View this article online: https://www.insurancejournal.com/magazines/mag-features/2006/06/19/70985.htm
Agents can make a difference in the perception of the insurance business if, instead of tracking and billing delinquent accounts, they turn everything around and call good customers, Kat Davis of Tower Hill Insurance in Gainesville, Fla., told Professional Insurance Agents of Florida members. Davis recently gave a presentation in Orlando, Fla,. on “Direct Billing Tips.”
Davis prodded agents for encouraging the customers that are costing them money while ignoring other customers that are profitable. She criticized them for “baby-sitting customers that don’t pay their bills.
“Is the post office at fault? Customers say they received their cancellation notice, but they never received their renewal bill. They never received their 10-day risk of cancellation notice. So you get your copy of the notice, what do you do?” she asked. “You file it, call them and track it some more.”
Davis explained that this is a common personal lines issue, in which the typical agent writes home and auto with a $1,000 premium. The audience told Davis the commission for such sales was typically $20 to $30.
How much does it cost?
“How much does cost you for your employees to keep this information on your books in employee filing time, computer time, mailing time and other procedures?” Davis asked.
The audience responded, $100 to $150.
Renewals
Davis pointed out that on such accounts, during the first year, the agent doesn’t make any profit. Profits begin with renewals, she noted.
“But when it comes to renewals, how much does it cost to remind your bad-payers, put payment info into your system, have a CSR from your office track it, check the company system to see if it was paid, etc.?” she asked.
Probably $200, the audience said.
“Are you making any money on an account like this when you have to keep tracking people and worrying about them?” Davis asked. Don’t forget about retention, she said. “Why would you want to retain this kind of account if you aren’t making any money?” she asked.
Referrals?
“Great, then they will refer all of their non-paying friends to you. So you are not making any money on them, and you have no idea unless you sit down and analyze it –how much time your staff takes on this, and how much extra pressure it puts on your staff,” she said.
Davis said this scenario is a good indicator of why agencies have problems keeping staff and problems hiring new employees.
Reinforcing bad behavior
“What have we accomplished by talking to bad pays?” Davis asked. “We reinforce their bad behavior because they have gotten away with it. You lost money. You gave the best service to your worst customer. This whole thing is a public relations issue for the insurance business.
“What else can the staff do with their time rather than tracking bad pay customers?” Davis continued. “They can sell insurance.”
According to Davis, it is much more productive to look at the files of good-paying customers and talk to them. “Do you think your staff could take five or 10 minutes [of] time once a week, or twice a week, or whatever, and spend a few hours calling your good clients?” she asked. “They can just ask, ‘Just wanted to know how you’re doing.”‘
“After you pick the customer up off the floor, the first thing that will come out of their mouth is “I paid my bill,” Davis said. “Think about that and the public relations issue. Think about this business. The only time [customers] get attention is when someone is checking up, or they get a refund.”
Nevertheless, Davis said the scenario can be controlled. “I have been an insurance consumer since I was 19 years old and working full time, and no agent has ever called me up, not one,” she said. Thus, she advised agents to call to talk to their good customers.
Among the questions agents could ask are: Did you know there have been legislative changes? Did you know that the insurance market has done, this, that, or the other? Did you know that Bismark is no longer an agent here and there, and this is why? Did you know that you can change your deductible and pay lower premiums?
To get conversation going, an agent can rely on two questions, Davis said: What did you do last weekend? And, what do you plan to do on your vacation?
With the answers to those two questions, a resourceful agent can generate answers to tie into the insurance business, Davis said. The answers could allow the agent to change the customers’ program, encourage them to buy new coverage, sell something and get a good result.
Once the conversation gets going, people might say, “You won’t believe what happened to me yesterday … my insurance agent called me up out of the blue.” That is much better use of an agent’s time, Davis concluded.