How your insurance agency can thrive during the pandemic
New habits and processes formed now to deal with financial challenges will hold long-term value for you and your business.
It might seem counterintuitive to talk about your insurance agency thriving during a pandemic and a worldwide economic downturn. But there are a lot of decisions you can make over the next few months that will not just keep you in business but put you in a stronger position than ever.
Here’s the bad news: Your insurance agency is very likely to see a drop-in revenue over the next two years, even as COVID-19 vaccines are distributed in the coming months, as it will take a while for enough people to be vaccinated to achieve herd immunity and for the economy to rebound.
Payrolls are going down amid higher than usual unemployment, which means workers comp premiums will be down. Liability premiums are based on sales, which are also down. Finally, some businesses are closing. Their insurance policies will be canceled or not renewed.
During the Great Recession, premiums went from growing around 4% annually to dropping at least 2% over two years. It then took another two years to recover to the prerecession level of written premiums.
But there is good news, too.
Insurance agencies are in much more stable positions than many businesses. Here are three reasons why:
- People are required by law to have car insurance and workers compensation insurance.
- They are required by their lenders to have homeowners coverage and business property coverage.
- They are required by contracts to carry liability coverage.
As you are making plans, one temptation may be to begin laying off staff. But study after study has shown this hurts your business in the long run.
While layoffs cut costs quickly — and payroll is often one of the biggest — they end up doing major damage to the business down the road.
My observation has been when a business must let people go, everybody else there starts wondering if they are going to be next.
Some of them will start looking for other jobs right away. You really cannot blame them.
Your best employees will always be able to find other jobs faster than your less valuable staff. That makes sense. Do you really hope to hire so-so employees away from your competitors/? Will layoffs lead to more staff leaving and your company losing your top staff?
Instead, focus on your customers.
Your customers’ premiums are going to go down as the economy struggles. To keep your commissions from decreasing, you need to have more customers.
It is more profitable to keep existing customers than it is to acquire new ones. But in a recession, that may take a little more work.
This year and next year, many more of your existing customers are going to shop around as they look to cut costs. So think about how your existing customers could be enticed to move their insurance. Is it lower premiums? Bundled policies? Added services? Write all these ideas down. Highlight the things in that list that are things you do not or cannot currently do.
Create a priority action list.
Most people start with the low-hanging fruit. You need to start with the actions with the largest impact.
Next, start looking at attracting new business. Past customers should be reviewed for reasons you lost the business. Can you address these reasons? Have you already tried and failed to get them back?
What about prospects you have presented to in the past but not acquired. Make a list just like the past customer list above and prioritize actions on this list.
Do you have a list of prospects you have never done business with? How have you approached them in the past? What were the results? Review this list, analyze and prioritize.
You could just make a list of everyone in your target market. Maybe that would be all the businesses in your town or county. Maybe that is a specific market like antique car collectors.
Decide if you represent carriers who offer a strong program for these prospects. There is no need to go after apartment complex owners if you do not have a carrier who will write coverage for them. Match your strengths with new lists.
In the coming 12 to 18 months, your prospects’ pain is likely to be the cost of coverage as much as anything else. Address cost savings, but remember, price is generally fourth or fifth on the list of reasons people decide to buy coverage.
The biggest decider in buying decisions is perceived value. Never forget to emphasize that value is equal to or more important than price.
Look at your competitors and make a written list of the features they offer online and the products or services they offer.
Compare this list to what your website does. Comparing the table to what your website does, what are the features these carrier’s websites offer that your website does not offer?
Chances are that there’s at least one or two upgrades that you could make to your site to attract more business or just keep the clients you have.
It also helps to have a more personal touch.
I have carefully watched how local businesses I deal with have changed or improved their marketing during the pandemic. My strong takeaway has been that businesses that have reached out in a personal way on a consistent basis — at least weekly, but sometimes more often — have been able to build more loyalty.
All the new habits and processes you form to deal with the changes being forced on you now are things that will hold long-term value for you and your business long after the pandemic has passed. Take advantage of the change and opportunity and you will not only get through this well, you will thrive for years to come.
Duke Williams (duke@simplyeasier.com) is founder of Simply Easier Payments, a leading no-cost total payment solution partner for insurance and other industries accepting mobile or online payments. Providing a one-stop credit card payment processing solution designed especially for insurance agencies, brokers and carriers, it offers a hassle-free experience without the high fees other providers charge, and it’s 100 percent compliant in all 50 states in the U.S. Since 1996, Simply Easier Payments has provided secure, compliant and reliable payment solutions to thousands of businesses around the nation with reliability and affordability being the cornerstone principles for delivering real, working solutions to its customers. To learn more, visit: https://www.simplyeasier.com.
These opinions are the author’s own.
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