PERSONAL LINES SELLING

SELLING HOMEOWNERS INSURANCE

Paint a vivid picture

By Troy Korsgaden

I have a 2003 wall calendar that features the paintings of Claude Monet. It includes some of this French impressionist's more famous works, such as Jardin en fleurs (Flowering Gardens), Les Meules, fin d'eté (The Haystacks, End of Summer, Giverny), and my personal favorite, Les Bateaux Rouges, Argenteuil (Red Boats, Argenteuil). One does not have to be a fine-art aficionado to appreciate the expertise of a person who can portray such vivid, realistic images. The pictures on this calendar made me think about the importance of "painting" vivid pictures of real life scenarios when selling homeowners insurance.

The homeowners market is in turmoil. Availability is drying up as the number of companies offering homeowners insurance dwindles. Rates are going up and underwriting guidelines have gone beyond tightening to ... squeeze. Companies are scrambling to purge unprofitable business and increase rates for what most experts believe is an underpriced product.

It will take a creative strategy to maintain customers and win new ones. To stabilize your homeowners book of business and put your agency on a growth path in this important product line--also an important profit center for most agencies--we suggest the following:

1. Understand the homeowners product you offer.

You must know the fine points of your homeowners product in minute detail--what is covered and what is not covered.

2. Sell the fundamentals of insurance.

Help customers realign their thinking to understand that the homeowners package policy was never intended to be used as a "maintenance policy" for homeowners. We believe that homeowners coverage should be sold and bought to protect from large losses by covered perils. Period. Sure, it's unfortunate when Johnny's brand new bicycle is stolen, but gone are the days of turning in a
$500 claim with a $250 deductible. Although irritating, this situation is perceived in today's market as a nuisance claim. Instead, this type of loss is best handled by the home owner, not the insurance company.

3. Be sure customers are protected for reasonable claims.

The first example is a home fire. Of course, a claim on something this catastrophic should be covered. Another example is a major theft. Paint a vivid picture of a family returning home from vacation to discover that their home has been cleaned out of all personal belongings. The loss in this scenario should be covered by their homeowners policy. With this being said, it's important to contact the state department of insurance regarding an agent's responsibility for turning in known policyholder claims. You will also contact the company you represent regarding fair claims practices.

4. Educate your clients when selling or reviewing a homeowners policy.

It is important that your customers understand that a larger deductible and long-term thinking regarding claims will help them make the best decisions when purchasing this important coverage.

Many carriers offer multiline discounts. Don't assume that your clients understand this. Draw them a roadmap to show them why these discounts are available. Customers with multiple lines placed with one company are more profitable to the carrier (and typically to the agency). They tend to have fewer losses and, in our opinion, hold the same philosophy as our agency; that insurance is purchased to cover a loss greater than an amount that can be handled by the policyholder.

5. Sell all the coverages.

Homeowners package policies have important coverages beyond dwelling, contents and liability. However, most agents and their producers tend only to highlight these three, then jump right into price. In our sales training, we teach that this approach makes price the issue. We teach agency personnel to focus on what others choose to ignore.

Explain "Additional Living Expense" (ALE). It's easy to paint a picture so customers understand just how important this coverage will be in a catastrophic loss such as a fire. We explain that it's not only the fire that creates a hardship for the family, but there is the expense of hotel stays and eating out, followed by the hassle and expense of moving to temporary living quarters while the home is being rebuilt. Add additional costs such as utilities hookup, cable TV installation, etc., in the temporary digs. Good selling equals good story telling. Talk about other insureds who have had the experience and were grateful to have ALE coverage. There are many examples you can use. Just remember to focus on the coverage and provide stories to back them up ... not price. And when you finally get to the price, have an arsenal of third-party articles from newspapers and magazines to support rate increases.

6. Sell the value of the your carrier company's stability.

Stability is very important to customers in this volatile marketplace. They want to feel secure in the knowledge that the company you represent will be in business next month and next year. Sell the value of the agency and your ability to look at their personal lines accounts. Then look at these accounts from a risk management point of view. For example, let's say a customer has a homeowners policy, two auto policies and one jet ski policy for a total of four policies placed with your agency. Look at the whole picture. The likelihood of a claim on all four policies is slim. Therefore it is reasonable to recommend a higher deductible on all policies which saves dollars for the customer.

Bottom line

Industry experts continue to inform the marketplace that homeowners coverage remains underpriced. So, it's your responsibility to educate customers and advise them on how to navigate through these troubled times to purchase the appropriate coverage that will adequately protect their families. Be a Monet and paint a vivid picture.

The author

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." He is the author of Power Position Your Agency; A Guide to Insurance Agency Success. This and TKS's new audio tape set, "Building a Successful Insurance Agency: The 4 Essential Steps!", are available by calling (800) 524-6390, or visit the TKS Web site (www.tksystems.org).