When your clients’ policies come up for renewal, do you:
- Renew them unchanged, or
- Review them with your clients to determine whether they need new or updated coverage?
If you chose the first one, you’re likely stunting your agency’s growth, squeezing your profit margins and risking errors and omissions liability claims. Reviewing and updating your existing clients’ coverage is one of the best things you can do for your agency. Here are some reasons why:
The costs they’re insuring against keep changing. Lumber prices jumped from under $500 per 1,000 feet in the fall of 2020 to more than $1,700 in early 2021. An upstate New York home builder reported that all housing components containing wood have similarly increased. Steel prices have also gone up. This means that the replacement cost of homes and commercial buildings your clients are insuring have increased significantly.
It’s not just construction costs that are rising; general inflation has picked up. Consumer prices rose between June 2020 and 2021 at the fastest rate in 13 years.
Consequently, your clients’ building and personal property insurance limits may now be insufficient to cover total losses.
They also need more liability insurance. A $1 million each occurrence limit for personal or general liability insurance may have seemed fine 30 years ago; today, $5 million should be the starting point. Lawsuit settlements and jury damage awards rise every year. Additional layers of liability coverage are often relatively affordable, so clients can buy more protection without spending much.
Better protection for your clients means more revenue for you. Missouri agent Tim Wahl writes about how a family purchasing a new home came to him to get a comparison price quote. After he explained their coverage gaps, they left his office with earthquake coverage on the home, a jewelry floater, higher auto liability limits and a $1 million umbrella. He sold better protection and boosted his revenue without competing on price.
Offering more coverage and documenting rejections protects against E&O claims. A client with a sizable uninsured loss may blame the agent. Look no further than the E&O cases described on this website for examples. If you’ve offered coverage to fill their gaps and documented the responses, it will be much harder for them to win lawsuits against you. Even if your agency is in the right, your still have to deal with the lawsuits and your reputation may suffer.
Coverage reviews are especially important if you’ve purchased another agency. Buying an agency is a large investment of time and money. It makes sense to ensure that the newly acquired clients have the chance to get better coverage. You will retain the clients who value good advice and lose the ones who are price focused.
You can make some coverage changes without the client’s permission. For example, a homeowners or commercial property policy with inflation guard coverage automatically boosts limits by a specified percentage. Other changes, such as higher liability limits or ordinance or law coverage, require the client’s consent. These should be topics for pre-renewal conversations.
Having a system for coverage reviews will make it easier. Some agency management systems, such as EZLynx Agency Suites and HawkSoft Agency Intelligence, can automate sending emails to clients at renewal time and remind you to make follow-up phone calls. They also make it easy to retrieve information about existing coverage.
Reviewing clients’ coverage at renewal is a lot of work. However, acquiring clients organically or by purchasing an agency can be more expensive. Selling them more coverage will produce good returns on your investment. It will also make them less susceptible to wooing by your price-obsessed competitors. For the good of your clients and your agency, make regular coverage reviews standard operating procedure.