It’s an especially difficult time for insurance agents, who are finding that much of their marketing plans have been laid to waste. Let’s face it, social distancing has wreaked havoc on attending conferences and shaking hands with potential customers. It’s becoming increasingly challenging for agents to meet prospects while bleeding existing clients who can’t pay their bills.
While insurance agents are scrambling to find new ways to meet people during the COVID-19 pandemic, insurance companies are offering discounts on policies because policyholders are driving less. In essence, agents are making smaller commissions while struggling to take on new business. Even with the price breaks, however, customers are letting their car insurance policies lapse, sometimes out of sheer desperation. And that’s worse than a smaller commission.
The same holds true in health insurance. When you consider the fact that the average health insurance premium for single coverage in 2019 was $7,188 per year while the average premium for family coverage was $20,576 per year, you can see why some people are skipping health insurance this year, especially if they are unemployed.
To many agents it seems like policy-drought season, but insurance technology companies like SmartFinancial are seeing an increase in user traffic to their websites because people are trying to beat the rates their insurers and agents are offering them. While it may not seem that way to many struggling agents, people are still buying insurance.
In fact, there’s been a spike in life insurance sales, especially with younger people, since the coronavirus pandemic began. Also, a segment of the population that stopped buying health insurance once the individual mandate was lifted is buying health insurance now because it’s cheaper for them than going without if they get infected with COVID-19. People are actively comparison-shopping health insurance, car insurance and homeowners insurance to save a few dollars. They’re just doing it alone, and on the Internet, not in an agent’s office.
Because marketing strategies need to shift to digital processes seamlessly, we foresee agents partnering with insurance technology companies in greater numbers and more comprehensively than ever. Before the pandemic, buying leads was a way to complement a marketing strategy but now it is the marketing strategy. We’ve seen many agents hit the ground running after opening their virtual doors while COVID was spiking. We’ve also seen bigger agencies use our services more robustly to compensate for the lack of in-person transactions.
In addition to shifting gears to digital processes of lead generation, client retention will be challenging but not impossible. Here are some tips on how to prevent clients from stopping their coverage altogether.
Tips on Preventing Clients from Lapsing on Coverage
1. Remind clients of the kinds of losses they may be responsible to pay if they are not insured. A few will consider breaking the law and letting their car insurance lapse entirely but most will simply downsize by carrying only the legal requirement, liability coverage alone, which won’t pay for damages to their own vehicle if they are the at-fault driver.
2. Tell the client that their wages may be garnished if they get into an accident and don’t have the legal requirements. If they are a homeowner and the accident was expensive enough, they are risking their home and other assets as well.
3. Educate the consumer about medical bankruptcy. Even if they have to pay upwards of $500 or $600 a month, it may not be as backbreaking as the medical bills they will receive with no health insurance protection at all. If your client has a pre-existing condition, buying health insurance may be the most cost-effective thing they do.
4. Share stories about clients who have not been so fortunate precisely because they were uninsured or underinsured. Every agent knows a high-worth individual who didn’t have high enough limits on their car insurance and ended up losing a lot more than they bargained for. Anecdotes about the very serious repercussions of going uninsured or underinsured are absolutely necessary when steering clients away from making foolish decisions.
5. Raise deductibles on homeowners insurance or car insurance to immediately lower premiums. Most consumers don’t understand how changing a deductible amount tips the bill on their monthly payments. Try that out for size if your consumer isn’t obligated to carry home insurance on a home that’s been paid off.
6. Build trust and establish a rapport even if business is only conducted off-site. Encourage clients to have Zoom meetings instead of just emailing or talking on the phone. The more solid your relationships are, the less apt consumers are to switching policies.