Monthly Archives: October 2018

10.28.18
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Genuine vs. the Algorithm

Marketing should supplement and promote genuine value not disguise the lack of.

Right now it seems that way, but somewhere in my reading and listening, I again heard what I already have known for a while now; You do not need to adapt to AI, and similar data ideas, but the agents/brokers/companies that do will survive and thrive and those that don’t, won’t.

So combine that with the following things stuck in my head from various reading and listening;

  • Sending out a birthday card is awesome and there are services that do this
  • Who is killing it on YouTube?
  • You must contact your customers 24-36 times

On Birthdays; Mrs. B is the mother of a childhood friend of my wife.  Each year a birthday card shows up for our children and I’m not even sure that she has met our children.  Handwritten.  Maybe she uses an electronic calendar, maybe she doesn’t, but it is real, handwritten ink and genuine.

Has Facebook ruined the birthday greeting?  I mean they remind you about the birthday and they even tell you what to say to the person.  I suppose technically the person “said” happy birthday to you.  Maybe you were even overwhelmed by the “love and the messages…..” But how many of those people took the 5-30 second to personalize it?  You can say the same thing about changing jobs or posting an update on Linkedin.  And yes, if automation is becoming more and more a part of what we do, those that use it better will stand out.  So, sure, a physical birthday card from your insurance agent showing up at your home is nice, sort of.  If you did it merely to keep in touch as part of a formula, is it?

  • Is it really just a self-serving act following a desperate formula to combat an already “noisy” world?
  • Is this just one touch of a formula?

Sure, you are combining data with a pseudo genuine act.  But, you are using what is considered an important, almost sacred, milestone and demeaning it into a marketing activity.

Killing it on YouTube

Cool.  Excited for you.  Especially if it is a goal you set for yourself and now you are accomplishing it.  On the other hand, what aren’t you doing?  Certainly, all that time recording, editing, posting and sharing takes away from other activities.  But, hey you are feeding an algorithm, good for you.

So, I’m confused.  You are recording a video to bring value to others?  Cool, in theory, your video will get to more people.  So the next question, and you need to choose one;  The person that calls you because they watched a video or the person who called you because an existing customer told you about them.  Choose one.

I have no doubt, just like this post, there is value in being found online.  But are you doing the right mix of activities to be found and activities to be valuable?  Be honest, the information you are writing or recording, likely already exists.  Sure, there are new ideas, but not when it comes to talking about the basics of auto and home insurance.  So, you want them in your voice, fine.  But what if you did something new?  What if you were really honest, I mean honest enough it likely annoys some of your partner companies?

Where is the person “killing it” in flood insurance?

Where is the agent who has an amazing internship program?

Is there an agent “killing it” with AMS360(or whatever management system you use)?

Need more ideas, consider these places to be of value immediately that will have positive results but may not simply feed an algorithm;

  • What is your plan for flood insurance?   HUGE changes have begun and will continue.
  • IOT, aka The Internet of Things. Have you tested any devices in your home?  How can they help your people?
  • Telematics; an app vs. a plug in?  Thoughts?  Are your encouraging use of this?
  • What have you done to help your carriers today?  Hint, they don’t need, and many don’t even seem to want, another policyholder?
  • Using PayPal in your agency?  Have you seen them on a carrier yet?  I’ve only seen one.  Why?

 

10.26.18
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I think my dog appreciates me

She does. She can’t say it but she shows it, at least I think she does.  Maybe the world needs a better guide to “working with an insurance agent.”  Here are a few bullet points from 2010.

This is closer to the truth than what I say to myself every day; which is that our customers appreciate us.

Comes on the heels of a bit of a rant between myself and one of our team, in front of a newer member of the team.  In the same stretch where a few customers have left that has been a bit tough to comprehend.  Sure, people leave, it is part of the business.  Even if the 25% rate increase is the cause it is always your fault.  Even with a backlog several weeks long and the ability to be overwhelmed with new people, losses sting.  But, we keep going forward.

The problem with reading a lot and the “current content, content, content,”  and ” please don’t forget me even if I am not worth remembering”the world is sometimes ignorance seeps through and people are writing to be seen not to convey information.  This is somewhere in the middle.

Most people have no clue or interest just how murky it is behind the scenes of auto and home insurance.  I read about a merger last night and my very first thought of the 9 billion dollar merger was “I hope that company can now figure out how to stop mailing EVERY document to us.”   But, as usual, the direction is forward.

The article of the week was two silly insurance companies, one old and one new, spending money on advertising instead of on their customers.  With the old one also using a B-List celebrity and a couple of NBA players to make their “point.”  In quotes because there really wasn’t one of any value.  Just another example of insurance dollars being spent frivolously.  Oh, and there is actually no way an agent, whose primary compensation is commission based, can spend that much time on claims.  Especially if working for a captive carrier.

And, appreciation is not the point.  Built into our system are several procedures to eliminate things.  Namely, even though the losses sting, our flow of new business far exceeds the people leaving.  And, even having this, we have other procedures in place to reduce the lost customers.  Both of these and their sub-elements work and work well.  And, as I said and will continue to say, we need to have enough pride that it stings, momentarily, and then shrug our shoulders and keep going.

 

10.24.18
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It doesn’t matter

On one hand, it feels slightly good that stuff I was writing about 3,4,5,6, 7 years ago is still valid. On the other, it hurts because that means things haven’t improved much.  Like this call for an honest explanation to rate increases

But what if you could fix one thing?  What if there really was a mission or directive that came down from all the lobbying groups that double as professional associations.  And that directive was, we want to see a massive increase in our market share versus that of captive companies. Well, first let us take a side turn, captive agents are dwindling and their market share will as well.

FACT; Many of the largest advertisers are “direct” by label only.  Their agents are allowed to broker business.  But, first, off they have a captive as their backing so they get the label.

So the one thing, and of course, writing this post doesn’t matter either.  I also have a severe distaste for use of absolute type words and phrases like “best.”  Since many times it cannot be accurately measured and proven.  But, for the sake of clearing my brain, it is rate increases.  Period.  All of them.  And not to be a conspiracy theorist, but we could make a case that companies use rate increases to limit the growth of their agents.  How?

The typical household that everyone wants; two adults, long time home ownership, no claims, degree, no dogs, above average credit.  Sees a $264 increase on his package.  No increase in value, no prime music or video, no free shipping, just an increase.  **Skipping several paragraphs over some proprietary stuff***

While I am trying to explain this and keep someone happy I AM NOT BRINGING IN A NEW CUSTOMER.  That’s it, that simple.  You are forcing me into a service that provides only imaginary value since it is simply making a wrong, slightly less wrong.  Maybe the math justifies it, you keep a customer at a higher rate and that new profit line is equivalent to what you would have made on a new customer?  But I lose in that scenario and SO DO YOU.

This goes nowhere, rant done, momentarily defeated.

10.23.18
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Awesome marketing opportunity

But it is in disguise.  See, everything can be classified as marketing or in it’s subcategory branding.  This post, even this post from November 2011 updated in 2015  

I could use words to rewrite the same things today and it would be valid, and also useless.  So, let us use words differently and simply make a different point based on the same thing.

  • Your rate increases allow us to build our brand stronger while weakening yours
  • Your rate increases prove that you have no faith in your actuaries and your distribution methods.  Could even say a lack of faith in your capital investment strategy
  • Your rate increases show a complete lack of understanding of how word of mouth works.  It’s been publicized many times and, although I think it is tough to prove, negative news travels faster.  This is a societal flaw.
  • Net Promoter Score is a useless measurement created by professors and marketers.  Here is a simpler measure; If you have 1000 customers, are you receiving at least 500 referrals a year?  Simple, shouldn’t half your customers think enough of you to share you with friends?
  • Still firmly believe that one of if not the biggest and boldest marketing moves is to freeze rates for 12, better to do 24 months, and advertise the heck out of that.  You’ll simultaneously prove that price optimization is awesome when used correctly and add huge amounts to your top and bottom line.

Oh, and I have been operating this way, mostly successfully, for 8 years.  Sure, some of this is theory, but most are already in practice.

10.22.18
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The replacement cost dilemma

November 2010, updated May 2015, still is an annoyance that happens once a week.

And it really is a dilemma.  I’ve likely written before that I have 20ish options for insuring a home and all 20 have a different idea of what the same home will cost to rebuild.  Scarier than this, is that several use the same backend system that determines the replacement cost.  But, there is nothing particularly “sexy” about this topic so maybe that is why it doesn’t get much attention.

I suppose this is what happens when no one is quite sure of the answer.  It has elements of collusion since home insurance may be the most underpriced line of insurance.  And, “odd” as it may be, if you compared replacement costs from ALL carriers, they would be likely significantly higher than new cost construction.  You’d also see that, with many companies, you actually get a credit for letting them increase your coverage but this credit doesn’t offset the rate increase, it just masks it?

Going to reframe this a bit…..

 

10.21.18
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Time to adopt

Original publish date of October 15 2015

” Why would you give an insurance company more data when they haven’t figured out what to do with what they have?”

I’m giving myself credit, I still believe in one what I was writing three years ago, now I just know more.  But, although our methods are better and new tools exist we just haven’t found the blend yet.

To frame this moment, I just caught up on Lemonade’s transparency chronicle and read a good piece via the Washington Post about home construction that survived Hurrican Michael.

Where is this going?  Well, I won’t allow it to go to a place of frustration.  What’s the point? Nothing good will happen there.

  1. Why does it seem like most insurance companies are not interested in growing the top and bottom line?
  2. Who is the bigger culprit in this; 1) the attitude in the C-Suite or 2) Actuaries or 3)Something around accounting and taxes?

 

10.20.18
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Paragraph rants, what if

Attempted to use some voice to text stuff and it produced some really odd paragraphs.  Reinterpreting them a bit below;

  1. Is your marketing plan simply to produce enough content aka noise, so that one or more algorithms will help people “find” you?  I am not sure that, as a strategy, this is much more than hedging your fear of not knowing where the next deal is coming from.  Hope is not a strategy, nor is relying on things you do not have control of, like algorithms.
  2. The family was on a walk on a nice local path.  On occasion, you would find benches.  In this case, we were a half a mile or so into the walk and there it was, the same bench but covered in advertising.  Cool, you sponsored a bench.  I like it.  But do I need to see your phone number in the middle of the woods?  Do you like that you are interrupting people during leisure time?  How many people walk with a pen and paper?  Oh wait, maybe they’ll take a photo. Exactly, now I might have found a customer who was strolling on a walking path.  Might be time to figure our who your customer actually is.  Then, decide if you actually want the person who knows nothing more than that they saw(were interrupted by, your advertising.
  3. Measure yourself against whoever you want.  But, falling into the trap of thinking your NPS or JD power score, matched against your industry, matters, think again.  If you have a call center, who has THE BEST call center.  Period.  Maybe you need to be more like Zappos.  Saying you are the best call center in an industry not known for service is not a great idea.
  4. Get back to helping people buy insurance.  Sure, Jim Rohn, Harvey McKay, Tom Hopkins, etc. all had very lucrative sales training, motivational, type careers. You might as well.  But, on the other hand, while you are producing marketing videos and blogs the industry is suffering, Your brain power and time are diluted away from the problems that need solving.
  5. Empower the people!!  Had a couple of really nice exchanges with call center people lately. But, they inevitably fell flat.  Why?  Because these wonderfully empathetic people were not empowered to do anything.  They simply had to perform their task, their step in the assembly line.  Such a shame.
10.19.18
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Enough is enough from three perspectives

So below you will find a short report that I receive daily.  This shows policies that renewed, the average premium change and the percent increase;

Renewal Details by LOB

LOB Number of Renewals Average Premium Change Average Percent Change
AUTOP 2 $121.38 10.21%
HOME 5 $61.80 7.45%
DFIRE 2 $47.00 7.32%
PUMBR 2 $0.00 0.00%

Now, showing you companies and names is something we shouldn’t and cannot do.  So let us focus on a few things;

1. Yes,   9 of the 11 policies so a rate increase.  None of them had claims or any other changes these are simply increases companies choose to take.

2. PUMBR stands for Umbrella policy.  Rare to see a rate increase with these.

3. Name ANY product in your life that you would allow the cost to go up when the quality of the product has not gone up?

So three perspectives and some notes

CONSUMER; Yes, this happens almost every year with most insurance policies.  Not with every company and not with every policy but with most.  Now think of the products you buy.  If the rate stays the same or goes down a little does that prompt you to switch?  Seriously, all things being equal if a company keeps the rate even are you leaving them?  What if on occasion they give you an unprompted discount?

INSURANCE COMPANY; Have you looked at how much you spend on advertising?  Have you looked at the acquisition cost of your new business?  Have you looked at the closing ratio of new quotes?  Have you thought for a moment and said: “you know, it costs us more to get new customers than to keep current ones…”  Or ” you know, we have been profitable on this person for two years, maybe earning $x from them for five years is better than earning $x +$y for two years or worse yet only $x for one year…”

What about your underwriters?  Think about them for a moment, they determined what people fit best into your system.  This is a big piece of their job  Problem here is that most preferred companies like the same people with only slight variations.  So in other words, your best customers have more options than you think.

Now factor in your actuaries; would having a customer longer give your more data?  Yes.  Should having more data help with your underwriting?  Well if it doesn’t you have bigger issues.

THE INSURANCE AGENT; Now we need to break it down two to three ways;

Captive Agent; So you only have one company.  You really, really, want to see your companies keep rates level.  If not you are pretty well screwed.  Really, there is no getting off that hamster wheel with just one company.  Keep buying all the leads you can and hope for the best.

BROKER; You are in the best position of them all.  Imagine you have 3-7 preferred companies, if you do it right you should be it a 98-99.5% retention rate.  Not to mention you should be closing on 70% if not 80% of your quotes.  Unlike the captive agent, rates go up you just move them.  Heck, even if they stay level you can likely pay attention to some live data points and strategically move households.  Remember a few things that we said already and some we didn’t

  • any way we shake it out, it costs more to get new customers than to keep current ones
10.18.18
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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?

Well, he now is not a fan of the former company because he feels mistreated.   The former company loses him and also loses his sons household.  They lost the other son two years ago.  So now you are down three households.  Call it six policies but it is really nine.  Fortunately, you only cost me one household I managed to keep the other two.

But Billy, you lowered the premium they are paying didn’t you lose money?  You can make a case I did in the short term but did I really  I didn’t have to go find a new customer which is good.  I stood tall on the promise of taking care of the people who trust me which is good as well. With some technology that is not quite here yet the perceived loss will be even less.  But where does it start?

Thought 1; It starts with complete actuarial assessments.  Someone in their big home office made some mistakes.  Like the rest of the industry, they think most customers are dumb and lazy and treat them as such.  They are most certainly not and buying patterns have changed.  They think that customer needs them because their product is good.  It’s not, you are very close to being a commodity.  Most things you market are never used by a customer anyhow.  Remember, if they use that new add-on they don’t need they’ll likely be penalized. Maybe it is because they are so focused on the short-term and operate in a “silo”   I think this may be it.  See the underwriters and actuaries apparently are not in communication with the marketers.  They also are likely not likely listening to the actual people bringing them the business.  

10.17.18
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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.

Why?  Well, the first thing you and I do is look at rates.  The home rate was about even and the auto rate went down.  Immediately I lost all urgency.  I also know that between my wife and I there are a handful of tickets and accidents that, like it or not, are still currently relevant to the rate.  You have to look at your rates.  PERIOD.  No, this does not mean to only shop on price, it just means you have to look at your price.  This is normal human behavior. And, like it or not, you have been conditioned by the industry to this.  BUT,  behind the scenes underwriting is tougher now than at any point during my 15+ years doing this.  We have begun to advise not canceling a lot of new property policies until we know any unplanned inspections have been completed.  Oh, and remember,  auto and home insurance + the U.S. consumer = commodities colliding.

Moving along to some detail;

AUTO:

  • cover the basics; name, address, drivers, etc. So disappointing that so much of this can be automated and pre-filled yet common apps fill it in an insurance quoting sites do not. This is basic stuff and the compounding time is huge.
  • Check the discounts, everything there that you thought would be? Tricky, tricky thing.  Discounts are not what they once were.  You are being “rated” more ways than you or I can count. Remember, asking is often the surest way to getting but, sadly, even if you get it, you may be disappointed.
  • Has your use of the vehicle(s) changed?  Fewer miles typically means lower rates. Telematics will replace this….but not until companies understand how to apply telematics.  Either way, mileage questions border on irrelevant.
  • Remember, a multi-policy discount can be substantial.  likely need to move both plans if shopping.  This may be the biggest flaw in the entire price shopping landscape.  Not quite fraud but certainly some ethical implications.  Multi-policy discounts are potential ENORMOUS. Not disclosing this to a homeowner who is doing an auto quote is a mistake.

HOME;

  • An escrow account is wonderfully convenient and very dangerous to your wallet.  Leaving just about any piece of your financial world unchecked is a bad idea
  • The compound effect is real and can have a profound impact on home insurance.  Sure, your coverage went up by a small percent this year but when it is 3-5 years later those percentage increases are magnified.  Pro-tip, many homeowners get a discount for something called “inflation guard” or similar.  Essentially, if you let us increase your coverage automatically we’ll “thank you” with a discount.  This often goes unnoticed but is important.
  • Where is your company flexible?  Some are with other structures.  Some with personal property.  Most aren’t with the main dwelling coverage.  Untapped but large opportunity for improvement here.  Not a full-on customization of a policy but certainly room here.
  • Fact is you are getting all sorts of coverage that look good on paper but really do not do much.  it is what it is.  Often said to older customers when comparing policies “Remember, there was likely nothing wrong with your home insurance from 20 years ago.  All these extras look nice but aren’t much….”  Google the insurance silos and this is another example of them not talking.  Lemonade did some funny writing on this as well.  This piece of coverage is overdue for an (r)evolution.

 

Your own diligence is huge.  Always has been likely always will be

Finding clever tools to help evaluate the replacement cost of your dwelling and your personal property is huge. This is a whole other topic and is a mess right now.  Lots of room here as well.  Don’t believe me?  Go look in your area at the price to BUY a brand new home.  Then realize that every property insurance company has a different version/idea of what that will cost to rebuild.  Many, or most of, will be laughed at by the builder.