Selling insurance by quoting for rates is bad business

Selling insurance by quoting for rates is bad business

Selling insurance by quoting for rates is bad business One of the biggest misconceptions in our industry is that prospects are price shopping, says Joseph Totah, president of Strategic Agencies, a provider of online tools for insurance agency owners.

“Some time ago many insurance professionals would evaluate the risk in a discussion with their prospects so they can properly address what coverages are needed,” he says.

“However, the latest trend is to just quote the insurance without evaluating the risk. Oftentimes, the quotes are being based on previous coverages and are trying to win business on price alone. However, this is not the prosper way to insure risks. If this is all people wanted, they don’t need an agent, they can do this on the internet.

“Agents that sell on price are not properly addressing the coverage needs of their clients and are working on a slippery slope.”

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Many agencies revolve their marketing around beating their prospect’s existing insurance rates. But that’s a flawed system. Here, Totah outlines the negative image agents give to their clients when they just focus on rates – and then gives advice on how to sell better and garner better relationships with prospective clients.

The “disasters” you create when selling on rates are:
  • You communicate to the prospect that coverage is not important, that you are putting rates ahead of everything else.
  • You don’t want clients who only care about rates, anyway. If they come on rates, they will leave on rates.
  • Many people are looking for a professional insurance agent who can discuss risk issues with them and, while rates are important, they are secondary to expertise.
  • You’re implying to the prospect that your value as an agent is providing the lowest rate and you have no other value.
  • Your book of business is volatile, if rates go up across the board, you will instantly lose a lot of business.
“To automatically presume that a prospect is price shopping is a huge mistake.  The most important thing an agency can do is ask the prospect why they are seeking out new insurance,” Totah said. “It’s very important to learn as much as you can about the prospect and their needs. What if someone is coming to you because their previous agency left off a coverage or did not give them enough coverage, had a claim and fell short. Would talking about the lowest price be of interest to these people? Of course not.

“When I owned an agency, the last thing I wanted to do was quote ‘apples for apples’. I could care less about what coverage they previously had, I have to explain the coverages to the prospect and tell them why I am recommending this coverage. The last thing I want to tell someone is that I am of no value to them if I can’t do any better in an ‘apples for apples’ scenario,” Totah said.

“Always present a multiline proposal, whether for personal lines or commercial. And an umbrella should be part of most conversations about insurance – many don’t have an umbrella because their agent never wanted to bother with it. If they are willing to listen and discuss the issues, your prospect is gold.

“If you constantly drive people to thinking rates are most important, you are doing a disservice to yourself, your prospects, and your clients.”

Joseph Totah is the president of Strategic Agencies, a provider of online tools for insurance agency owners. You can visit the firm’s websites at AgencyEquity and InsuranceNewsletters.


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  • NJ Underwriter 6/19/2017 12:21:37 PM
    Good article. Brokers have been selling coverage on price for years. As an representative of a carrier, we do our best to educate the brokers, wholesalers, and insureds about our policy, but to little or no avail. Recently, we've noticed certain agents in the professional lines space that are aggressively driving the market into the dirt. If the products they were pushing were better, we could constructively respond (refile to account for the market trends), but (so far) the insureds seem to be the only victims. What makes matters worse, is that when our firm has notified the various state DOIs regarding these practices (of which also include improper service/policy/agency fees/suspected violation of filed rate and rules), no one seems to care. We aren't doing it to make our competitor's lives harder, just call them out for their improper conduct.
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  • Moreismore 6/19/2017 1:05:17 PM
    You should address this article to Geico agents. They are the biggest price shoppers of all time, selling individuals state minimum limits 93% of the time, regardless of their asset levels. As independent agents, we come across so many cases where customers have switched to Geico from policies offering higher protection to basic bare minimums, without even realizing it. Unfortunately, most consumers focus on price when they obtain a quote and they do not usually take the time to compare coverage levels.
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  • 6/20/2017 7:24:14 AM
    Matching or beating prices just validates what the previous agent did, and doesn't bring value to the client. Most companies situation changes a bit from year to year, so the apples to apples strategy assumes no change. It also assumes that the carrier market has not changed. In cyber alone, there should be something new to discuss with the client. Price alone plays into the Google/Amazon playbook which no agent/broker can win.
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