According to Reed.co.uk, the average salary for an insurance broker in the UK is £38,668, while according to the Bureau of Labor Statistics, the median salary for a U.S. insurance agent is $49,990.
A substantial portion of that income comes from policy renewals commissions — especially after 5 years of employment.
The Trouble with Renewals
Policy renewal season can be the best time of year for an insurance agent, because renewals represent “easy money” for work already done in the past. All you have to do is secure the renewal from the client. But, here’s where things get tricky.
Policy renewals at many agencies are still handled manually. Meaning, the agent has to reach out to the policyholder and ask for the renewal. If the agent forgets, the policy lapses. If the policy lapses, the renewal is lost. Once you've failed to lock in the renewal, the client may decide to take his or her business elsewhere, lured by the promise of more personalized attention or a better deal.
It hurts the agent’s reputation, the agency’s reputation and, of course, it results in lost commissions.
Not only that, but fewer policy renewals means less revenue for your agency. If enough firms in the industry suffer from the same problem, it increases the risk that disintermediation will take over. That is to say, it increases the likelihood of a new normal wherein the entire industry is modeled on consumers buying policies online, directly from the insurers.
That paints grim picture for agents and brokers alike, but panic is still premature. It doesn’t have to be that way, and with the help of good technology applied intelligently, it won't be.
Automate your Policy Renewals
The most damaging aspect of the policy renewal process is that it is still done manually at many agencies. By implementing an intelligent digital management platform, your agency can automate the process and increase your renewal rates. How?
For one thing, automation reduces keystroke errors.
The more manual data entry agents have to process, the more likely they are to make mistakes. When workflows are automated, agents can move onto more useful activities, like making sales. An automated system will also send alerts directly to the client when it’s time for them to renew their policy and, as soon as it’s accepted by the client, the policy is renewed. Just like that, without requiring any intervention from the agent.
In some cases, the client might need to sign a document, but this can usually be done electronically through an online portal.
Not only does automation benefit the agent, it benefits the client as well. According to insurer Direct Line, 5% of motorists drive uninsured for a short period of time. Of those, 27% believed they had insurance when they didn’t and 30% simply forgot to renew their coverage.
This chart by Statista displays the number of nonelderly people without health insurance in the U.S. in 2016, by household type.
The numbers are eye-opening.
Think about it for a moment. Suppose 5% of your clients did not have insurance when they were supposed to or when they thought they did. How much of a hero would you be if your agency guaranteed that coverage would automatically renew?
Even if policyholders later decided to go with another agent, they'd never fall victim to a gap in coverage. Most clients appreciate agents who look out for them in this way. Some might even feel so loyal that they’d overlook a modest increase in their premiums.
Use Predictive Analytics
If you’re not leveraging the data at your fingertips, you’re missing out on significant opportunities to optimize your renewal process. Digital management platforms use predictive analytics to analyze various patterns in client data.
An intelligent platform can notify you what policies a client currently owns and what coverage he or she might be interested in based on demographic information, actuarial data, consumer psychology, or policy gaps. By tapping into this information, you can figure out what’s most likely to persuade your clients to renew their policies with you.
For example, let’s say one of your clients owns a manufacturing business. You sell her business interruption insurance, which will pay for lost income as well as expenses in the event of a disaster. But this is the only policy she’s purchased from you. You know from previous interactions with this client that her business is growing and posting profits every quarter.
While her business is doing well, the data in your system shows she doesn’t have the full coverage she needs. When purchasing business interruption insurance, one would typically consider property insurance as well. Especially if the business owns expensive equipment, property insurance is a must.
It looks like this client may have “fallen through the cracks”. She has some coverage, but not enough (and not enough of the right kind of) insurance for her business or her current and expected growth.
Your company’s analytics also show she’s young, which means she’s nowhere near retiring and looking to sell the business. So, it’s definitely worth your effort to get the renewal and encourage her to expand her coverage. Thanks to your integrated management platform, you have valuable, actionable intelligence on your client, which you can use to approach her with a smart sales pitch that genuinely makes sense and doesn’t feel forced or awkward.
This is why predictive analytics is so important. It helps you identify and prioritize high-value clients and be proactive with your service.
Where To Go From Here
If your agency is still processing renewals manually, consider upgrading to a digital management platform. It’s never too late to change. And, pretty soon, you may not have much of a choice. The competition will be too stiff to ignore.
Yes, it may be difficult to change the way your agency currently operates. But, you may be surprised by the amount of additional revenue it brings back to your agency, especially revenue from an increase in policy renewals.