How Often to Bid

[scott]

This for commercial lines producers...

A longtime client of yours - good client, right in your sweet spot - asks you how often she should bid her insurance using multiple agents. What do you tell her and why?

In a conversation with a great prospect the same question comes up. What do you say and why?

[Porter]

The answer is "as long as I am doing a good job for you never".

[superdash8]

That's nice, be we are "insurance salespeople", which unfortunately is still seen by many as a closely related to used car salesmen. The answer we give is "We are constantly keeping our eye on the insurance marketplace and if a new opportunity comes up that might be a fit for you we will certainly look at it for you. Otherwise we will plan to do a full market of your account every 3 years. We'll let you know what markets we will be going to and certainly if another agent has a market unavailable to us, by all means see what they can do. If it's better coverage at a better price than we may even recommend that you take advantage of it. The only thing we ask is that if we have access to a market you let us get the quote for you." This is the agent actually looking out for the clients best interest, not their own. They generally pick up on this and we are able to develop a long term relationship. We have a very high retention rate (97%) and don't waste time on having to constantly compete to keep accounts.

[darnovak]

Nice response 'superdash8'. Please consider using your real name. It's OK. Really.

[kevinraz]

When I was an agent I responded to that question like this:

"I hope that you are enjoying my service to you. I would think that every three years would be a good amount of time. If you market your account every year underwriters get tired of seeing your file if they do not write the account and won't work hard to secure your business. Let it sit with one carrier forever and you can't be sure of having the best program possible. Most reputable agents and underwriters agree that a full marketing of your account every three years serves the account, agent and company well.

As for me, I welcome the competition. All I ask is that we select markets before hand and let's see who comes up the winner. I have no fear that someone else can provide better service to you."

I never reminded them of the three year idea of bringing in another agent but I was sure to fully market it internally as promised. Most never had other agents come in as long as the service was good. If some screw up happened, well, all bets are off anyway.

[scott]

I have also posted this on a few Linkedin insurance groups. Interesting responses.

In a multi agent bid process should the incumbent get the last look?

When you are bidding a renewal within your fleet of insurers do you give the incumbent insurer the last look?

[AlstonCPCU]

Let's say you send your insurance out for "multi-bid" strategy to Agents X, Y and Z and the incumbent Agent X has contracts with every company under the sun and immediately sends applications to every market imaginable for quotes. Agents Y and Z then attempt to obtain quotes but receive messages back from their companies saying that Agent X has already obtained a quote or will be soon.

[darnovak]

The good old 'multi-bid' strategy. If the prospect told me who the other agents were and I knew who they represented, I would say to the prospect "I would like to send your specifications to the Green Ins Co and the Blue Ins Co. as I feel they have programs that best serve your insurance needs. Agent y and/or Z may very likely contact those companies in an attempt to block any other agents from quoting. How is this done you ask? Once the quote is delivered, agent y and/or z may or may not let you see the quote and may or may not 'bunk it up' to make it appear the quote they want you to accept (from the Yellow Ins Co) looks great. Now Mr. Prospect, I guarantee that if you give me exclusive authorizations to quote those two carriers, I will provide you with the quotes as received from the carriers so you can make an informed comparison."
Did this work? Once in a while it did. If the prospect hesitated or stalled me in any way, I very nicely terminated contact and went looking for more worthwhile pursuits. I tried to read my prospect as well as possible because sometimes I accomplished the task only to have the prospect take my quote and give it to another agent or broker and ask them to write the policy. Oh my, that never happens in the insurance business does it? Regards, DarNovak

[scott]

Here are the replies to date - from all sources. Ten pages of comments.

More comments welcome.

I am particularly interested in your thoughts on giving the incumbent insurer the last look at other insurer's quotes. What do you do?

https://docs.google.com/Doc?docid=0AVX3 ... NWMy&hl=en

[scott]

Insurance Renewal Process White Paper Draft Review Copy Available

As I have mentioned here before, I have been doing a great deal of thinking on the subject of the business insurance renewal process - from the insurance buyer's perspective.

I have put some of my ideas in a white paper, including ideas shared by the well over 100 people who commented on my posts, here and from other sites.

I'm interested in feedback on the draft of the first section of my white paper. I will provide a free draft to anyone interested. Absolutely no obligation and your email address will not be shared.

Please go here to sign-up.

[Mainemiss]

It seems to me that there is no "should" in the question as to whether the incumbant agent or company "should" get the last look. In each case it "should" depend on how well satisfied the buyer is with his agent and the agent with his company.

Neither the agent or the company can rest on "should." If they have been responsive and serviced their client/agent well then it could be lead to being granted a last look. Unless the agent asked the company for their absolute best price and the company later indicated, after the presentation was made, they could go lower, then, the trust is broken and they deserve to lose the account. As long as the agent has a fall back position. If not then we tend to scramble to keep the account.

The agent can his ask his client for a last look but his/her credibility is really on the line if the best premium/coverage proposal is not given up front. The old question of "if you could do better why didn't you do it the first time?"

Remember, selling on price alone is dangerous. Unique value must be added by the agent/agency. Most accounts will pay more than the lowest price if they are happy with the relationship.

[pita3333]

On the subject of pricing reductions.

Sometimes the broker/agent can and will give back some of their commission to the carrier in order to get lower pricing. This is not rebating, as they are giving it back to the carrier and not directly to their client. Goes along the lines of some comm is better than no comm.

This type of situation is one where a lower price could come back after "last best" presentation.

Does this represent a lack of credibility on part of the broker/agent who presented "last best"? I guess that is subject to each persons point of view. What I have seen happen is that the broker/agent who gives up some comm and obtains/retains the client is that they think that they will make up the loss of comm on the next renewal...but what usually happens is that they have now created a artificially low benchmark for the future.

This type of situation is exactly what happens when pricing becomes the sole or greatest purchase decision on the part of the client. One would hope that the client shares in the view that a person/agency deserves to get compensated for their work.

[scott]

I never suggest that an agent gives up commission (either when Im mentoring agents or when Im buying insurance for a client).

The issue is the insurer's ability to hit a stationary target.

Another point. Agents often say that price should not be the only issue. In ten years of helping insurance buyers I have yet to see the instance where price was the only issue. What does happen is agents fail to differentiate themselves from other agents - leaving only price as the differentiator. The client sees two good agents separated by a 20% price difference.

Price is also the easiest excuse for an insured to use. I sat in the room recently when an insured told his, now former, agent that he just could not ignore the premium savings he would get by changing agents. The truth was that the agent was unresponsive in normal service and reactive instead of proactive. It was easier for the client to blame it on price.

[pita3333]

Scott: I am in agreement with you on the comm reduction issue.

However, we all know that there are many who do this...particularly on new prospects. Wondering what suggestions the crowd has on how to combat this...meaning when they are about to loose an account to a broker/agent who is giving up comm to get the account.

Obviously the good/great broker/agent would have already addressed the other issues (service etc) with the client and the client has honestly disclosed any of those issues that are involved in the process.

[jeniffer1]

Oh bidding is something that has to be done very carefully. You just can't bid on everything otherwise it will look "spammy" and you won't get any benefit from that. So I would advise everyone not to go for quantity just look for the quality.