While trends toward commoditizing much of the personalauto insurance market exist, many of the best agents are focused onselling value to customers who care about getting expert coverageadvice and choices delivered by their local independent agent. Thevalue-driven strategy is proving to be effective, providing thoseagents with an account-oriented book of business that will be morestable and profitable over time. 

Auto Opportunities

Owners of higher end automobiles, who by and large arevalue-oriented, represent a particularly attractive personal linesmarket segment. The higher end auto market is broad and includespopular auto brands such as Audi, BMW, Cadillac, Lexus andMercedes, and extends to classic and exotic cars. The growthtrajectory of this particular market segment is attractive, withsome estimates suggesting sales of higher end autos growing morethan 18 percent since 2009 among households earning $100,000 ormore. Moreover, the higher end auto segment is projected to be at a13 percent share of the overall auto market in 2012. 

In addition to market growth, this is an attractive segmentbecause owners of these higher end cars understand and appreciatevalue. When investing $40,000 or more in a car, they expect betterperformance, better engineering, better workmanship and betterquality. They understand and accept that they will need to pay moreto service and maintain their vehicles because of the inherentvalue of a owning a superior car.

Related: Read the article “A World Without PersonalAuto Insurance?” by Robert Regis Hyle.

As sophisticated consumers who appreciate the value in theircars, they also appreciate value when they make other purchases,such as their car insurance. Just as these consumers don't want tobuy an economy car or a basic, no-frills model, they generallyaren't interested in low-cost insurance offerings that fail tosufficiently protect the assets they've worked hard toacquire. 

“Higher end auto consumers shop for insurance in the same waythey approach their lives. Whether they have a collection of carsor are driving their first Lexus, they value coverage and servicemore than price. In the end, they want a high-quality insuranceprogram, just as they would purchase a high-quality car, home orpiece of jewelry,” said Susan Ogrodnik-Smith, chief sales officerof personal lines at HUB International New England. Among otherareas, Ogrodnik-Smith is responsible for sales within theorganization's private client group, which is designed to meet thepersonal insurance needs of affluent clients who traditionally havemore complex insurance requirements.

These consumers also want a higher level of expertise andservice. “Higher end auto customers want 'white glove' service.They expect an agent to offer consultative guidance and serve as anadvocate on their behalf. They also want their claims managedclosely, making it important for us to partner with carriers thatare responsive and service-oriented,” Ogrodnik-Smith said.

These value-oriented customers also appreciatecomprehensive and innovative coverages more than the averageconsumer. Among the coverages that they expect include deductiblereductions for good driving behavior, lockout assistance, tripinterruption coverage, new car replacement and assurances they willreceive a rental car at least equal to the one that is beingreplaced as a result of a claim. 

Ogrodnik-Smith agreed. “The higher end auto consumer is used tobuying and owning luxury goods and as a result, he or she is happyto pay for value. Many have an emotional connection to theirvehicle or vehicle collection and they want to ensure they have theproper insurance in place to protect their assets.”

As a group, higher end auto owners have additional assets andwant to be sure that they have adequate insurance in place toprotect those as well. Consequently, they value the advice andcounsel local agents provide. And they appreciate the convenienceand peace of mind of insuring their cars, homes, boats,recreational vehicles and other valued possessions with the sametrusted agent and carrier.

Mark Trinka, principal of McCarthy & Trinka in Oak Brook,Ill., said his agency experienced growth across higher end autoaccounts, as well as the entire affluent market. McCarthy &Trinka offer a broad range of personal lines coverages for home,automobile, umbrella liability, scheduled items, recreationalvehicles and yachts.

Related: Read the article by Caterina Pontoriero “12 Key FactsAbout Classic Car Coverage.”

McCarthy & Trinka touts an insurance coverage/costsmanagement approach, in which its producers encourage an open andcontinuous exchange of information about a customers' ever-changingrequirements.

 “When customers have multiple homes, high endvehicles, scheduled items or complex marine exposures, theyappreciate a company that can take a holistic approach to theirinsurance, providing a high level of expertise and customizedcoverages for their individualized situation,” Trinka said.

Agents Capitalize

 A growing number of agents are enhancing theirbusiness strategies to better capitalize on these emergingtrends. 

 Universally, agents who take advantage of the growinghigher end auto market begin by committing to selling value inpersonal lines. This means applying the same disciplined sales andservice approaches in personal lines that they do throughout theirtotal operations. Many agents also use carrier service centers tofurther their capabilities, such as extended service hours andproviding their staffs more time to focus on value-oriented salesapproaches to acquire new customers and round out existingones.

 Agents who have the most success with this strategyhave invested in staff training, and ensure that their people knowhow to engage with customers effectively to sell value. The bestagents ask the right questions, get to know their customers welland make well-founded recommendations. Even when a higher end autoowner doesn't act on all of an agent's recommendations, thecustomer still appreciates that the agent's staff is thinking abouthis or her personal situation and insurance needs.

“Our private client group offers a variety of products andservices to meet the sophisticated need of this market segment. Thegroup is compiled of a dedicated team of specialists who understandthe complex needs of this market,” Ogrodnik-Smithsaid. 

Agents also can uncover hidden gems in thehigher end auto personal lines market by looking carefully at theirexisting clients in the small commercial and middle market who arebusiness owners and executives. This is a ready source ofincremental and profitable business. From their commercial linesrelationships with the agency, these customers already are familiarwith and value the agent as a trusted advisor. It also is an idealopportunity to further cement the total relationship with theseimportant customers.

 Successful agents embrace a thoughtfulness about thecarriers with which they will partner, seeking those who arecommitted to selling value. These agents have partnered withcarriers that have proven their commitment by investing to buildout their product portfolios, provide broad and innovativecoverages and improve technology. 

Related: Read the article “New Technologies RapidlyChanging Auto Insurance Business” by Rodney Griffin.

“Not all insurance companies write higher end auto. It isimportant for us to partner with carriers that are dedicated to themarket and continue to enhance their products and services for thisgrowing segment,” Ogrodnik-Smith said.

Agents serving the higher end auto market segment want tomaximize their efforts by handling their customer's total account,such as adding watercraft coverage to an existing homeowners'policy without referral to an underwriter or requiring a separateboat policy. “Customers appreciate the peace of mind they get frompackaging their insurance and often enjoy the discount that comeswith it,” Orgrodnik-Smith said. 

Trinka says his agency “breathes” total accounts. “For us toproperly protect a customer, we need to offer auto, home, umbrellaand coverage for any toys they may have. This enables us to workwith them to review their individualized needs and provide the bestcombination of service, coverage and price for their needs,” hesaid.

Trinka notes that writing total accounts improves “stickiness”for both an agent and carrier. Other benefits of offering a totalaccount solution are improved agency productivity when the agencytakes advantage of providing solutions to support the totalaccount. Agency staff further benefits when a carrier invests inlocal professionals to work closely with agents. Theseprofessionals can assist with products and technology, such as anautomated sales system that helps CSRs work quickly and efficientlywith customers in selecting policy options. 

“When independent agents partner with carriers that arededicated to the agency system model, the results can be verypowerful,” Trinka said. “We can create something very different andspecial together.”

Generate Lasting Benefits

Agents who commit to selling value in the higher end auto marketinvest a great deal of time and energy. In return, they realizesignificant benefits, including a more stable and profitable bookof business, where they often handle customers' total insuranceneeds. This value focus often proves to be a sustainable andwinning strategy.

 Unlike much of the personal lines auto market, wherecustomers are highly price sensitive and tend to shop theirbusiness frequently, the higher end business tends to be moreloyal. These buyers are interested in purchasing the right coverageand getting the right level of service. They aren't interested injust paying the lowest possible price. 

All of these favorable agency economics can begin with attentionto the higher end auto market. It's valuable in its own right, butwhen linked to an effective total account strategy, value sellingto higher end auto customers can power an agent or broker to newlevels of growth and profitability.