What to Do When a Client Wants to Cancel a Policy
Tuesday, January 27, 2015/Industry Tips
It’s a regular day. You’re in your office filling out ACORD forms when the phone rings. It’s a client, and they are convinced they want to drop a policy.
For an insurance agent, this is a high-stakes situation. Play it right and you could do more than keep the business. You could be the insurance superhero for the client. Play it wrong and, well… let’s just work on getting it right.
Reality Check: Top Client Reasons for Canceling Insurance Policies
Let’s start by considering the reasons a client might want to cancel. According to the Ernst and Young Global Consumer Insurance Survey…
- 43 percent of consumers care most about the value of coverage for what they pay.
- 43 percent of consumers care about an insurer that’s easy to deal with.
- 40 percent care most about insurer responsiveness.
- 40 percent care most about policy recommendations that fit their needs or budget.
That’s kind of eye opening, isn’t it? Money obviously matters in client insurance decisions, but it isn’t the only factor. Communication and customer service have important roles, too.
What Do Clients Need to Know about Insurance to See its Value?
For laypeople, insurance is hard to wrap their heads around. They spend all this money to buy an intangible product they hope to never use. Few understand what coverage they need or how it works. Most only see their agents when it’s time to renew or when something goes wrong. In fact, that same Ernst and Young survey reports only 44 percent of consumers had contact with their agent in the past 18 months.
When you look at it that way, it’s not surprising that when they open their bill, clients start wondering if they need the insurance they have.
Some scenarios do make cancellation sensible, while others can best be handled by modifying the existing policy. The problem is clients don’t always know the difference. It’s up to you to clarify that they should consider…
- Canceling their Commercial Auto policy if they don’t plan on replacing their business-owned car or doing any work driving.
- Adding their restaurant’s second location to their Property Insurance.
- Buying Umbrella Insurance to meet a new customer’s liability requirements.
- Updating their General Liability policy when they offer a new product.
Pointing out that cancellation isn’t their only option can work, but you may also have to convince your client that cheaper coverage doesn’t always mean better – especially if they’ve been shopping around. Take the time to walk your client through their risks and how their policies protect their assets. And then show them where the cut-rate policy skimps.
Keeping Insurance Clients: An Ounce of Prevention
The most important way to keep clients satisfied it to prevent problems from starting. That means…
- Discussing their exposures.
- Identifying appropriate policies.
- Finding budget-friendly deductibles and limits.
- Recommending suitable endorsements.
Additionally, because you and your clients aren’t in constant contact, you need to make the most of every meeting. Even if you simply run into a client at the local coffee shop, ask them how business is going. Any response could have insurance implications. For example, a client who complains about a supplier’s rate hike may be struggling to make ends meet. Offer to review their policies to see if you can make adjustments that help their budget.
Also, listen closely for complaints. Was a claim denied? Was a settlement less than expected? These are problems that need to be addressed quickly and may require meeting with a client to discuss a possible change in plans.
Finally, remember to regularly communicate your value. Find tips on how to do this in the post, “3 Ways Insurance Agencies Can Grow with Social Media.”