Knowledge is Sales Power

Why does a person buy insurance? To meet contractual obligations and leaseholder agreements, to fulfill mortgage lenders obligations and to protect against the “what if.” These are only a few reasons why people buy. Understanding consumers’ motivations for the purpose of placing coverage is an important factor for the insurance broker. The role of the insurance broker is to complete applications of insurance with the insured and approach the insurance marketplace for the best coverage and premium. Once this process is complete, the insured binds coverage and the deal is sold. Or is it this easy?

To be a successful producer in the insurance industry, one must realize at an early point that insurance sales cannot be carried out like sales in other industries. To be successful, you must first remember that the insured is purchasing a contract; should a loss by a peril occur that is outlined in the agreement, the insurer will indemnify the insured. Think about this: the insured is purchasing a piece of paper in case something happens. So if the insured has never experienced a major loss (as many have not), what value do they see in this piece of paper we call a policy? If the insured does not see value in an insurance offering, why would they buy? Learn the insured’s business and industry conditions. Ask questions relevant to your prospective client. Find their need, and then provide an option that will meet their need or solve their problem. But remember, a solution that worked for a similar insured in the same industry will not always work again. Find the insured’s buying needs and influences and then plan your approach. Be client-centric in your approach: this is not about you, but rather the insured. Every brokerage has the best markets, loss control services and claims specialists. What every brokerage does not have is you — the producer.

Here is where insurance brokers earn their commission, by providing valued service to insureds, thereby differentiating one brokerage from the next. The insured can see and measure this part of the process. But it is much more difficult for the typical insured to measure a policy.

Knowledge is power and will only lead to further success for any broker’s sales. Product knowledge will allow the broker to find a policy that meets the insured’s needs; in our industry, these products are always changing. Once you have identified the insured’s buying influences and issues, finding the best insurer and policy is a major factor to presenting a viable solution.

The insurance industry is extremely cyclical. It is dependant on many external factors leading to profitability of insurers and brokers. Stock market conditions, interest rates and inflation are all economic factors of which the clients are aware. But how many brokers explain how these conditions affect the insurance premium, or their ability to even obtain coverage at times? Every renewal is a sale for a broker. Once you close an account, that insured has no obligation to spend more than one, two or any years for that matter with the same broker. Outlining the marketplace for the insured and explaining why premiums fall in a soft market and rise in a hard market is extremely important. Can you explain the concept of cash-flow underwriting? Stop and think about an account you may have lost in a hard market simply because the insured was not properly educated on the market conditions that directly affected them.

Educating yourself with sales seminars and training courses will never hurt. Educating yourself in your clients’ industries will allow you to speak intelligently with your prospects about their businesses. Also, taking classes through organizations such as the Insurance Institute of Canada will add instant value to your offering.

As you educate yourself, it is important to remember knowledge that is relevant today may not be relevant tomorrow. Products, underwriting guidelines, rates, insurers’ appetites and even the number of insurers in the marketplace are always changing. For the insured, the insurance broker can represent the one constant in the insurance market. The broker is the service provider. Due to the multitude of factors affecting the insurance marketplace (many not even mentioned in this article), you must become comfortable with change.

Selling insurance will no longer lead to success. Rather, to be successful increasing new business and retention, a broker must assess the insured’s business and the risk associated with it. The next step is to arrange the best policy/policies available for the insured at the most competitive premium.

Throughout this process, continue to educate and service the insured’s needs. Ultimately, bring the insured the products and service that best suit their needs and not yours. In doing so, the insured will buy from you, and this is the key.

Selling insurance is not always the most glamorous process. But providing insureds with an offer they will buy, meeting their needs, and allowing insureds to buy based on their own decision are all key to increased sales for you and profitability for your brokerage. The following is a process that can be followed to help in this method:

1. Review of the insured’s industry prior to your first meeting;

2. Ask questions about the insured’s business. (Make sure you listen);

3. Identify the insured’s needs;

4. Evaluate the options available;

5. Present your solution and illustrate the transition process; and

6. Implement your solution and evaluate your experience with this insured.

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Be client-centric in your approach: this is not about you, but rather the insured.