Value-Added Services to Offer Clients

The insurance consumer will not see any significant value difference between insurance companies and insurance agencies. Products, price, and service are roughly the same. Insurance is really a commodity.

Consumers have new options to access insurance through insurtech/fintech (technology-related companies) that drive the channel distribution into new, non-traditional companies. Direct writers rely heavily on clever marketing to promote their brand presence. The local independent agency no longer has a captive audience.

To differentiate from others, salespeople are forced to sell on rapport, relationships, and sales skills. Things are said, such as “we have the best service” or “this policy has broader coverage.” Price sensitivity can often be handled by adjusting or justifying limits and deductibles.

How to Differentiate

How can the insurance industry in general, and a local insurance agency specifically, stand out and be perceived as offering an excellent, quality service to the consumer?

The answer is to provide the client with additional services and products they cannot get from the rest of the insurance industry or other agencies in town–services and products the consumer needs and desires, or new ones they don’t yet know that they need.

These additional services are called “value-added services,” and as the name describes, they are valuable to the client. Value-added services (referred to as “VAS” in this article) are add-ons to the core services of a business. They have unique characteristics and provide benefits to the client that core services cannot. VAS can be stand-alone products, although they are usually connected to the core service and intended to enhance it.

Increasing customer expectations are the initial driver in the offering and creation of VAS. The major players in the insurance industry react to meet these consumer demands. The insurtech/fintech companies develop new and innovative VAS that create new services that the customer did not have before. But what can the local independent agency do?

Anticipate and Collaborate

Incorporating VAS into an agency will require rethinking the agency’s core beliefs and behaviors. It requires understanding the current client’s needs and then filling in those gaps. It is equally important to anticipate future needs and develop or seek out VAS that will be attractive to the customer. VAS should be looked at as a way to collaborate and engage the customer while strengthening existing relationships, improving retention, and fostering new client acquisitions.

Value-added services can be anything insurance customers might want or need. There are two ways to categorize VAS.

First, the VAS can be in the form of advice and assistance. These VAS typically provide information to prevent or mitigate risk, as well as to let the customer better manage their property and lifestyle. Some ideas include risk management services, human resources services, attorney services, financial management services, estate planning, business consulting, disaster planning, identity theft protection, COBRA administration, loss control, workers’ compensation claims management, security protection, etc.

Second, the VAS can be a self-service tool, where the client has the ability to better manage their account and their insured risks on their own time. Consumers like the immediate access that self-service tools provide, and the agency usually has less service work to perform.

Self-service tools are generally in collaboration with the insurance company or some other third party. Some carriers allow the customer to have limited but direct access to their account online. Third-party vendors have created client portals that enable the customer to access information and make limited changes to their accounts. These include CSR24, Zywave, CertificatesNow, etc.

Next Steps

There needs to be a realistic assessment of what can be offered by the agency based on staff, time, and money limitations. Otherwise, these services are often outsourced for a fee. A smaller agency in a rural area might not be able to provide the same services a larger agency or regional broker offers to its high-end clients. However, that same small agency can put together an impressive package of value-added services and products that will differentiate it from its competitors.

Putting together a customized package of VAS can be rewarding but also incredibly time-consuming if it becomes too elaborate. If the agency is large, it might make sense to have a full-time employee who can research, analyze, and create a series of value-added services for the agency. In a small to medium-sized agency, the owners with administrative staff will have to do this and decide what can be offered cost effectively for the firm and its clients. Some agencies provide these services only for accounts over a specific size. Some agencies will pay for these services for their clients and sometimes a particular producer may pay for them. Others may charge the client for the use of these services.

Start Small

There are some very simple VAS options that can be done quickly and at minimal cost.

One client did this: 1) Send an email to clients with a checklist for disaster preparation, just before a pending event such as a tornado or hurricane. 2) Videotape or photograph a client’s possessions (personal and business) for claims purposes on a bi-annual basis and store the videos at the agency.

Some agencies are also offering drone service to look over a prospect’s properties for hazards an underwriter may be skeptical about, especially with wildfires in certain areas.

Education is an easy VAS option. Some agencies offer public workshops on insurance-related topics. Training can be customized for a specific client, as well, such as risk management, loss control, employee benefits compliance, etc. There are many sources to create an educational VAS. Internal risk management services and products can be developed from sources such as IRMI and RIMS. Advisen (www.advisen.com) provides its members with a variety of resources related to insurance products and industry-specific news and data. Imagine being able to show clients how their insurance portfolio compares to their peers through the use of industry-specific benchmarking. Or just send clients important industry news related to insurance. Doing comparisons of policy coverage forms between companies in proposals can also be helpful.

Outsourcing

There are short cuts that can be used in place of creating customized VAS. Insurance companies might offer some VAS services. Many companies will put together a package of VAS for key agents and VIP policyholders. For example, some companies offer VAS for their high-end personal lines clients, such as appraisal services, home monitoring, identity fraud mitigation, and background checks on domestic employees. Chubb’s private fire prevention services recently made the news during the California wildfires. Health insurers offer tele-medicine, health screening, and education on preventive health care. Life companies offer estate planning and retirement planning services.

Other local professionals can develop VAS packages for clients. Coordinate with local CPAs, attorneys, and payroll service providers to offer their services at a discount to clients. Hire a consultant that can develop a business disaster plan and sell that service to clients.

Some companies pre-package a set of value-added services that the typical insurance customer might desire. One such company is BizAssure (www.bizassure.com). Members can offer to their clients legal, HR, claims, and accounting services. This type of arrangement can put the small agency ahead of its larger competitors in the eyes of the consumer.

Free or Fee

Since these are add-ons to the primary insurance services offered for a commission, they should meet the definition of what agencies can charge a fee for by law. Therefore, a VAS can be sold to the client for a price as long as it is separately disclosed on the client invoice. Clients will love the ease of getting great additional services and products provided by their broker/agent, so don’t be surprised if a client does not mind paying a fee for these services.

Summary

Value-added services are increasing in importance to the insurance industry. There are at least three benefits to the agency. First, the client will become more of an advocate of the agency and less likely to move to another agent because of the value these services provide. Second, agencies that have VAS will have a market advantage and attract new clients. Finally, if the agency offers these additional services and products for a fee, the agency will bring in a new income stream.

Start small and methodically when adding services and products. However, do keep the focus on insurance products. Add value to that service before adding value-added services. Don’t get bogged down handling the details of the VAS–they can be mostly outsourced. This approach often does not require significant commitment from the agency.