Selling personal umbrellas is a nuisance, yes?
Some agents say, “Forget the $15 or $20 commission; it’s the perception of value-added service to the client. It helps round accounts and keep accounts. And a lot more people probably ought to have ‘em, period.”
Here are some thoughts from those who pay attention to umbrella sales:
• Have a commitment to personal lines rather than treating it as an accommodation to commercial lines clients. Pay CSRs a commission for rounding accounts with new business, including umbrellas. Make sure to build in an incentive that is worth their time
• Work the umbrella sale into a regular routine for new and renewal business. For example, offer it to every one of your customers. “A lot of it is mindset. Twenty-five to 30 years ago, we started to sell them to every customer who came in the office,” said Tom Lynch, president and owner of the Plastridge Agency in Delray Beach, Fla. “More than 50 percent of our clients have umbrellas, and some go up to $25 million.”
• Use a personal lines “auditor” to make outbound calls for customer account reviews,including the need for an umbrella. One of the auditor’s goals might be to quote an umbrella for every account without an umbrella “whether they want it or not,” said Matt Petro, an independent agent in Troy, N.Y.
• Have customers check a box indicating they understand they’ve been offered an umbrella but they’re declining. All new customers can be offered an umbrella right up front. Your E&O carrier will appreciate it and you might sell a few policies in the process.
• An emotional appeal works. “People really feel it’s a good thing to have. It makes them secure,” Lynch said. “And the more affluent an area where you’re located, the more people want to protect their assets. We tell them it’s good coverage and peace of mind.”
• Most customers simply aren’t aware of the breadth of coverages an independent agent offers. Send a postcard about umbrellas. Run articles in customer newsletters. Post the information on your website or include it in an email. Get the word out.
• Segment your customers. Get into your agency management system and get a profile of the book of business of auto policies with limits of 250/500 or higher, or 300 or higher on homeowners, and ask those customers if they want an umbrella policy.
Said Lynch: “It used to be that if you had a million dollars, you were a wealthy person. Now lots of people have a million. Let’s say the customer comes in and basically has nice cars and is looking for high limits of liability—let’s say $300,000—and they have a big mortgage. Once we explain what an umbrella does, and what the cost is, nine out of 10 clients we explain it to buy it.”
• But it’s not just the wealthy. “Anybody with assets to protect in today’s society needs an umbrella. It is not just the mega-wealthy anymore,” said Becky Lundberg, marketing director for RLI, a Peoria, Ill.-based stand-alone personal umbrella market. Teenagers and their lousy driving records raise liability flags and their parents are great targets for additional coverages. “Parents of teenage drivers are an easy pick,” says Stan Dreckman with Huggins/Dreckman Insurance Agency, Seal Beach, Calif.
• Rental property owners are excellent prospects. This is “a high-close ratio type of customer,” Dreckman said. “A current customer or prospect who owns property…has a lot to lose if a tenant’s dog bites someone. [He described a Murphy's Law rule: 'The tenant who lets his dog bite a child will not have any personal liability insurance—the claim will always go to the landlord.'] We’ve had people attacked by other tenants and then turned around and sued the landlord for renting the property to the ‘attacker.’”
Dreckman works with a real estate sales and property portfolio/wealth creation outfit (he swears it’s legitimate) that emphasizes the importance of umbrella policies. “These sales are automatic; it provides the outside endorsement of the need for the umbrella,” he said. “When we get calls on the umbrellas from the wealth—creation program, we turn these into packages. This makes for a good account with, hopefully, good retention because of the package. Also, when we get calls from our current insureds—because of our promotions of the umbrella product—we look at this as another means of further retaining the account for years to come.”
It’s not always easy to get umbrellas written. Most carriers want both the underlying auto and homeowners policies before they’ll write an umbrella. And they look for high underlying limits first. Raising the underlying limits can cost twice as much as the $150-price tag for the umbrella itself, some point out.
Stand-alone umbrella markets are a way around these issues.
Tom Suess with Clyde Roy Stelling Insurance in Monrovia, Calif., said that Los Angeles-based surplus lines broker Anderson & Murison “makes it easy. They don’t have all those ridiculous rules with the primary homeowners and auto. Insurance companies have made it difficult to sell them.”
RLI’s Lundberg said the company is allowing more people to qualify for this admitted market, and sales are rockin’. “We don’t care what the Best rating is on the underlying coverage. We do direct bill. We offer umbrellas on 100/300/50 if there are no youthful drivers in the household. We write more homes, more kids, more violations, more exposures; we expanded to all 50 states; and we took some rate decreases.”
RLI’s new $5-million umbrella program “is going nuts,” Lundberg said. “It amazes us how many people want that.”