As you begin to move to selling on value as opposed to price, it’s extremely important that you understand some of the things you need to do to educate your prospects on how you sell and how to buy from you. One of the things that I talk to everybody about when I get in and meet with them, if they’ve been with one of these national agencies for a while is their reputation in the marketplace. That’s what I want to talk to you about today is your prospect’s reputation in the marketplace and why that’s important. Come on, let’s go talk.
If you’re not going to focus on price, you have to teach your prospects how to buy from you based on value. One thing that most prospects don’t realize when I engage with them is that they have a reputation in the marketplace. See, so many people have been taught that the best quote wins that they go to every market every year. And guess what? You go to 20 insurance companies, 19 underwriters lose every year. While I realize that some of you are cold hearted out here and you think that that’s just the nature of the beast, that couldn’t be further from the truth. The problem we have is that markets begin to dry up, appetites change, economics shift, but underwriters never lose their memory. It’s very, very difficult to have an underwriter who’s lost a piece of business six years in a row, be willing to quote for the seventh. Even worse, what about the guys that go out or the ladies that go out just to block the market and never had any intent whatsoever in placing business with that? That’s nuts. You have to get in there and educate your prospect on how much damage is being done. It might be by their design, it might just be the way that their representation handles things, but either way you could be alienating the best carrier for them. So when you get in there to talk to your prospects, talk to them about broker or agent selection, not market assignment, not RFP, and not just shotgunning and looking for the best price period. You need to get them to understand why it’s important for you to control the process, and then when you do control that process, you need to make sure that you’re having honest and open communication with your underwriters.
In my firm, one of the things that we do is we ask our clients to give us a three year commitment to the market they’re going to go with. Many times because of the condition of the account, the underwriter in the company’s going to need three years, just to make sure that it’s going to be profitable for them. They don’t want to stick their neck on the line for the first year only to get hammered with a claim and then you leave go somewhere else. Really bad for them, honestly. So we ask our clients for a three year commitment. Now, at the end of that three years, we may go out and just validate pricing in the market. I’m not saying we’re going to leave the carrier, but every three years, it makes sense from a due diligence standpoint, to go out, to see where things are. See insurance relationships in the middle market are about much more than just premium.
Claims handling, coverages, all of the things that you need to look at that go into that account besides the price. When we talk about total cost of risk, one of the things that’s costing some of your prospects right now, inside of their total cost of risk, frankly, is their reputation in the marketplace. Because if they have a bad reputation with a good company that could have saved them money or would have had a form that covered claims that otherwise weren’t, that’s money they’re spending out of their pocket. Take the time to educate your prospects, build the relationship with your underwriters, set expectations appropriately in the marketing process, and I can tell you right now, if you do just these few little things that I talked about today, you’re going to kill it in commercial insurance.
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Until next time:Â Kill or get killed!
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