Insurance producers sell roughly the same product as their competitor. The competitive edge often touted by producers is that their firm “has the best service” or “this policy has broader coverage” or some other generalization. Price is handled by adjusting or justifying limits and deductibles.
But most independent agencies’ offerings are roughly the same. The majority of firms that specialize in personal lines are run in a similar fashion. Likewise, most firms that specialize in commercial lines or employee benefits are similar to their peers. For most firms, the insurance consumer will not see any major value difference between agencies. Products, price and service are basically the same and that leaves sales professionals selling on rapport, relationships and skills.
How can an insurance agency be perceived as unique and of good quality to the consumer? What can an agency do to make it stand out from the crowd? The answer: Offer the client additional services and products they cannot get from other agencies in town – services and products that the consumer needs and desires.
These additional services, or “value added services,” are valuable to the client. Value-added services (referred 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.
All VAS share the same characteristics:
- They do not form a basic service from the firm, but rather they add value to the total service offerings of the agency.
- VAS can be stand-alone products, although in practice it is unlikely.
- VAS do not counteract the basic services offered, but rather augment them.
- Since they are add-ons to the basic insurance services offered for a commission, they may be sold to the client for a fee, and meet the definition of what agencies can charge a fee for by law.
Value added services can be anything that insurance customers might want or need.
What to Offer?
Incorporating VAS into an agency will require rethinking the core beliefs and behaviors of an agency. It requires understanding the clients. It is important to evaluate what value added services and products the client might need and will want. There needs to be a pragmatic assessment on 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 offer the same exotic 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 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. For small to medium-sized agencies, the owners with administrative staff will have to do this and decide what can be offered cost-effectively for the firm and for the clients.
Keep it Simple
There are simple VAS that can be offered for little cost. Mike McGee of Investment Insurance Consultants in Katy, Texas, had these two thoughts: 1) Send out an email to clients with a checklist for disaster preparation, especially just before a pending event such as a tornado or hurricane. 2) Video or photograph a client’s possessions for claims purposes on a bi-annual basis and store the videos at the agency.
For more sophisticated VAS, internal risk management services and products can be developed from sources such as IRMI and RIMS. Local attorneys, CPAs and HR consultants can be tapped to offer package deals to clients. Third party administrators can be hired for claims management, COBRA administration and other services.
There are short cuts that can be used in lieu of creating customized VAS. Research what VAS the insurers might offer. Many companies will put together a package of VAS for their key agents and VIP policyholders.
There is a plethora of VAS that can be offered to commercial lines clients. Collaborate with a bookkeeping payroll service and offer it at a discount to clients. Hire a consultant that can develop a business disaster plan and sell that service to clients.
Put a risk manager’s hat on and think of what services a client might use. How about loss control training? Some agencies have a library of videos on various loss control issues that they loan out to clients. Help create a safety program for clients.
Employee benefits companies might offer training or support for compliance to regulations such as HIPAA and COBRA. Some agencies offer web-based online administration and enrollment for their benefits clients.
There are some companies that 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 their clients legal, HR and accounting services. This type of arrangement can put the small agency ahead of it larger competitors in the eyes of the consumer. These organizations do charge a membership fee for these offerings.
Advisen provides its members with a variety of resources related to insurance products and industry specific news and data. Show clients how their insurance portfolio compares to its peers or periodically sending clients key industry specific news related to insurance.
There are two benefits to the agency. First, by offering these additional services and products, the agency will bring in a new income stream. Second, the client will become more of an advocate of the agency and less likely to move to another agent/broker because of the value these services provide them.
Start small and methodically add services and products. Keep the main focus on insurance products. Add value to that service before you add value-added services. Don’t get bogged down handling the details of the VAS – they should be mostly outsourced. Firms that offer value added services will stand out from the competition.
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