If your business is all about auto and homeowners, AAA Washington Insurance Agency Vice President Rich Hawkins says you may be missing out on the business-building power of life insurance.
Think selling life insurance is a big hassle you just don’t need? Rich Hawkins, vice president of the Insurance Division for AAA Washington Insurance Agency, thinks you’ll change your mind once you learn the three big ways life insurance strengthens his company’s property and casualty (P&C) business.
Benefit No. 1:
Protect customers better by thinking less like an agent and more like a “risk manager” (and increase sales in the process).
Whether you’re talking auto, homeowners, long term care or life insurance, Hawkins says it’s all about managing risk to protect assets and income. That’s why he wants his agents to think less like sales people and more like “risk managers.”
“When we’re looking at a customer’s insurance portfolio, we don’t want to be switching hats from P&C to life insurance,” he said. “We don’t want our customers to feel like, ‘Gee, I came in for an auto and home quote and now this agent’s trying to talk me into something I didn’t ask for.’ To avoid that kind of feeling, we want to become very good at talking with customers about all of the exposures they have to risk.”
One way to do this is by asking relevant questions during the insurance review. For example, when you’re talking to a client about homeowners insurance to cover the property against loss, don’t forget to ask them if they also want to protect against income loss. In other words, ask them if they want to purchase life insurance protection so their loved ones can stay in the home should the primary breadwinner die.
If this kind of straight-forward logic doesn’t click with clients, here’s another way for them to think about risk: A typical person might buy auto insurance for a $20,000 car and choose a $250 deductible. This transfers $19,750 of the risk to the insurance company. And yet, they’ll retain 100 percent of the income-loss risk by going without life insurance.
“Let’s say the client makes $50,000 a year,” said Hawkins. “If he dies in a car accident the family will get a new $20,000 car, but now they’ve just lost $50,000 worth of annual income. It’s probably much easier for them to replace the car or ride the bus than it is to replace that lost income year after year. Their risk management portfolio is basically upside down.”
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To fix the problem, a client with a $250 deductible on their car might raise the deductible to $1,000. By assuming an additional $750 of risk they reduce their premium — a cost savings they can use to buy life insurance coverage (see the hypothetical scenario in the box on this page). Essentially they’re using pennies to buy dollars, and Hawkins knows from experience that clients presented with this concept almost always “get” that this is a much more cost-effective way to manage risk.
“We want to promote the risk-management idea by pulling life insurance into every P&C insurance interview,” he said. “We probably sell 400 or 500 homeowners policies every month. If we asked every customer that bought a homeowner policy if they also wanted to cover the mortgage — and that’s just a very natural question — we’d be selling 200 or 300 life insurance policies a month rather than 60 or 70. Obviously we’re not there yet, but it’s part of our training goals.”
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Benefit No. 2:
Improve customer retention by creating “total account clients.”
You’ve heard this before: If you sell a customer a stand-alone auto policy your retention is going to be around 50 to 60 percent. Add homeowners and it might jump to 70 or 80 percent. But also sell them a life insurance policy, and you’ve created what Hawkins calls a “total account client…someone who is never going to leave you unless they die or move out of your territory.”
What’s unique here is that AAA believes so strongly in the retention- and relationship-building power of life insurance that it gladly turns over 70 percent of commissions to the writing agent. Of the portion it keeps, the money goes back into marketing and advertising to sell more life insurance.
“We’re proud of the fact that we give our agents most of the life insurance commissions,” said Hawkins. “It’s our evidence to them that we believe this is important. It’s also an acknowledgement that we understand it takes a little extra work on their part. People call us to buy auto and homeowners, not life insurance. We know it’s going to take a little creativity and good solid sales skills, and we’re willing to reward them for it because we know it enhances the overall retention of our book.”
Benefit No. 3:
Retain quality employees by giving them a new, easy way to boost their personal income.
Don’t misunderstand. AAA Insurance Agency is first and foremost a P&C operation with about 90 percent of sales coming from auto and homeowners. Nevertheless, as mentioned above, the agency gives its 65-plus agents 70 percent of all life insurance commissions. That compares to a 30/70 split for P&C renewals and a 50/50 split for new P&C sales.
Why do they do it? We’ve already established that adding a life insurance sale can improve client retention, but it can also give agents an additional, morale-boosting source of income. Since implementing the compensation plan a few years ago, AAA has gone from three or four life applications a month to 60 or 70.
“This kind of incentive plan can help retain your strong producers by providing income opportunities that allow them to earn as much as they want,” said Hawkins. “The income potential is limitless.”
Hawkins said selling life insurance is also a good tool from a sales management perspective. If an agent wants more income, rather than talking about a raise or trying to squeeze more out of the P&C side, Hawkins works with them on the life insurance opportunity: “Our average life commission is around $600, and so we show our agents how just a little more activity with their existing client base could yield two or three life sales a month, possibly generating an additional $1,000 or more in commissions.”
Admittedly, it’s a fairly inexpensive incentive for AAA to offer. “With P&C, there’s a constant, ongoing need for service. Since most of those expenses are generated by the P&C business we cover those costs with P&C premiums,” he said. “But with life insurance, there’s virtually no customer service or administration by the agency. All we have to do is write the business and the rest is handled by the carrier.”
With Symetra Express, even writing the business is simple. His agents can get a quote, apply for and deliver a certificate of temporary insurance to qualified clients in as little as 10 minutes.
“Symetra makes life insurance easy to understand, easy to apply for and easy to deliver. And that,” he said, “helps us create multiline producers who enjoy greater financial opportunities, build relationship-cementing opportunities that improve client retention, and above all, provide the necessary insurance protection our customers need.”
For more information about how we can help turn your P&C agents into multiline producers, contact the Symetra Sales Center at invest@symetra.com or 1-800-706-0700.
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Other life insurance articles:
- Convertibility Matters
As we age, even small health problems like high blood pressure or weight gain can make term life insurance harder to get. Agent John Storbeck explains why clients find it reassuring to know that all of Symetra Life’s term policies are fully convertible to permanent insurance.
- Why ‘Buy Term and Invest the Rest’ Isn’t Always the Best Advice
Although semi-retired, Harold Roberts sells more than 120 life insurance policies a year — mostly permanent insurance. Here’s his secret.
- New Nursing Home Care Accelerated Benefit Provides Long Term Care Alternative
Symetra Life’s two no-cost living benefits can provide a long-term care safety net, with all the advantages of universal life insurance.
- Super Size That Life Sale With a ‘Combo’ Strategy
The combined premiums of a term life and universal life combo sale puts less financial stress on young families, while giving them versatile coverage.
- Sell a Life Policy in 10 Minutes, No Kidding
We've made selling life insurance so simple, so intuitive, that even your grandma could go online to get a quote, fill out an application, and deliver a certificate of temporary insurance in less than 10 minutes. (Restrictions apply to temporary insurance coverage.)
- ‘Temporary’ vs. ‘Conditional’ Coverage: Don’t Leave Clients Exposed
Symetra Life is one of only a handful of companies that offer "temporary" life insurance protection to eligible term life and universal life applicants. That means whether or not your client is ultimately approved, if they are eligible for temporary coverage they are automatically covered up to $250,000 from the day they submit their application — no ifs, ands or buts.
- Two Simple Ways to Sidestep ‘Errors & Omissions’ Lawsuits
If you’re licensed to sell life insurance (and other products) — and a lot of property and casualty firms bill themselves as full-service providers of auto, homeowners, life insurance and investments — you could be held liable if you don’t offer everything you have available that is appropriate for your client.
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Rich Hawkins, Vice President
AAA Washington Insurance Agency
Bellevue, Wash.
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