Brokers look to cross-selling to add value

Canadian brokerages looking to boost revenues might look at selling life insurance in addition to home, auto and business insurance. Certainly there are benefits, but would cross-selling work for your brokerage?

 

Many brokers are lauding cross-selling as a good way to improve retention rates, loss ratios, and generally differentiate their brokerage services.
 
Of course, not all brokerages are going to be able to pull off selling life insurance as well as multiple property and casualty (P&C) lines to consumers. But brokerages that do cross-sell cite a number of business advantages. 
 
“Whether it be cross-selling of one line, which would be home or auto together, bringing in a third line, a commercial policy, or a fourth line, a life policy, cross-selling does help build the relationship with the client,” said Carol Vickers of Merit Insurance. “The retention rate is usually at a higher percentage than when you only have one single-line account.”
 
The brokerage’s loss ratio also benefits from a cross-selling approach.
 
“Generally speaking, if people are more attuned to their insurance, they are also more attuned to risk,” said Vickers. “If a client has got home, auto and commercial risk, as well as life insurance, they probably come from a background where they are more attuned to minimizing loss. They probably have an alarm system in their home. They take more care, for whatever reason, and it creates a better loss ratio.”
 
Ernst & Young’s 2013 Canadian Property and Casualty Insurance Market Outlook says competition in the brokerage marketplace is tight, and cross-selling is a way for a brokerage to stand above the crowd. (continued.)
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“Customer service can be a vital competitive differentiator,” the report says. “Understanding that a significant number of customers prefer to buy different products from a single supplier — and are receptive to cross-selling when the insurer understands their needs and offers the right proposition — can guide new business and improve customer retention.”
 
Anthea Mumby of Mumby Insurance Brokers said cross-selling is not just good for brokers. “I agree that cross selling P&C products to life insurance clients and vice versa is beneficial to brokerages, but more importantly it is beneficial to the customer,” she said. 
 
Mumby said brokers who offer life insurance in addition to home, auto and commercial lines are in a good position to help clients through personal milestones. 
 
“For example, if a customer is getting married,  the changes required to their insurance such as change of address,  life insurance for their new partner,  and a review of the health insurance needs of the couple could all be handled by one brokerage,” she said. “In today’s busy world, customers need quick and effective service without compromising peace of mind so this approach truly brings the customer value. “
 
Even so, cross-selling is not for every brokerage. It requires licensed life insurance agents, for example. And the licensing regime for life agents is different than it is for general agents. That means additional licensing fees, for one. 
 
It might also require more time and a larger brokerage, said Ross Davey of Davey & Benn Inc. Insurance Brokers.
 
“Some brokerages have a separate financial services division, and some certainly do have a licensed life person,” he said. “It requires a lot of additional resources and you get into stuff like space required, and a lot of licensing required. Very few general insurance brokers probably have the time to do the life as well. They are pretty busy with one or the other.”
 
Mumby said the complexity of life and P&C products means it would be a rare thing for a single broker to excel at selling both.
 
“It would be extremely difficult for an individual P&C broker to also sell and service life insurance, and vice versa,” she said. “In my opinion, it’s best that within the brokerage there are true experts in different areas who work as a team to ensure the success of this holistic customer approach.”  

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