Online Competition

[Pathwayinsurance]

Insurance companies are paying close attention to the GEICO model of writing business direct. Agents need to implement aggressive marketing tactics To overcome the TV ($1 billion) budget this company has at their disposal.

What is The only compelling Proposition that GEICO can talk about?

Price.

Agents on the other hand can talk about a variety Of different services that can be offered versus a cheap price, a local agent clients can meet with versus a toll free number (and the guarantee that you would never speak with the same CSR twice when buying insurance direct) for customer service.

The local angle is just one advantage, there are many other advantage agents bring to the table.

You can scream 'value' all you want. Overwhelming trends indicate that the personal lines insurance product has been positioned as a commodity product by large segments of the insurance buying public. The GEICO/Progressive model emphasizing price is just one reason.

In no way am I forecasting the death of a market segment that will still and always want a personal touch for their insurance needs, it's just a shrinking piece of the pie that does not bode well for the licensed agent who wishes to embark on a new main street agency business venture, starting from scratch.

Personal lines insurance buyers have for years been separating into two groups...those who need higher limits of coverage and those just wishing to 'get by' with minimums. There's no longer a real place in our industry where a thougtful conversation takes place over the merits of 25/50 or 50/100 Aubo BI limits...the consumer has dictated that 250/500 is where they want to be if there are assets that need to be protected or 15/30 if the consumer is living a brick/board/beanbag lifestyle.

Technology advances and consumer demands and just plain marketplace changes are what will turn the smaller, boutique, main street insurance retailer into a dinosaur marching towards the tar pits in the coming decade.

I believe you are incorrect in your assumption. Clients do want value. You just need To take steps to educate them on why they need value. To give an example, how many people Feel irritated when they call to ask a question on The cable bill, phone bill, credit card To be connected to an individual the barely speaks English?

Companies employ customer service representatives in foreign countries because the wages are less.

The same principle applies when folks purchase insurance from Geico. For example if you purchase insurance from Geico And you need assistance on your car insurance policy You make a telephone call to a toll-free number. It's quite likely that you would never speak to the same CSR twice.

Clients really want familiarity, They want a relationship, Not a stranger. What we have to do as agents is to properly educate clients on The role and importance of the local agent.

If we are to assume that all insurance policies are identical in the coverage that they provide, Then from a pricing standpoint a direct model makes sense. However all insurance contracts are not the same. For example in the state of Ohio Geico has a provision (Along with State Farm) called 'other insurance' Clause.

While it's true that this clause is also found in many standard policies through carriers in the uninsured motorist and UIM section, This clause is found in their standard contractual language under liability. So in other words if you allow your brother to borrow your car and he causes an accident and you submit your claim through Geico (Assumes you are insured with Geico)

Geico will deny the claim Because the brother has insurance elsewhere, What if the brother only has state minimum limits, And you have 250,000 Limits?

Taking time to study contractual language and the policy language of your competitors is a powerful way to educate prospects that they need a professional local agent who understands the policies that they offer And your competitors.

Does that make sense?

[d's insurance store]

I believe you are incorrect in your assumption. Clients do want value. You just need To take steps to educate them on why they need value. To give an example, how many people Feel irritated when they call to ask a question on The cable bill, phone bill, credit card To be connected to an individual the barely speaks English?

Companies employ customer service representatives in foreign countries because the wages are less.

The same principle applies when folks purchase insurance from Geico. For example if you purchase insurance from Geico And you need assistance on your car insurance policy You make a telephone call to a toll-free number. It's quite likely that you would never speak to the same CSR twice.

Clients really want familiarity, They want a relationship, Not a stranger. What we have to do as agents is to properly educate clients on The role and importance of the local agent.

I'm not saying and have never said there isn't a segment of the insurance buying market that doesn't want or care about value, I just believe strongly it's a shrinking slice of the pie. If your business model surrounds yourself and your agency with clients who think you're the greatest insurance advisor in the world and shower you with praise and adulation throughout the work day, then you're going to come away with the view that the entire marketplace demands and appreciates and will pay for 'value'.

I respectfully submit that there are now and will be fewer people interested in that value proposition going foward, at least in the personal lines arena. 'Value' is also in the eyes of the beholder and to some, the ability to talk to an agency person and get a minor problem resolved is 'value' enough, while for others, a housecall and monthly phone reminders to pay a bill is 'value' demanded. The overwhelming conversation starter in an insurance relationship is 'how much?', not 'how much value?'. You may have developed a client base that is imune for the most part to looking elsewhere for the same product at a cheaper price, but what happens when they die off or move out of your area? Who's replacing those clients. And before you answer back that your phones continue to ring with prospect inquiries, think for a moment, are you making sales becuase you just happen to be lucky enough to have a really good rate with a carrier or two, or are you really honestly placing business at more than what they're now paying because you can sell and make a case for whatever version of 'value' you bring to the table? Sometimes it's the blessing of competitive rates that make us as agency principals think it's 'us' and not the rates.

I urge you to beware of elevating yourself and your position in people's lives. When they're actively in the market for insurance or when they need service or need to file a claim, you become a very important person in the client's life, but once that event has passed, you're nothing more than a service provider who is out of sight and mind until the next inflection point comes along.

[Robert742]

"I believe you are incorrect in your assumption. Clients do want value. You just need To take steps to educate them on why they need value. To give an example, how many people Feel irritated when they call to ask a question on The cable bill, phone bill, credit card To be connected to an individual the barely speaks English?

Companies employ customer service representatives in foreign countries because the wages are less.

The same principle applies when folks purchase insurance from Geico. For example if you purchase insurance from Geico And you need assistance on your car insurance policy You make a telephone call to a toll-free number. It's quite likely that you would never speak to the same CSR twice.

Clients really want familiarity, They want a relationship, Not a stranger. What we have to do as agents is to properly educate clients on The role and importance of the local agent.

If we are to assume that all insurance policies are identical in the coverage that they provide, Then from a pricing standpoint a direct model makes sense. However all insurance contracts are not the same. For example in the state of Ohio Geico has a provision (Along with State Farm) called 'other insurance' Clause.

While it's true that this clause is also found in many standard policies through carriers in the uninsured motorist and UIM section, This clause is found in their standard contractual language under liability. So in other words if you allow your brother to borrow your car and he causes an accident and you submit your claim through Geico (Assumes you are insured with Geico)

Geico will deny the claim Because the brother has insurance elsewhere, What if the brother only has state minimum limits, And you have 250,000 Limits?

Taking time to study contractual language and the policy language of your competitors is a powerful way to educate prospects that they need a professional local agent who understands the policies that they offer And your competitors.

Does that make sense?"

No, I think it is an insurance agent fantasy that customers are seeking a relationship with an insurance agent. But they do like familiarity. You may run across a customer, insured with an agent for the last 10 years, and find out they haven't had their coverage reviewed in years, but they are not interested in talking to you, because they are happy with their agent. What closes sales and what keeps customers is not the actual value the agent understands, but the perceived value of the individual customer. I had a customer once tell me how much they loved my company and service, only to further explain, "Yep, you are the best company, I can't find a lower rate anywhere else." With that customer, great service equals a great price. I had another customer I could save over $1,000 a year by rewriting his auto insurance to a newer subsidiary of the same company. The customer preferred the benefits, guarantee, and long history of the old policy, instead of the big price savings of the new policy.

You make a great point about the quality of service offered by a direct writer's call center, which should be relatable and a concern to every prospect you quote. But if you don't have competitive rates, it's not likely to make a difference. There are personal lines insurance consumers considering price less important. But these type of customers tend not to shop (unless they are difficult to please or shopping problems), and harder to reach these days. New agents are attracted to selling home & auto insurance, because people have to have it. But what I think many prospective agents do not realize until they start selling, is they are not so much selling a product people have to buy, as trying to get people already having the product to switch brands. It's not hard to find prospects willing to switch based on price. It's a lot harder to find prospects swayed by a value proposition.

Auto insurance is not a commodity, but it is perceived as one by most of the public, and sold that way by many agents and companies. Has anyone seen the 21st Century TV commercials pitching the same service and coverage as other companies, but at a better price? I know a good agent provides tremendous value, but if consumers see agents & personal service as an unessential convenience, the future of insurance agents may be the same as travel agents.

Today's consumer researches products they need to buy on the Web. It has never been easier for auto insurance customers to educate themselves on coverage, get accurate online price quotes, and purchase a policy through a website. Reaching consumers appreciating the value of an agent is harder than ever. Even if they are not on the DNC, people under thirty don't even listen to their voicemail, much less answer the phone. In today's busy world, who has time to sit down with an insurance agent? Particularly, if you can learn what you need to know and buy on the Internet, when you have a little time after 9 pm, after you put the kids to bed? The challenge to succeeding today in starting & growing a personal lines agency is enormous.

As for the "other insurance" clause in Geico & State Farm policies, I think you should check the wording again. The customer's insurance is usually primary in the situation you described. Does anyone else agree with Pathwayinsurance's interpretation? If he is right, it's an important distinction among companies.

[Pathwayinsurance]

I make it a habit to collect insuring agreements from competitors, the 'Other insurance' clause is most certainly in the policies I mentioned in Ohio.

When insurance agents decide to become educators and understand the policies that they are selling The type of client that they attract to their agency goes from the price shopper to the coverage shopper.

When insurance agents try to compete head-to-head on price, The client will leave you on price because that's the only thing that you have showed to them.

[ziiqui]

'other insurance' is a very important distinction in every auto insurance policy. For example, the new Farmers policy in California will only extend minimum liability limits 15/30/5 to someone (other than a household member) who borrows your vehicle with your permission. I'll bet you didn't know that!

[Robert742]

I make it a habit to collect insuring agreements from competitors, the 'Other insurance' clause is most certainly in the policies I mentioned in Ohio.

When insurance agents decide to become educators and understand the policies that they are selling The type of client that they attract to their agency goes from the price shopper to the coverage shopper.

When insurance agents try to compete head-to-head on price, The client will leave you on price because that's the only thing that you have showed to them.

Jack, all auto insurance policies have an "Other Insurance" clause -- I'm questioning your interpretation of it. Since you collect insuring agreements, would you please post Geico's other insurance clause? There is more than one Geico auto insurance subsidiary, so the other insurance clause may be different between, for example, Geico Casualty & Geico General. How about the Other Insurance clause from one of the State Farm companies? I would be very surprised if the language supports your interpretation.

[Pathwayinsurance]

I make it a habit to collect insuring agreements from competitors, the 'Other insurance' clause is most certainly in the policies I mentioned in Ohio.

When insurance agents decide to become educators and understand the policies that they are selling The type of client that they attract to their agency goes from the price shopper to the coverage shopper.

When insurance agents try to compete head-to-head on price, The client will leave you on price because that's the only thing that you have showed to them.

Jack, all auto insurance policies have an "Other Insurance" clause -- I'm questioning your interpretation of it. Since you collect insuring agreements, would you please post Geico's other insurance clause? There is more than one Geico auto insurance subsidiary, so the other insurance clause may be different between, for example, Geico Casualty & Geico General. How about the Other Insurance clause from one of the State Farm companies? I would be very surprised if the language supports your interpretation.

Ah Robert, not true! If I was Referring only to uninsured motorist that would be correct. Most insurance companies do not place a 'Other insurance' for Bodily injury, that is what I refer to. The best friend that Borrowed your automobile and then promptly causes an accident and injuries will invoke the 'other insurance' clause in the policies I mentioned(if your best friend has insurance)

[Pathwayinsurance]

I make it a habit to collect insuring agreements from competitors, the 'Other insurance' clause is most certainly in the policies I mentioned in Ohio.

When insurance agents decide to become educators and understand the policies that they are selling The type of client that they attract to their agency goes from the price shopper to the coverage shopper.

When insurance agents try to compete head-to-head on price, The client will leave you on price because that's the only thing that you have showed to them.

Jack, all auto insurance policies have an "Other Insurance" clause -- I'm questioning your interpretation of it. Since you collect insuring agreements, would you please post Geico's other insurance clause? There is more than one Geico auto insurance subsidiary, so the other insurance clause may be different between, for example, Geico Casualty & Geico General. How about the Other Insurance clause from one of the State Farm companies? I would be very surprised if the language supports your interpretation.

Ah Robert, not true! If I was Referring only to uninsured motorist that would be correct. Most insurance companies do not place a 'Other insurance' for Bodily injury, that is what I refer to. The best friend that Borrowed your automobile and then promptly causes an accident and injuries will invoke the 'other insurance' clause in the policies I mentioned(if your best friend has insurance)

Its true Contractual Language also differs. (For instance a company that provides preferred insurance on one program and nonstandard for another)

I am posting on my ipad and have no ability to upload the insuring agreement. If I remember I will copy the clause and post it when I have access to it.

You need to keep in mind That there is no requirement for insurance insuring agreements to be identical between companies, so Insurance companies are free to place within their legal contract any sort of exclusion that they wish as long as it does not violate public policy.

For instance another 'gotcha' clause in several Competitors in my market is the water backup clause for personal property.

When a water back up Occurs and $10,000 worth of your personal property is destroyed in the basement or lower level, you are out of luck! (No coverage for certain companies, also assumes you have that endorsement.)

Purely from a Marketing standpoint you should understand your competitors insurance contractual clauses and point out their weaknesses no matter if You are attempting to take business away or retain it, make sense?

This is just another reason why agents can show why Purchasing insurance direct Is a bad idea. Who would you rather buy insurance from, an expert that understands The very insurance policies they offer, or a company that quotes a cheap price?

[Pathwayinsurance]

I make it a habit to collect insuring agreements from competitors, the 'Other insurance' clause is most certainly in the policies I mentioned in Ohio.

When insurance agents decide to become educators and understand the policies that they are selling The type of client that they attract to their agency goes from the price shopper to the coverage shopper.

When insurance agents try to compete head-to-head on price, The client will leave you on price because that's the only thing that you have showed to them.

Jack, all auto insurance policies have an "Other Insurance" clause -- I'm questioning your interpretation of it. Since you collect insuring agreements, would you please post Geico's other insurance clause? There is more than one Geico auto insurance subsidiary, so the other insurance clause may be different between, for example, Geico Casualty & Geico General. How about the Other Insurance clause from one of the State Farm companies? I would be very surprised if the language supports your interpretation.

Robert, looks like you have a lead generation website, are you a licensed agent, Or just an affiliate marketer?

[Robert742]

Jack, I've been licensed since 1990, spending most of my career selling & servicing personal lines. I now run a web site providing information to help consumers shop for insurance.

Rather than questioning my experience, why don't you post the "other insurance" clause(s) to which you refer, so you can prove your claim State Farm & Geico sell an inferior auto insurance product?

[Robert742]

I'm sorry, Jack, I didn't see your other replies. Yes, the coverage for Water Back Up can differ a lot from company to company. There are sometimes important differences among the policies of different insurance companies. But you need to be careful, when you are talking about how coverage works for a company you do not represent. What you are saying about the "other insurance" clause is not accurate at all. I encourage you to double check what you think you know about it.

[Pathwayinsurance]

I'm sorry, Jack, I didn't see your other replies. Yes, the coverage for Water Back Up can differ a lot from company to company. There are sometimes important differences among the policies of different insurance companies. But you need to be careful, when you are talking about how coverage works for a company you do not represent. What you are saying about the "other insurance" clause is not accurate at all. I encourage you to double check what you think you know about it.

Robert I'm sorry to say but you are 100% incorrect.

The other insurance clause is indeed in the insuring agreement I mentioned. This is a new way for companies to increase their profits by 'passing the buck' to another insurance company when someone borrows your vehicle and they cause an accident with injuries when that driver is insured with another company.

If you sell insurance, next time you replace a Geico policy request that the insured give you the insuring agreement and read it for yourself! Perhaps your next statement will be, 'wow Jack was right after all.'

I don't frequent this forum much, so if i remember to post that excerpt i will do it...on my iPad again!!

I'm really busy helping other agents with marketing. (I own my agency and Web Insurance Network.)

[Robert742]

Jack, until you present policy wording backing your interpretation, I'm going to strongly disagree with you. I know you are busy with making a living, but when you have time, I would appreciate you (or anyone else) posting Geico's other insurance clause, and from which state & Geico subsidiary's insuring agreement it appears.

If what you say is true, I may want to blog about it, to inform consumers. With proof, I can admit you're right, but I hope this conversation has led you to at least double check the wording of the other insurance clause, to make sure you are correct in your interpretation, and not misrepresenting Geico's product.