Cross-Selling Can Be Risky, But Lucrative For P-C Agents

Nusbaum Insurance Agency Inc. in Norfolk, Va., holds a sales meeting each Monday to discuss their clients and review programs among 17 agents and three divisions–property-casualty, pension and profit, and life and health–said Charlie S. Nusbaum, president of the firm. The group reviews each account to determine if there are additional coverage programs that each division could provide that would benefit the customer, he said.

For each account, there is a yearly survey performed of the clients operation, Mr. Nusbaum noted. Two main questions asked in the survey are what benefits program the company has, and if they are happy with their plan. If there is any dissatisfaction, the p-c agent asks if they can bring in an agency representative with a benefits proposal, he said.

One thing Mr. Nusbaum said agents must remember is to listen to their clients when discussing possible program extensions. "People want to talk if you ask them," Mr. Nusbaum observed. "Be quiet when you ask them."

However, a p-c producer might be a little uneasy about handing off a client to someone else to review benefits or life and health packages, noted Mike Mann, vice president and chief operating officer for New Orleans-based Eustis Benefits, a subsidiary of Eustis Insurance, an insurance agency. The major job of a benefits representative is not to "screw-up" the account for a p-c producer, he said.

"We as benefits people have to acknowledge the value of who our client is," Mr. Mann observed. "Our client is the property-casualty producer."

The first step for the benefits representative is to gain the trust of the p-c producer, assuring them that they are not going to annoy, disappoint or otherwise anger the p-c account, noted Mr. Mann.

An example of a "screwup" is installing a benefits plan for a p-c customer, who then complains that the plan does not pay claims on time, according to Mr. Mann. Another is the imposition of a large, unexplained rate increase that upsets the client and undermines the entire account's relationship with the agency.

Such concerns can work both ways, he noted, pointing out that a bad relationship can also be created when a benefits representative brings in a p-c producer to capitalize on a cross-selling opportunity. Problems can develop for the benefits producer if a client rejects a proposed p-c insurance package, or is disappointed because the coverage or claims service does not meet their expectations, he suggested.

The best way for p-c agents and benefits representatives to develop a good working relationship is by ironing out potential problems before approaching clients for the business, Mr. Mann suggested.

"Trust needs to be built up so each is confident that they will be able to help people," he observed.

It is also important that the benefits representatives and p-c producer make a point of meeting the client regularly and reviewing their lines of coverage, Mr. Mann said. During the course of these discussions, producers should take the initiative in introducing new packages to the client and educating them on why they are needed.

"Communicate with clients to help inform them of what is coming," said Mr. Mann, adding that especially in a hardening commercial lines market, information not only helps avoid surprises during renewals, but also helps retain customers.

For a small Illinois agency of five employees, recognizing the limitations of life and health insurance moved them to take on p-c lines 30 years ago. It is a move, said Gene Sberna, president of Sberna Insurance Agency Inc. in Lake Forest, Ill., that he does not regret.

Having p-c, life and health insurance all under one roof has proven "the best complement" for customers, while rounding out the agency's portfolio, Mr. Sberna reflected.

"A lot of customers own small businesses and [adopting p-c] turned out to be a nice fit," Mr. Sberna said. "We looked at rounding out the business. This way the customer knows to call us for all their insurance needs."

The product diversity also helps deflect a lot of internal problems as different lines respond differently to the changing economic climate, Mr. Mann observed.

A p-c agent looking to round out his or her book with life and health products can count on a lot of help from insurance companies as they expand into new lines, according to Mr. Mann, a past-president of the Professional Independent Insurance Agents of Illinois. However, he said there are issues unique to particular lines that need to be addressed.

One potential problem, Mr. Mann observed, is the issue of ownership of the book of business when it comes to health insurance. An agent will receive commission for the initial sale, but receives nothing later as the policy ages. The health insurance market, he said, is also in crisis now, with costs and premiums soaring. "Individual health is not a good place to start, to just jump into it," he said, but he added that the current problems would eventually work themselves out.

One factor that makes handling cross-selling of different lines possible for a small p-c agency is technology, Mr. Mann noted. It would be impossible to keep up with the demands of the business without tech support, he observed, adding that every agent should harness as much technological knowledge as possible to continue to grow.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, January 21, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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