Rate increases; the most debilitating piece of the personal insurance puzzle

Incomplete draft from March 15, 2015.  I could write this post, with very little variation, this week as well. That is a massive failure.  Adding any more to it would be a waste of time.

 

The setting; a longtime customer is hit with double-digit rate increases two years in a row.  First year can be absorbed but by the second they have had enough.  The end result; YOU keep the customer.  That is the goal right?  Find a group of people who trust you and keep their business with you as long as possible.  What happens?  His $5500 premium drops to $4200.  Yes, scary.  In that he decides to save some money and drops an umbrella.  We also move a child onto their own.  So where is the fail?

Time for an annual review

Cleaning out some drafts I apparently never published, the paragraphs below(italics) were from February 2015.  Updates and comments in regular type.

Reviewing your insurance could be the most critical piece of personal finance.  Until the process can be automated it is on you and me to do it.  In this case, since it is just my insurance it is all on me.  I first wrote about this over five years ago.  If you searched the word “review”‘ on this site you would get several different takes.  Mostly coming from a variety of things that happened.  Here is a fresher look since my policies just renewed.  Yes, it actually happened just shy of three weeks ago and yes the paperwork has been on my desk since late December.

Just keep in touch

In the last week, a customer left, no news there, but I have donated to a fundraiser they did and do sort of know them. Yesterday, another customer came in with a gift for me and one of our team.  Actually very tasty olive oil.  The first one checks more “boxes” that most companies look for and spent at least twice as much with us.  The second spends half the amount of money and doesn’t “fit” common profiles of what a company wants.  Below was written May 2014 and has only been updated thanks to Grammarly.

4 updates in 1

Circa October 2010, none of these really need/deserve a full reboot and it looks like I made slight updates in May 2015

Post 1     Post 2   Post 3   Post 4

First, let us take a moment to thank Grammarly.  Like you, I’m busy and miss things.  Old posts had lots of silly, mostly lazy, mistakes.

Your updated disclaimer; I value time more than I did in October 2010 and, as my available time seems to diminish and priorities shift, even more than in May of 2015.  What does this mean?  Well, I am not sure that I held back then and the only stuff I hold back now is proprietary stuff.  Even that is shared with certain audiences.

What you can do that they can’t

Apparently, I forgot to hit publish in September 2013

 

Enough already, so sad that industry publications continue to write articles about direct writers (state farm, allstate, geico, liberty mutual, etc.) and how the independent agents are competing against them.  Are you really?  Maybe it is time for a solid look in the mirror.  While you are at it maybe you look at your business plan as well.

Some things to consider;

1. Do you really want their customers?  I like leftovers but my wife is a great chef.  Her leftovers are the only one’s I eat, I’m not interested in anyone else’s.  The lesson, focus on what you want instead of what they do not want.

Insurance and Time math…again

So I get a call from someone at a fairly large, established agency.  Had a few questions, was trying to “help” someone out.  Nice enough, but not necessary.  I appreciate the effort, I really do.

About two hours later I was on the phone with a new friend(some say client/customer) and was binding their policies.  Could be coincidence that this person was with the same agency that the other agent worked at…or maybe it isn’t.  Lets dive a little deeper;

When the system breaks

I lose some sleep and wake up thinking about yesterday’s “loss.”  Not really a loss more like a time where everything seems to match up but it just doesn’t.  Everything is there;

  • was referred by a trusted person(is there any better way)
  • has been with me a few years(yup, 98+% stay)
  • had actually met in person(shocking but happens)
  • helped with a non-insurance thing(helped get one a job)

So you go into the renewal time ready to follow the plan and this time it doesn’t work.  Factually the overall plan always works.  But, within that plan, sometimes the sub-plan doesn’t get the expected result.  Take the other set of circumstances;

Things for Insurance agents to consider this year….or any year

1. If you work as part of a larger agency; Are you builiding your business or someone elses?
2. What is really a “fair” split on commissions?
3. Why am I more focused on buying leads instead of cultivating referrals?
4. What is the household and PIF growth I am looking for this year?
5. Would you settle for only one option anywhere else in your life?  Than why are you only working with one company?
6. What is the last marketing book I read?
7. Am I regularly reading about marketing concepts or insurance marketing concepts?
8. Are you a part of someone else’s perpetuation plan or do you have your own?
9. How are you dealing with the changing consumer?
10.  The agent/broker has lots of control they are not using.  What about you?
11. Do you still believe in rate increases?  Are they really “a necessary evil”  or part of the business….
12.Are you taking advice and listening to people who have done things before or just people who write/talk about it?
13. If you are paying for some sort of label/qualfication is it really valid?  Was it earned?
14. Why are you not averaging at least half if not one referral from every household you work with?
15. Issuing an insurance policy(ies) is not enough.  What else are you doing for your customer?
Will you be surfing the wave of change that has started or being washed away by it?

Maybe the insurance industry is just a reflection of society

Reality is this; insurance companies are run by other members of our human species.  They are also influenced by their surroundings both human and inanimate.  They are influenced by many of the same ideals, both positive and negative as the rest of us.  There is a lot of talk about “disruption,” #insurtech, #fintech, and #bigdata.  The industry is “ripe” for change, blah, blah, blah.

Yes I have many of my own thoughts, heck it’s my blog so of course they are my thoughts.  This dawned on me the other day;

Maybe the insurance industry is just a reflection of society.  But how?  In what way(s)?

Insurance Agency Math

Let’s say it costs less than $20 to acquire a customer(it should)  and most times can just be measured as a fraction of fixed operating costs since there is no official advertising expense?  Is this really possible?  Yes,yes and yes!!!

Even if we broke down all your fixed costs, which are hopefully almost ” to the bone” and put some slight variables in you are hopefully at a very, very manageable daily cost.

Is being hired by one new household per day unreasonable?  NO NO NO.  If it is, time to change business.