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Even though it’s common for insurance premiums to change from year to year, that doesn’t mean clients are always willing to blindly accept those changes. If you want to increase your renewal success rates and have satisfied clients, then insurance agents need to be able to explain premium changes.
That includes discussing both premium increases and premium decreases. With increases, clients will want to know why they need to pay more, or else they might feel like they’re getting the short end of the stick. And while clients are generally happy to accept decreases, it’s often still worthwhile to take the time to explain what caused that discount.
Otherwise, clients might jump to conclusions, such as that you overcharged them in the past, or that their coverage limits have changed. Or, even if the premiums went down due to better risk management on their part, explaining that to clients can help them understand what they have to do to keep their rates down in the future.
Altogether, explaining premium changes to your clients provides insurance agents with opportunities to help clients understand what they’re paying for and form deeper client-agent relationships. In turn, that can lead to more renewals, policy add-ons, referrals, and other positive business benefits, as we’ll explore in this article.
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Discuss Why the Premium Changed
When a premium changes, it’s important to not just inform clients of the new rates. Insurance agents also need to dive into why that change occurred so that clients understand the value they’re getting from their policies. If the focus is solely on the price of the premium, then clients might be tempted to price shop with other insurers to find the lowest rate, rather than focusing on what their premium goes toward.
List the Specifics
As part of discussing why a premium changed, insurance agents should list out the specifics of what went into the new rate. Different lines of insurance can have different factors, so listing that out and sending the list or showing it to clients can help them understand their rates. For example, perhaps a property insurance policy premium went up due to changing risk levels in the neighborhood. Or maybe a premium went down due to a client installing security cameras.
Whatever the reasons for the premium changes, make sure to specify the cause and effect so that clients know that the rate is tied to specific areas like risk. That ultimately can help clients feel like they have more of a handle on what’s behind their rates, so they can at least feel like they’re not getting blindsided by price changes.
Set Up a Meeting
Besides listing the specifics of what caused a premium change, insurance agents should also offer to set up a meeting with clients to go over these factors in detail. This could be a video call, phone call, or in-person meeting, depending on the client’s preferences. The goals should be to answer any client questions around why the premium changed and help clients understand what they can do to potentially influence the rate going forward.
By doing so, you can also start to build more rapport with clients. They may not like it if their premium increases, but they may still appreciate you taking the time to walk them through why that’s occurred and want to hear your suggestions on how they can keep rates manageable.
Explore Ways to Offset Increased Rates
As mentioned, insurance agents should aim to go beyond just presenting clients with the new premium rate. They should also examine the factors behind those premium changes so that they can strategize with clients on ways to offset increased rates or keep rates low if there’s been a decrease.
While that might mean slightly less revenue for insurance agents in the short term, it can lead to more long-term growth by way of higher client satisfaction. If you can save clients money on their premiums, then they may be more likely to renew their policies with you, leave positive reviews, recommend other potential clients, etc.
Some of the ways that clients may be able to offset increased premium rates include:
Bundling Policies Through Your Agency
Instead of paying for two premium increases with separate insurance agencies, clients might be able to combine policies under one insurer for the same rate as they were paying separately, thereby avoiding the increase in the individual premiums. Or that could at least offset some of the increase, depending on the size of the bundle discount.
Adjusting Coverage Limits
While this strategy isn’t necessarily a good idea for everyone, some clients might find that they’d prefer to adjust coverage limits in order to offset premium increases. Help clients at least understand the connection between coverage and cost so that they can determine the balance that works for them.
Implementing Risk Reduction Measures
Many different types of insurance policies offer discounts or rebates for taking risk reduction measures. Depending on the type of policy, that could range from improving healthy habits to adding physical security devices. Help clients understand their options in this regard so that they can take the steps that feel right for them while also potentially reducing their insurance premiums.
Make Renewals Straightforward
When explaining premium changes to your clients, it can still be a difficult topic to talk about, even if you’re armed with quality information. No one wants to be the bearer of bad news and inform clients of a premium increase, for example, regardless of how much detail insurance agents can go into to explain the “why” behind the increase.
But while the conversations around premium increases can be difficult, insurance agents can make up for it to some degree by offering a simple, streamlined renewal process. If you can get clients past the roadblock of premium changes, then you want them to be able to easily finish the process of renewing their policies, rather than stonewalling them with complicated renewal procedures.
One way to simplify renewals is to automate the process using tools like Wheelhouse. Insurance agents can bulk quote renewals and then proactively send renewal quotes over to clients. Then, after discussing why premiums may have changed, agents can easily complete the process to renew their client’s policies for another year through the platform. They don’t have to wait for insurance agents to mail out cumbersome paperwork but can instead manage everything digitally.
When customers have a good experience, they’re generally willing to pay more. “The payoffs for valued, great experiences are tangible: up to a 16% price premium on products and services, plus increased loyalty,” notes PwC.
As such, it’s vital for insurance agents to not only explain premium changes but also have the tools and processes in place to provide a good renewal experience. That can make it easier for clients to swallow rate increases. Plus, if insurance agents do a good job walking clients through premium changes and providing a streamlined renewal process, it could be easier to convince clients to sign up for additional policies — such as after suggesting bundling as a way to offset rate increases — which thereby helps insurance agents grow their businesses overall.