Soft Market, Recession Drive P-C Agents To Cross-Sell Life, Health, Fin'l Products

A dearth of catastrophic storms over the past three years–with one or two exceptions–has left the insurance industry with unused underwriting capacity, excess capital and falling premium rates. The economic recession we're in will also undermine agency growth opportunities by forcing many customers to cut back their operations or go out of business.

As traditional sources of property-casualty revenue remain relatively flat, the most successful agencies are navigating this period of slow growth by finding new sources of business. They are looking to stock their proverbial “shelves” with an expanded array of new insurance coverage and financial products for their clients.

Property-casualty agencies are turning to the world of life insurance and financial services, incorporating other products such as individual life insurance, employee benefits (including group life and disability coverage, health and dental insurance), investment services and retirement planning.

Agencies that can successfully cross-sell not only boost their top- and bottom-lines, but also solidify their existing business lines.

Selling new products to existing clients can increase loyalty and improve business retention. The more products an agency can sell to an existing customer, the more likely that customer is to stick with that agency, multiline agencies have learned.

Another benefit to the bottom line is that cross-selling can reduce the cost of acquiring new business. Prospecting costs both time and money. It's far easier to sell additional products to a client who already knows and trusts you.

But does a customer really want their agent to approach them about other insurance or financial needs? Does the customer see the agent's expertise in the p-c business as transferable to other lines and other financial products?

According to research by The Hartford Financial Services Group, the answer to those questions is “yes.” The survey determined that small-business owners actually prefer to buy multiple products from the same source. Companies with 21-to-100 employees, in a 2005 survey, indicated that being cross-sold actually increased customer satisfaction:

o 78 percent said they wish they could turn to a single source for all insurance and financial needs.

o 70 percent rated good advice and service as more important than saving money.

o 68 percent purchased 4.2 insurance and employee benefits products from the same producer.

At this very moment, many of your clients may be contemplating the addition of an employee benefits program, thinking about how to save for retirement or wondering if they should increase their life insurance–or at least they would if producers asked them about it. What's important for agents is that their clients consult with them, rather than seek another financial professional who could turn out to be an agency's competitor.

As p-c agents increasingly serve their small-business clients' needs for employee benefits and life insurance-oriented coverage, they can transition to the life insurance and employee benefits markets with the help of knowledgeable product specialists or wholesalers who offer a high level of service that is sometimes referred to as an “assisted sales” approach.

The level of assistance available can be surprisingly comprehensive, enabling agents to help their clients evaluate, select, install and service whatever program is appropriate.

Not every insurer or financial services firm offers the same level of support. So it's critical for agents to work with a company that offers high-quality sales assistance and education to support both producers and clients every step of the way.

There are some good litmus tests to gauge which organizations and support staff have the right stuff. The most skilled product specialists provide six essential “assisted sales” support services:

o Licensing assistance.

o Product education.

o Review of a firm's client roster to determine specific financial or benefits needs.

o Prospecting for new business.

o Financial planning assistance, including the ability to meet with producers and their clients at the point of sale.

o In the case of benefits or retirement plans, access to appropriate resources such as third-party administrators and after-sale service through a team of professionals.

The first question an agency's specialist representative should ask a producer is: “Are you appropriately licensed to sell whatever product you plan to discuss?”

If not, the specialist should educate the producer on what licenses are appropriate, on both a state and federal level.

For example, some states require only a life insurance license to sell unregistered 401(k) products. Other states require a securities license as well. If a producer is selling registered products, they must obtain a license or licenses from the federal Financial Industry Regulatory Authority.

The specialist can provide education on the different types of products available, how they work, and how they can help meet the different benefits or investment needs of your clients.

With more p-c agencies expanding into the worlds of life insurance and investments, many life insurers have built the requisite support systems to help agencies become successful in expanding their product line to meet a wider and ever-growing list of needs for their clients. The most advanced firms have even created special programs to support p-c agents in selling life coverage, investments and retirement plans.

There is no controlling the severity of the hurricane system, the market for p-c coverage or the overall economy's health. But agents can control their mix of business and how they serve their clients, no matter what the weather forecast or monthly “Market Barometer.”

By broadening the product mix beyond traditional p-c products to include life insurance, employee benefits and retirement plans, the outlook for an agency's business prospects is sure to be decidedly sunny.