PERSONAL LINES SELLING


PERSONAL UMBRELLAS

By Troy Korsgaden

PersUmb As multiple lines agents, we have a unique opportunity to provide total asset and personal protection to our customers. While the "cheap" companies are selling low-cost, low-limit auto or home policies, we demonstrate greater dedication to our clients by providing complete coverage of all areas of risk.

We have the resources to ensure our customers' overall protection. Umbrella policy sales provide a perfect outlet for us to educate our clients on the true need for a blanket of insurance protection, and to simultaneously increase our revenue and expand our book of business.

Who currently has umbrella policies in place?

It is typical for 20% or fewer of a multi-line agency's customers to carry umbrella coverage. Recently we found that only 28% of our agency's customers have umbrella policies. Despite our company's heavy focus on marketing, we realized we had been bypassing a huge untapped corner of the insurance market.

Typically, customers who have umbrella policies are those who do business with multiple line insurance agents, and who are well-versed in insurance. They understand the vast array of legal risks today, and they grasp the high cost of litigation in the event of a lawsuit. As a result, they protect themselves with extra insurance, namely, the umbrella policy. We need to create more of these types of customers.

How to sell umbrellas

We need to take a unique approach to umbrella sales. Unlike other lines of insurance, it is not obvious to the average consumer why such a policy would be necessary. We must teach clients that umbrella policies often play the role of the "savior" when other coverages fail to indemnify the entire loss. The need for such a policy must be thoughtfully and strategically communicated to our customers.

Umbrellas have a relatively minimal cost and a huge payoff. Most customers do not know that an umbrella could save them thousands, even millions, of dollars in the long run. It is our job to inform them not only of the common risks covered under the auto and homeowners policy, but of the less-common but equally devastating risks they face every day.

We must remember to look out for the overall interest of our clients, instead of focusing on the quick sale of a single policy. It is easy to forget that they don't know or understand their risks. We must be willing to break through their assumptions, be their advisors, and educate them--it's our job.

For example, most insureds do not know the difference between the terms personal injury and bodily injury. They may have coverage for bodily injury, but not for a personal injury lawsuit. We must teach them the difference and sell them the policies they need.

Sell the need

Financial planners have long been advising clients to refrain from moving forward with investment programs until they protect what they already have. As insurance agents, we must provide asset protection; it is important to place our clients in a position where they think about how hard they've worked for their home, car and 401(k). They don't want to lose these things simply because they didn't understand the need for protection and the risks of not having it (or not having enough).

It is our job to educate our insureds on what is available to them and why they need it. We must let them know up front that different customers have different needs; a million-dollar umbrella policy isn't the answer for everyone. Each client's need must be evaluated based not only on the contents of her/his bank account, but also on factors such as the client's revenue stream, future earnings and potential inheritance.

Our clients' risks also vary with lifestyle and occupation. For example, a writer may have a greater risk of being sued for libel, slander or defamation of character (personal injury) whereas the owner of a business that conducts boat tours would be at increased risk for bodily injury suits. Similarly, a couple with teen-aged drivers has more risk than a childless married couple. Most insureds don't think about the small details that determine the scope of their risk--unless we tell them.

Know your audience

Our clients want to know that they have the right kind of insurance. When selling umbrellas, it is essential to know your market and to target customers who fit your specific underwriting guidelines.

More specifically, you can look at your customers' current liability limits to help determine the category they're in. In our agency, 51% of our clients have 100/300/100 bodily injury and property damage limits, while only 28% maintain limits of 250/500/100. We typically do not target umbrella sales at those whose limits are lower than 100/300/100.

Why sell umbrellas?

Agents rarely take advantage of the opportunity to sell umbrella policies. The first, and most obvious, reason to sell umbrella policies is to increase the premium brought in for a given customer. As we are well aware, additional premium is almost always beneficial to the agent. And, since the frequency of needing to use the policy is low, we have a greater chance of profiting.

There are other benefits of umbrella sales, one being the ability to retain customers for a longer period of time. It is easier to preserve existing business from clients who buy more policies from you; it usually prevents them from going to another agent later. Additional policy sales also help expand the trust relationship you have with clients and, in the case of a loss, the umbrella becomes the "savior" when no other policy covers the entire claim.

The main reason most people don't carry umbrellas is because they don't understand them. You have the power to change their minds instantly if you remember to poll your clients, educate them on and help them assess their individual risks, and demonstrate their need for additional coverage. *

The author

Twice named "Agent of the Year" from among 14,000 Farmers Insurance agents and a frequently featured motivational speaker at industry events, Troy Korsgaden has trained nearly 30,000 insurance agents and staff across the country using his industry-specific manual and seminar program, "Achieving Success in Agency Management." His recently released book, Power Position Your Agency; A Guide to Insurance Agency Success, explores, in depth, strategies for growing and retaining insurance agency business. For more information, call TKS, (800) 524-6390 or fax the company at (209) 625-1603.

©COPYRIGHT: The Rough Notes Magazine, 1999