As the world looks ahead, there are many changes in the car insurance industry’s focus. With tremendous opportunity on the horizon, many independent agents look at monoline car insurance agencies as a profitable choice. This is particularly important for those agents investing in capabilities to lead to greater growth for their business.
This article discusses the key elements of success with a monoline car insurance agency.
- Pros and cons of running a monoline car insurance agency
- Servicing and client retention in a car insurance agency
- Agency fees
- Is a physical office location a better option for monoline car insurance agencies?
- Customer reviews
- Filing claims
The car insurance industry challenge includes heightened competition, evolving loss trends, shifting customer preferences and the increased talent gap. Yet, the prospects for the long-term future still look good.
Pros and cons of running a monoline car insurance agency
To have a balanced view, let’s look at both the pros and cons of running a monoline car insurance agency. When the agency offers only car insurance to customers, there are differences both internally and externally. These variations impact how the agency operates and the core customer experience.
Internally, the agency specializing in car insurance uses fewer software packages and invests less in technology. Staff is easier and less expensive to hire and train. Employees with clerical and business backgrounds quickly pick up procedures. So, the agency requires fewer highly trained (and paid) insurance specialists.
Externally, marketing is cheaper and easier. With a monoline car insurance agency, niche marketing has a greater impact, more quickly. Customer experience is streamlined as it only takes a few minutes to set up car insurance—no lengthy conversations about beneficiaries and disability benefits.
Internally, staff and agents may find the work to be less challenging. Most car insurance customers respond to ads or walk-in, and renewal rates are incredibly high. So, there is not much in the way of “high-level sales” going on, as compared to multi-line agencies.
Externally, most customers deal with at least one other insurance agency. Customers also purchase homeowners or tenant insurance and life and disability insurance. Cross-selling to customers is impossible when you only carry one product.
Servicing and client retention in a car insurance agency
Customer retention is exceptionally high in a car insurance agency. The industry average is 84%, but many agencies do even better. With the right customer service, you can improve up to 95% or more.
In every industry, it costs more to acquire a new customer than to keep an existing one. And in the car insurance industry, customer acquisition costs are higher than in any other industry. Insurance agents spend between seven and nine times more to acquire a new customer than it takes to retain an existing one.
So how do you keep your customers? Two ways – 1) Don’t give them a reason to leave, and 2) Give them good reasons to stay.
- Don’t give them a reason to leave.
The insurance industry has the highest customer retention rate of any industry. So, as long as you don’t give a customer a reason to leave, they usually stay. Why might they leave?
- Trouble with a claim
- Increased (unexplained) premiums
- Competitor offering a better deal
- Unpleasant customer service experience
- Billing issues
Make a point of running your agency so you can manage these issues, and your customers have no reason to leave.
- Give them good reasons to stay.
One of the most critical factors for customer retention is to remain in contact between renewals. More contacts are better, but schedule at least two per year. That could sound like a lot of work, but with today’s technology, it is far easier than ever.
Give your customers digital options to learn about their insurance options, but don’t abandon them. Shoppers want to shop online, but a recent McKinsey report uncovered the fact that 3 out of 4 online insurance shoppers could not complete their transactions. So, we know that customers want digital insurance purchase options, but they need help to get what they want.
Automate your application and renewal process. Customers enter their application data, all in a straightforward application. This saves customers and agents significant time. And this system allows you to set up an automatic drip follow-up email flow. Each automatic email counts toward that customer contact goal.
Your customer’s experience is crucial to customer retention. Handling claims efficiently, digitizing, automating, and maintaining contact between renewals provide exceptional customer experiences. Give customers a positive experience, and your agency reaps the rewards.
Agency fees are an addition to a premium and the commission charged by retail or wholesale car insurance brokers. Ultimately the insurance buyer pays the fee. There are two specific overriding rules: (1) agents fully disclose the fees to insurance buyers and (2) the fees are reasonable.
Agency fees fall under several state regulatory restrictions. For example, Florida retail fees top out at $35. Minnesota treats agency fees as a surplus line premium and subjects the fees to a surplus line premium tax.
Sometimes, agency fees cover non-standard vehicle insurance policies because there tends to be more work on them. Those policies have more cancellations and re-writes from premium non-payments.
So, every time an agency employee deals with an individual policy, it increases the expense. That’s why many agents charge fees for their services. Because they wouldn’t earn anything by just selling and servicing customers requiring multiple transactions, so their insurance policies stay in force.
Is a physical office location a better option for monoline car insurance agencies?
Most monoline car insurance agencies rely on walk-in customers for a significant portion of their business. You’ll probably find that most agencies flourish in a business section of town where customers are already spending time (and money.)
Monoline care insurance agencies are a retail business, unlike many multi-line insurance agencies. So, the agency must show a retail storefront to both potential and renewal customers.
But as times are changing, agencies must adapt to more flexible communications options. FaceTime and Zoom chats are now mainstream enough that many customers prefer these platforms over simple phone calls. Many younger customers prefer a chat platform, and email works for all ages.
So, although a physical office location may be a better option for monoline care insurance agencies, it is time to implement more flexible communications.
Train your staff on the most popular technologies, so every customer has the option to communicate using their preferred method. Most of these technologies are incredibly inexpensive (or free) and well worth the investment.
If you are wondering which platforms are best for your customers, create a survey on your social media, or by email in Google Surveys. You’ll probably find your customers are quite happy to offer their opinions!
Every one of your customers now has a powerful tool in their hands. They can advertise the details of their experience (good or bad) with your agency. Count on the fact that every extraordinary experience your customers have will be published on Google My Business, Facebook or Yelp.
Every complaint becomes glaringly public. So, these reviews can make or break any agency.
How to Manage Customer Reviews
There are 3 keys to managing customer reviews, specifically negative reviews.
- Respond promptly. Don’t let the complaint sit there unanswered to fester.
- Begin by expressing that you appreciate that the customer has brought this to your attention. There is no need to specifically apologize unless your agency actually made a mistake.
- Explain the situation. Don’t worry about trying to change the mind of the poster of the review. You are talking to every potential client who will see this explanation. Be respectful, clear and persuasive.
Many agencies hire freelance writers to manage negative reviews. A freelance writer from outside the organization can approach the situation objectively. This objectivity allows for more precise, less emotional, more persuasive communications. (Because a bad review is bound to get under your skin!)
Creating an exceptional internal system for filing claims is the foundation for customer retention.
Filing a claim is an emotional process. Customers need help every step of the way to get everything back to normal as quickly as possible. Through your claims service, offer as many convenient ways to report a vehicle claim as possible. Most agencies use a toll free number, emails, or an online process.
As an independent monoline care insurance agency, dedicate the resources necessary to ensure that each customer gets a fair, equitable resolution.
Communicate clearly to customers what to expect when they file a claim. This makes the process easier and less frustrating for them to navigate.
Then by outlining these simple steps for customers, you’ll find expectations are easier to meet (and exceed.)
- File A Claim – Get a claim number
- Investigate the Claim – Collect the details of the accident
- Evaluate the Damage – Determine what should be repaired or replaced and get an estimate
- Review the Estimate – Discuss the settlement
- Wrap Up the Claim – Receive payment
So, can you be successful with a monoline car insurance agency? Most certainly, yes. You’ll need to focus on internal systems and niche marketing strategies, but overall, you’ll find it satisfying and profitable.