Personal lines insurance is a hotly competitivebusiness, as the ubiquity of television commercials will attest.Many independent agents are concerned about retaining theirclients, who may respond to an amusing advertisement from adeep-pocketed insurer. Fortunately, there are proven methods foragents and brokers to stand out in the crowded field and acquiregreater sales volume and improved customer retention metrics.

By having a single insurer underwrite multiple policies (andumbrella liability, watercraft and other personal lines coverages,too), an agent significantly improves the value proposition for hisclients. Aside from significantly lower insurance premiums, dealingwith just one carrier is advantageous when it comes to payingbills, filing claims and attending to other policy issues, such asa change in address or the addition of a new driver. This highlystreamlined process can alleviate inefficiency and potential errorswhen a client or an agent has to contact two or more insurancecompanies.

Read PaulMorrissette's previous column, “Money Up”

In cases where a natural disaster or fire may damage both a homeand a car, having a single carrier underwrite the policies can be ablessing in disguise. Insurers that provide specialized, ancillaryrisk management services like pre-incident protection from a fire,for instance, can leverage this expertise on behalf of both thepolicyholder's house and automobile.

These bonus features are on top of significant premium savingsvia discounted insurance rates. According to research complied bydmv.org, consumers can save as much as 15 percent in premium, onaverage, each year with a packaged policy. Each time a policyholderadds another policy with the same insurer, other discounts mayapply.

Why do some insurers offer packaged, multi-line policies atlower cost? They gain significant economies of scale by servicing asingle customer with multiple policies, as opposed to manycustomers with one policy each. These savings in labor productivityare then passed on to consumers via the discounted coverage.

Insurers also are aware that their retentions are higher whenthey can write multiple lines, and these companies pass along theiracquisition cost savings in the form of package credits.

Revving Retention

These various features play an important role beyond greatersales—they also may boost customer retention metrics.

“There is just more loyalty when a customer has multiplepersonal lines insurance policies with the same carrier,” said RickPrice, president of Price Insurance in Lake Forest, Ill. “Itbecomes harder to `break up'—to move the business.”

Price said that clients “know if they switch carriers on theauto insurance just to save a couple hundred dollars, yet want tokeep the homeowners' insurance with the same carrier, that insureris going to charge more for the coverage. There is no question thatpackaging insurance policies with a single insurer has had apositive impact on my agency's customer retention priorities.”

Read another Getting Personal column by Paul Morrissette, “BuildBrand with Blogs”

He touted another plus in the packaged policy concept—fewercoverage disputes when one insurer is writing all the personallines policies. “You avoid the finger pointing,” Price said.“Getting into a contentious situation where two separate carrierseach argue that the other has insured the exposure causes enormousanxiety for the policyholder. With one insurer, such issues don'tarise.”

Yet another advantage is more manageable budgeting by consumers.“A big cause of consumer stress is billing—that's where many of theinsurance carriers I represent really fall down,” Price said. “Theyhave disparate systems for processing bills, and also claims,policy changes, and so on. Obviously, having one bill is a lotsimpler and easier for the client.”

Value for Agents

Having a single carrier on multiple policies further benefitsagents and brokers in their own business operations. Eric Gordon, apartner with the Denver Agency, a Colorado-based firm, said, “Whenwe conduct an annual insurance review for a client, we need toevaluate multiple policies that are often with multiple insurancecarriers, each of them dated differently.

“If we can consolidate all these policies with one carrier atone effective date, it streamlines the process for both the clientand our agency.”

Rather than managing an array of policies withdiffering renewal dates, the agency performs a single annualinsurance review. Not only is it efficient for the customer, but italso has a positive impact on errors and omissions liabilityinsurance. “We see this as a one-stop, turn-key approach,” Gordonsaid.

Packaging insurance policies also promotes long-termrelationships among carriers, agencies and customers. The customercomes to realize the benefit of establishing a carrierrelationship. “When a clients spreads his risk and generates alarger combined premium with one carrier, it creates a moremeaningful relationship,” Gordon said. “Such stable insuranceprograms have been important to us, particularly with respect toour high-net-worth clientele.”

He added that if something does go amiss, a multi-line insureris “more apt to stay on the risk than carriers insuring risks viamonoline policies. “There's just more loyalty both ways, whichcreates a sense of security,” Gordon said. “The client takescomfort in knowing that they are well protected because theinsurance company is underwriting everything.”

Gordon said that packaging business is not more important thanproviding the right coverage: “While many insurers say they canpackage policies, as an agent you want to suggest only those thatoffer the best coverages and ancillary services.”

He added that package policies underwritten by a carrier thatprides itself on risk prevention and mitigation—as much as risktransfer—has unexpected added value. “When you consolidate aprogram it often creates a total account premium that wasn't therebefore, enabling the customer to take advantage of services likewildfire defense,” he said. “We've had instances here in Coloradowhere, in advance of a coming wildfire, the insurer will dispatchtrained firefighters to take all steps necessary to save the home,cars and other assets—lining the property with sprinklers, hosingdown the structure with fire-retardant gel, driving the cars offthe premises, cleaning out the gutters, and moving flammableoutdoor furniture.”

Buying property and personal security services directly fromunique vendors can cost tens of thousands of dollars. “With theright insurer, this vital protection against disaster iscomplimentary. It can save a life, a fortune or both.” Gordonsaid.

Packaging business with one carrier, and linking clients up withcomplimentary services provided by insurers, are proven clientretention tactics. Most strategy fails, however, unless youcommunicate. Price advised that agents and brokers shouldcommunicate via social media and blogs that tout customer reviews,while supplementing these words with traditional means ofcorrespondence.

Winning the loyalty of customers isn't dependent on a largeadvertising budget. Expert advice that minimizes risk whilesimplifying the insurance transaction—now that's a package thatbenefits everyone.