From the October 2011 issue of American Agent & Broker •Subscribe!

GPE, BTA and A&H

Take a personal approach to selling commercial insurance

Is your agency taking full advantage of the personal insurance opportunities afforded by your commercial customer base? Few would argue that it is challenging to find quality new personal lines customers using traditional lead sources. Some agencies are bucking this trend, however, and are successfully using new methods to grow their firms.

A consultative approach that addresses the corporate risk of individual employees may afford new sources of growth for your agency. The line between the individual and business insurance sales can become blurred, particularly when a commercial customer desires one contact with its insurance brokerage. Also, agents can establish themselves as trusted counselors by tailoring some commercial products and services to meet their clients’ personal and professional needs.

Many employers will recognize that individual acts committed by their employees can lead to reputational and performance problems. If the employee becomes a defendant in a personal-injury lawsuit, it can be assumed that he or she will be distracted from the job. Group personal excess liability (GPE) insurance can help make the legal troubles less of a professional distraction.

Related: Read the article "Say Yes to the Best" by James Hahl.

Injuries and sickness during business travel affect an employer’s bottom line. Senior executives who travel frequently will want to know that they and their families will be treated properly if a problem occurs. Agents and brokers should consider speaking to their clients about business travel and accident insurance to help protect an individual’s personal and professional well-being.

GPE Leads to Peace of Mind

GPE is the perfect solution for organizations that want to incorporate high-value benefits at a low cost into an executive benefits portfolio.

Consider the following scenarios that could result in multi-million dollar lawsuits:

  1. While driving to work, a senior corporate executive hits another vehicle, and the other driver sustains a neck injury
  2. A delivery person slips and falls and breaks his leg on the icy steps of an affluent homeowner
  3. A CEO donates time to a homeowners’ association board. A swimming pool installed by the association has a faulty diving board resulting in an injury to a child.

Accidents happen, and lawsuits are common in today’s litigious society. Each of these scenarios could lead to a substantial lawsuit and potential reputational damage to the employer if the incident is not properly addressed. If a high-net-worth individual is involved in an accident and then sued for an amount greater than his or her existing liability coverage, then the assets—including home, belongings, investments and future earnings—could all be at risk.

Who needs higher limits of liability coverage? Employees, family office members and affluent members of a defined group who typically have significant insurable assets and unique or highly sophisticated insurance needs could benefit from group personal excess insurance.

Jonathan Crystal, executive vice president of Frank Crystal & Co., a national insurance brokerage firm headquartered in New York, said the benefits of selling GPE include solving a problem for clients and developing a relationship with commercial customers.

Related: Read more about Frank Crystal & Co. in this month's Agency Success story, "Once Upon a Client."

Crystal said the product builds a great bridge between personal and commercial lines for agencies. His brokerage firm has successfully paired GPE specialists within the brokerage with account executives serving other needs of decision-makers, such as executives responsible for purchasing directors and officers’ liability insurance and human resource buyers responsible for employee benefits programs.

Generally, the most efficient and effective way of selling GPE is partnering with commercial lines and benefits producers who have access to target accounts. Ultimately, the goal for agencies in selling GPE is to create an environment where commercial producers consider the question, "Is there an opportunity to help this client with GPE on all of their new and existing business?" When done successfully, this strategy enables agents to achieve immediate success by bringing new business in the door as well as allowing them to create a pipeline of personal lines customers for the future.

Crystal knows that tapping this pipeline isn’t easy. "Selling personal lines to GPE participants can be a real challenge," he said. "Success depends heavily on how the program is positioned within the employer-sponsor. When a personal lines review is positioned by the employer as part of the benefit, there can be real opportunities to penetrate the underlying group participants."

Related: Read Paul Morrissette's article "Helping Hand."

Accidents Will Happen

Business travel presents a variety of risks, especially when an employee will be visiting an unfamiliar international environment. Accidents and injuries, exposures to infectious disease, terrorism attacks, political unrest, assault and kidnapping are only a few of the risks that face traveling professionals.

Travel risks represent a low frequency but high-severity exposure. Agents and brokers can speak to their clients who own their own businesses or act as risk managers for corporations about business travel accident (BTA) insurance for themselves and their employees. When recommending insurance benefits to clients, agents and brokers can remind them to consider the following:

  • BTA insurance protects employees against catastrophic accidents. According to the Centers for Disease Control, statistics show that at younger ages death is more likely to occur as a result of an accident than sickness. And when death occurs at younger ages, people are at the stage in their lives when they have the highest amount of financial responsibility.
  • As an essential part of a company’s benefit/risk management program, BTA attracts or retains talented employees. Providing BTA insurance has a positive impact on a client’s corporate image, allowing them to say, "We care about your family. We insure you."
  • As a supplement to life insurance, BTA is a cost-effective way for clients to obtain loss-of-life coverage.
  • BTA policies frequently include advisory services that provide referrals to highly qualified medical professionals around the world, and can arrange emergency evacuation transport where needed.

Fred Wittenbaum, agency principal with S P Agency Inc. in Cincinnati, said that cross-selling between commercial and personal lines is a must for today’s agency. His agency sells accident and health (A&H) products and services. "Cross-selling involves knowing the products in the marketplace and then making those options known to customers, so that they can be an informed buyer," he said. "It also involves spending time with clients to get to know them and their lifestyle." This allows the agent to tailor products for their clients’ individual needs.

If agents have clients who travel extensively for business or leisure, A&H products far surpass the travel insurance offered by standard credit card companies.

Some of the benefits of A&H insurance include:

  • Accidental death and dismemberment
  • Accident medical expense
  • Paralysis benefit
  • A temporary total disability benefit option
  • Claims that are paid independently of general liability or workers’ compensation insurance
  • Affordable premiums
  • Minimal administration
  • Insurance that is easy to quote and implement.

Consider the following loss scenario:

An international software company executive from the U.S. attended the company’s worldwide sales meeting in Cancun. While out on a group horseback riding excursion, he was thrown from his mount. A local medical facility diagnosed multiple contusions, a broken back and possible spinal damage. A colleague immediately contacted the company’s travel assistance provider for help, who determined that it was crucial to move the patient to a higher level of care. Ground ambulance transportation to and from the airport was arranged, and the patient was taken via air ambulance to a specialist in Miami for treatment. Travel for the patient’s spouse was arranged so that she could join him at the hospital. In Miami, the executive received extensive treatment, and then the travel assistance provider again arranged for his return trip home to Michigan to continue rehabilitation. Despite countless hours of therapy, he was left paralyzed from the waist down.

Fortunately, the executive’s company had a BTA policy in place for its employees at the time of the accident. Although coverage always depends on the specific facts of a loss and policy terms, the executive received $500,000 as a result of his paralysis. Additional benefits were paid to cover a portion of the costs associated with his physical rehabilitation and psychological therapy. Lastly, all costs associated with the medical evacuation from Mexico to Miami and then to Michigan were covered.

Related: Read the article "Agency Education Is Up To You" by Paul Morrissette.

Wittenbaum puts accidents such as this in proper perspective. "What are insurance agents and brokers as an industry? We are paid professionals in the same realm as an architect or an attorney or a CPA. Always do what is in the best interest of the client, and don’t make your primary concern about what you’re making in compensation. We’re here to solve the client’s problems and help protect them from the risks they are exposed to."

At a time when many agencies struggle to find qualified lead sources for personal lines business, Wittenbaum’s team generates new opportunities through a consultative approach with commercial clients. Business travel accident and group personal excess programs are perfect companions to this type of account review, as they provide risk management benefits to the employer and their workers.

Agents, who are in front of decision makers at a firm, should take the opportunity to present group personal excess, and accident and health services to help protect your clients’ personal and professional lives from risks associated with personal liability and travel.

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