Claim Economics

Had a call about a claim this weekend.  No big deal, part of the business.  An awful, annoying and very, very broken piece of the business but part of it.  So the usual;
Is everybody ok?  Yes
What happen?  other person hit me, admitted fault and police were called **REAL good news but must be handled properly**
Then what?  Call the other company, not yours….
Etc. etc. More posts here and here and here

Here is what I thought about though.  Both companies have the money ” in the bank” to pay this claim.  So what do they lose?  Well they plan on this anyhow and the reality is, if done correctly, it is really just a marketing activity.  This is your chance to jump over price and cement a relationship but instead both the paying and the non-paying company will likely negatively impact both the person who is at fault and who isn’t.

Baffled by the economics of this since we have already committed a lot of money to an underwriting philosophy that made this customer one that we want.
Baffled at why an industry would allow the occurrence of one claim where a person was deemed completely not at fault to override several dozen other factors.
But, then again, this is likely just another example of how having clear goals, appreciating humans and allowing morals, ethics and philosophy to blend with technology is really just the next frontier.

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?

Are you for sale?

So it is apparent to most everyone that Mergers and Acquisitions are on the rise in the insurance world.  Soon enough they will have a MASSIVE impact on my piece of it; the independent broker channel.  I’m sure in some pockets it has already started.  Fact is the industry and the American public will be better off with less independent agencies.  Many existing brokers have not ” kept up with the times..” so to speak which reduces the overall customer experience, gives the insurance companies to much power(which most are not using wisely) , reduces the ease to entry into the business and creates where we are today; Non insurance people entering to take over.

So I have been semi-actively looking for agents to buy/merge/acquihire for over four years now.  I limit this to a certain geography and admittedly have been growing to quickly to keep up with a very consistent search.  But, I still have seen lots, researched lots and came up with several criteria I find “interesting” to look at.

In many cases, I am sure most dive right into the “numbers”  What is your gross commission?  What is your loss ratio?  What are your expenses?  blah, blah, blah.  All well and good I suppose, but as they say; if you do what you’ve always done you’ll get what you’ve always gotten…or something like that.  So here are some others, in no particular order since nobody buys the cow when you can get the milk for free;

  1. What is your total “household” or client count?  What has it looked like for the last three years? **Must factor in agency age, owner age, employee tenure and likely adjust the three year look back
  2. What is your PIF(policy in force) count?  Same as above, This is as important as policies per household/client.
  3. How many of your accounts have both commercial and personal insurance with you?  How many could have that with you?
  4. How many have life insurance with you or an affiliate?
  5. If dealing with health insurance; how many of those clients have other (commercial) policies with you?
  6. Agency owner; I was talking with an executive of a large company and we had a conversation about what is really important; the owners age or the owners time in the business?  What is behind this?  Well we all have a life cycle and so does a business.  Plateauing your business, sometimes called maintenance of a book or farming a book instead of actively growing it.  Time in business could be a better indicator
  7. How did you get into the business?  Did you stumble in and buy another agency?  Buying another agency may have set up your expectations for now.  ** Pay attention to Zenefits but not to much.  Must factor in how inexpensively you can acquire customers; less than $20
  8. How big is the space you rent or do you own?  Big difference.
  9. What kind of furniture do you have?
  10. Do you have a large printer and a copier?  All in one?
  11. How about a wall full of file cabinets?
  12. Where do you, the owner, sit?
  13. Do you rely on your company partners for wall decorations or have your own style?
  14. Is your location one that accommodates “walk ins”?
  15. Your website; is it full of stock photos?
  16. Your website; when was your blog last updated, does it read like stock/canned material
  17. Social media presence or lack there of?
  18. What memberships do you pay for?
  19. What are you doing next?
  20. How often do your carrier reps visit you?

Wow, honestly I was surprised when I wrote all my ideas in one place.  I suppose I look at many of these almost subconsciously at this point.  Either way, welcome to your input.