A Q&A for agents looking at ways they can help their insureds
As personal lines insurance rates continue to climb across the country, both agents and policyholders are facing new challenges and opportunities in the landscape of property and casualty insurance.
To aid agents who may be unsure how to navigate these waters with their insureds, Agency Checklists connected with Bill Martin of the Boston-based insurer Plymouth Rock to discuss the current situation in the personal lines and, more pointedly, in the homeowners’ insurance marketplace. Mr. Martin is currently the President and CEO of Plymouth Rock Home Assurance and has been with the insurer since 2016.
In the email answers he provided to our questions below, Mr. Martin delves into the strategies that can help agents not only manage these increases but also strengthen their client relationships and enhance coverage understanding and satisfaction.
With “personal lines” insurance rates on the rise, what strategies can agents employ to help their clients navigate these increases and maintain adequate coverage?
We noticed that the agents with the highest retention let their customers know of significant coming rate increases long before companies send notice. They don’t remarket them.
Agents explain what is happening better to a policyholder than an inanimate notice they receive in the mail. While this may spur the client to ask an agent to shop their rates, it can also cement a long-term relationship with the agent. Any automated system can send a text, paper letter or email. Agents, as humans, can call, empathize and customize the requested information to what the customer is most curious and concerned about. They can start a conversation about the differences between carriers and what may happen during a new business (versus renewal) underwriting process. A personalized meeting can help answer questions about what is driving the rate increases and is an opportunity to suggest potential alternatives such as coverage changes.
We have seen conversations like these result in the purchase of more coverage, not just cost avoidance, as the conversation drifts to what coverage offers more security. Agents who use their advantage – a human, personal relationship – win a more loyal customer who is buying for financial protection rather than to save a buck or two.
What role do agents play in helping policyholders understand the specific coverages included in their “personal lines” insurance policies?
It is a crucial role. Agents, unlike algorithms, don’t have to predict or guess what a homeowner needs. They can ask them about what they own, their activities and what risks they have or are likely to encounter. There is no service more customized than a conversation. When homeowners listen carefully, agents have the best vantage point to understand the specific needs and risks of the policyholder’s property and lifestyle. Based on this assessment, agents may recommend appropriate coverage limits and additional endorsements if necessary. For example, they may suggest additional coverage for valuable items like jewelry or artwork, but homeowners may recommend scheduled property or state value to avoid arguments if there is a claim. Insurance policies use dense technical language so that they can be defended in court against creative plaintiff lawyers. Agents can help decipher what coverage is intended, ensuring that policyholders understand what is excluded or limited. I have heard agents help policyholders weigh the cost implications of different coverage limits, add-ons and deductibles. Questions like “can you afford to lose or replace this item” help balance coverage needs with budget constraints.
How can agents assist clients in identifying potential coverage gaps and finding solutions to address them?
For homeowners, so much changes each year! Parents, children and renters move in and out. Kitchens, bathrooms and decks are remodeled. Some agents upgrade coverage as their customer’s income grows and have a checklist of the questions on hand to ask at renewal and make personalized policy recommendations. When customers understand what they are risking, they will want more, not less, coverage.
What are some common misconceptions policyholders have about their “personal lines” [homeowners] insurance, and how can agents help clarify these misunderstandings?
While 85% of homeowners in the U.S. have home insurance, only half actually know what their policies cover. For example, one of the biggest misconceptions policyholders have when it comes to homeowners’ insurance is that their policy covers damage created by natural disasters like floods and earthquakes – but this is not the case. Those coverages need to be sold when a bank does not require them. Sometimes a customer will say “I don’t have to buy flood insurance” because they aren’t in a special hazard zone as defined by the National Flood Insurance Program. “But why wouldn’t you,” is the right response from an agent – it is optional and much less expensive when a homeowner is not required to buy it. A chief focus for agents is to help clarify these misunderstandings by taking the time to walk through what their homeowner’s policy covers and what it doesn’t.
What resources or tools can insurers provide to agents to help them better educate their clients about their “personal lines” [homeowners] insurance policies?
The best insurance carriers provide tools to help agents better educate their clients about their homeowners insurance policies. At Plymouth Rock, we publish large amounts of educational materials such as brochures, infographics and guides that break down all of the different aspects of homeowners insurance policies. Agents often provide the materials directly to the customer after discussing it with them. The handouts cover topics like coverage types – such as dwelling, liability and contents – policy limits, sub-limits and deductibles. Each year, agents should check for updates to these materials – and seek information on emerging issues such as cost of construction increases – and keep them at their fingertips.
Technology is one of the best toolkits. Next time an agent quotes an optional coverage or a different limit and deductible, they should calculate how long it takes to go from one price to another. If it is anything more than instant, the carrier is trading off precision in pricing and underwriting for the extra profit margin customers are willing to give for a better and faster customer experience. Agents and policyholders alike should explore hundreds of options and carriers should not make it hard to do so.
Along the same lines, digital communication is becoming a preferred method of interaction among policyholders. More than 80% of consumers say they prefer texting with an agent. That is similar to a conversation, though homeowners and agents alike might miss important tone, inflection and body language clues. Agents who text can build closer customer bonds, according to a survey by Hi Marley, a provider of insurance communications software. The ability to communicate asynchronously – when available rather than making people wait – often speeds up rather than slows down response.
Customers may also need an explanation of the risks involved in skipping some coverages that they don’t understand. Agents should have a list of claim stories that respond to skeptical clients who may skip buying coverage which is important.
The best carriers invest in self-serve claims tools for their agents, such as ClaimXperience, Hover or PLNAR, that allow homeowners to follow along the entire claims process. The majority of phone calls to carriers during the claim process are for status updates. Putting the latest activity online reassures the client that such work is progressing quickly. This builds confidence the assigned adjuster has their interests top of their mind. It is no surprise that thinly staffed companies avoid revealing too much using tools like this. They are afraid they might be sued or that a customer may discover adjusters are unable to keep up. The best insurers provide agents with the tools that allow prospective customers the option to shop and file claims via chat, text and even in-app communications channels to interact with customers the way they prefer, fostering a better customer experience.
What are the most significant dangers of “going bare” or foregoing homeowners’ insurance, and how can agents convey these risks to their clients?
Ah, the big secret is unveiled – the difference between auto and home policies! Home insurance is not required. Agents can distinguish themselves by selling the options. Mortgage companies can require coverage for the replacement value of a home, but that is just one protection of many in a multi-peril policy. Homeowners are not forced to carry those optional coverages that protect risks without a lienholder interest.
Some who have paid off their mortgage or bought their home with cash do have the option of going “bare.” However, that decision can be financially catastrophic. A home is likely a homeowner’s biggest asset and they may be interested in passing it on to future generations. It would be foolish to risk it when insurance can protect it from one simple fire or natural disaster. I recently had a washer hose disconnect while I was out of town and the cost of repairing the premium flooring and “floor-touching” furnishings was absurd. And remember, if homeowners are liable for something other than a car accident, they can be sued for ALL of their assets as punishment, not just the value of their home.
If customers want to save money and can endure short-term financial shocks, agents should recommend they carry as high a deductible as possible. But, don’t go bare. However, if any kind of catastrophe occurs, homeowners may be left with no money and no home. This is where agents should step in and provide real-life examples, statistics and scenarios to illustrate the potential consequences of going without insurance. Peace of mind should never come with the words “I have never had a claim.”
As the Property & Casualty insurance industry evolves, what future challenges do you anticipate in terms of educating policyholders about their “personal lines” [homeowners] insurance, and how can agents and insurers work together to address these challenges?
This is all good news. Carriers are now differentiating services and coverage more and more and agents are using technology to make it better for clients. In the future, the insurance process will be easier and faster. The value provided by an agent has never been clearer. Every great insurance success story is a distribution story. Personalized agents that outsource insurance purchases and management for customers have the advantage and with climate, economic and technological changes to come, agents are being set up to be the winners.
