclusion of the Russell Miller, Inc. study, Life Insurance Marketing by Independent Agents. The Miller study found that a P/C agent 'can reasonably expect to earn income from Life insurance equal to 25% of P/C commissions'-and 16% of the agencies surveyed did better than that.
• According to the Life Insurance Fact Book, for every dollar your customers are spending on P/C coverages, they're spending $1.10 on Life insurance-plus another $.50 on Health products.
• Agency consultant Douglas Moat estimates that an independent agency can double its pretax net income by marketing Life.

A Stable Income Source

Life insurance and related products provide commissions and fees year-in and year-out, insulated from the swings of the underwriting cycle. In a soft market you can persuade your clients to use the money they've saved on P/C coverages to meet their Life insurance needs. And since Life commissions are front-end loaded, you'll end up with higher commission income than you lost on the P/C side.

A survey by the PIA on retention rates found that:

• If an agency writes either an Auto or Homeowners policy, the retention rate on that business at the end of ten years is only 10%.
• If the agency writes both the Auto and Homeowners coverage, the retention rate increases to 40%.
• If the agent adds a Life policy to the Auto and Homeowners coverage, retention jumps to 90%!

You're an insurance agent: a professional who assists individuals and businesses in protecting their personal and financial assets. Consumers see you as selling insurance, period, whether it's Property/Casualty, Life, or Health. By and large, they expect you to offer a complete line of products and services. A Lou Harris poll found that 56% of respondents preferred to buy all of their Personal insurance from one agent.

If you don't offer your customers Life insurance, your competitors will. Other agents and brokers, direct writers, captive agency companies, even stockbrokers-everybody wants to do Life business with your clients. There's no better way to isolate them from the competition than by offering them a comprehensive array of Life and related products.

As competitive pressures lead to a shakeout in the independent agency system, we'll see fewer-and larger-agencies doing business with fewer companies. Your P/C carriers will be developing special relationships with the agencies that give them what they need, including Life production. Even if your P/C companies don't offer Life products, they know that you're far more likely to develop and retain quality business if you've built an effective Life operation.

As an independent agent, you enjoy a unique set of advantages in marketing Life and related products:

1. Your relationship with your client base. You have better leads and more trust from your customers than any financial services organization- because you have developed an ongoing service relationship with them over the years. That means your customers will be willing to listen when you show them how you can meet their needs in the Life insurance area. Life insurance agents don't enjoy this advantage because once they've sold the product, there's very little service involved.
2. Your potential for total account selling. The wealth of data in your present files is invaluable for cross-selling Life and related products. This data includes everything from the birth dates of Personal Lines policyholders (for Life insurance) to Homeowners renewal dates (for Mortgage Guaranty or Mortgage Acceleration), to financial information on your Commercial Lines clients (for Business Life and Employee Benefits).
3. Low Overhead. Unlike most of your competitors, you already have the physical facilities and administrative structure to handle Life and related products, with only minimal changes-which this Agent's Guide can show you how to implement.
4. Your Community Image. Your clients see you as a local business-not a cog in a giant, impersonal financial services conglomerate. Although you market the products of large companies, you make local decisions, belong to local organizations, and contribute to the local economy.

Despite all of the above, many (perhaps most) P/C agents aren't taking advantage of the potential profits that marketing Life and related products entail. Some agents may feel that they don't have the time to do a professional job in this area. They may believe that they lack the technical knowledge to market Life insurance. Or they may see selling Life insurance as something foreign to their way of doing business-they may be convinced that the gap between P/C coverage (a demand product) and Life insurance (a non-demand product) can never be bridged.

We're convinced that it can be-because hundreds of P/C agencies are bridging that gap. So can you. This Guide will help you you develop, manage, and build a Life department as an ongoing (and growing) source of bottom-line profit for your agency. You don't have to be a CLU or a specialist in Life to create a quality Life operation. You do have to make a commitment in time, effort, and money and stick with it.

This Guide probably looks like a lot of material to digest. We suggest you attack it, and attack the formation of your Life insurance operation, by taking these steps: