How Program Partners Can Help You Sell Value

“Price is what you pay. Value is what you get.”
—Warren Buffet

Agents, brokers and underwriters should heed Mr. Buffet’s advice and consider how they’re doing business. I’ll bet if I asked agents whether they are selling price or value, most would say price. I base that assumption on an online survey where price was the No. 1 reason why our program was not chosen.

If that’s true, then we’re treating commercial insurance as a commodity, and that’s a disservice to an industry built on relationships and to businesses that can benefit from what we offer. It also can be bad for your business. Selling cost versus coverage is a top reason why agents’ E&O claims are increasing.

This is clearly a tough market. Not only did the recession slash the sheer volume of available commercial accounts along with their revenues and payrolls, but the prolonged soft market squeezed margins and reduced agency revenues. Maintaining renewals is important, yet too many producers and underwriters are scared that giving clients anything but the lowest price will mean they could lose business.

Agents, brokers and underwriters together need to focus not just on price, but on value. One of the best ways to sell value is to take advantage of program partners — the MGAs and program administrators that have industry expertise and valuable resources.

Selling value means selling comprehensive coverage tailored to the insured, along with risk management, education and safety services that can improve the insured’s performance. This will improve loss ratios and experience mods, and lead to better premiums for a prolonged period, not just the current term.

For example, my company encourages agents and brokers to talk to gold and country clubs about a free CardioReady certification to ensure they have proper placement of AEDs, as well as training, maintenance and communication with emergency response providers.

Sudden cardiac arrest (SCA) is the leading cause of death in the United States, and when you study the factors that contribute to the statistics — victim’s age, time of day, and chance of survival decreasing as the time it takes an emergency responder to administer care — it’s an important topic for golf and country clubs. Certified clubs can properly respond to SCA events, protecting their members, guests and themselves.

Another MGA that has a program for emergency service providers joined forces with a local university to develop a distance-learning program that provides education on driving safety, firefighter safety, sexual harassment prevention and OSHA compliance for handling blood borne pathogens and infectious disease. Thus, it improves safety and provides value to emergency service providers.

The move from price to value begins with us. It is time to start building and focusing on long-term relationships with program partners and insureds. Insurance is a relationship business, so tap the resources of program partners, and take advantage of their specialized resources to create value for insureds. Remember, you have the sales and marketing knowledge of your MGA expert when needed.

Warren Buffet is known for looking at the big picture to build long-term value. If we in the insurance business can work together to sell value, not price, we will succeed in building the long-term relationships that will sustain us in any market.

Topics Mergers & Acquisitions Agencies Training Development Insurance Wholesale