This October marks my 30th Anniversary in the insurance industry. Many things have changed since my first insurance sale. One difference is the average size of my clients and of the accounts I choose to work on. Initially, as a new agent my experience and confidence level precluded me from effectively pursuing larger accounts. As my knowledge and experience grew, so did the size, type & complexity of the accounts I was able to underwrite and service account generator. The other major difference is strategy and process involved in writing and retaining larger accounts. This strategy or process is the topic for this article. First, let's define what I consider a "Larger account".
To me, any Property & Casualty account which Approaches $500,000 in premium is considered a larger account. Or, any Life, Health or P&C account which generates $50,000 or more in commission or fee based income.
Knowledge Base Change: The first difference involves knowledge base. On smaller accounts, it proves valuable to have experience within their specific industry group. If you have an insurance program, or write a number of similar companies, it helps if your prospect or client perceives you as an industry expert. As companies grow, they lose the herd mentality and while it is important to understand their industry, it becomes more important for their Agent to understand and know a great deal about their individual business.
Sales Cycle: The next difference involves the sales cycle: Small commercial and BOP's can be found, rated, qualified and closed in 1 day with the help of online rating programs. Average P & C accounts generating 25,000 up to $250,000 in premium normally require 30 - 90 days and one or two visits to provide a proposal. Not so with the larger sale. This process will typically require a minimum of 6 months to 2 years to write, with a significant amount of research and time in front of the prospect.
Selling at different Levels: With smaller accounts, we typically sell to the owner, partner or perhaps a controller. This is typically a one on one sales process, and a one level sales process. With larger accounts, it is wise to sell at several different levels. What I mean to say, is this sale requires multiple visits with various people involved in the companies insurance program. One visit you may meet with the owner or CEO to discuss insurance issues, planning and service. On a different day you may meet with the Human Resource. Director on claims reporting, claims handling and review procedures.
Still another day you may take loss control through the facilities with production manager and then discuss any issues or recommendations before moving forward. In addition, interfacing with outside consultants becomes much more common, as safety directors and risk managers become prevalent and affect the insurance buying process, and influence the decision maker and other company employees who may affect the sale. The more complex and expansive the insurance program becomes, the more time is required to develop the necessary relationships, uncover issues, analyze needs, develop solutions and prepare a platform on which to sell.
Coverage: On smaller accounts, price often makes or breaks the deal. While price is still important in the large sale, other facets of the insurance program become more important. There are more "conditions" required by larger accounts, and if your agency or company cannot find a way to meet these conditions, they become glaring deficiencies which can preclude developing a business relationship. Some of the more complex coverage and service conditions which can be difficult to satisfy are:
Rating requirements. Larger companies with high values are often insistent upon an Excellent AM Best company rating. This knocks a lot of the companies in today's market out of the running. If your company isn't an A- paper company, one way to address this is to secure a "Cut Through Endorsement" Through Re-insurance.
Large Umbrella Limits: Companies with gross sales over 50 Million, difficult products exposures, large fleets or large employee populations often choose Higher Umbrella limits to protect their companies "Deep Pockets" Against litigation where punitive damage awards could cripple or Kill their company. It is important to secure competitive layers of excess Umbrella for these clients, which often exceed 10 million and can go much higher. If we can't find a good market, our paltry coverages, or our exorbitant price will prevent us from doing business.
D & O, E&O and EPLI: These and many other coverages which normally become advisory recommendations on many of our proposals for smaller companies now become critical and non-optional pieces of protection for owners and executives of larger companies. These also become personal coverage issues for many of the individuals you are working with for the company policy. Often, a larger firm will also ask for a certificate on E & O coverage from my agency as well.
BI & EE and contingent BI: Larger companies with CFO's or Financial Consultants become very aware of the importance of business interruption coverage, and Contingent B I involving sister companies, divisions and distributors. Limits and terms become critical negotiating points. Calculating appropriate limits for exposure, assessing probable maximum loss and helping to determine the risk tolerance of your prospect is an opportunity to cement relationships and show competence.
Values & Limits: With larger clients it seems everything is bigger. Fleets become massive, and employee populations become large enough to scare off work comp providers due to catastrophic loss exposure. Property values may exceed many insurance companies ability to provide adequate limits and reinsurance or risk sharing must be secured. Some of my clients have as many as 3 companies sharing the risk for property coverage. This makes it difficult for smaller companies and agencies to compete, but if you know where to go, you can find companies willing to provide additional layers or share risk. Each company will have its own set of coverage conditions that must be met. We must make sure all of these conditions uncovered and confirm that we can meet them before going too far down the road.
Service: What your company and your agency bring to the table become critical points beyond price and coverage. Larger companies are more interested in partnering with innovative, service oriented firms that they can leverage to access additional talent and infrastructure. Technology has made access to information extremely easy and our industry innovation give client's access to online services which allow them to file claims, write their own certificates and even make policy changes without calling their agent. Larger companies will take advantage of all loss control and safety service you & your company can offer, V.S typical smaller companies who want to pay their bill and be left alone Claims handling, follow up, return to work and reserving also become critical service components for the larger risk.
Risk Management: This menu of services allows us to become an integral part of the extended management team for a large company. They will willingly use your time and talent to better their bottom line. Deductibles, Self insurance and risk sharing or risk shifting become viable alternatives which must be explored.
Role Playing: One of the shifts I have noted is that the role of the insurance agent changes when working with larger companies. On smaller accounts, I wore all the hats and was "the" insurance contact. I had total control over the insurance program, and my relationship with my client was critical. With larger clients my role is more of a coordinator/consultant who anticipates the needs of the client and orchestrates the mix of people and products to meet these needs. One big obstacle for me was the control issue. The agent who writes the business actually becomes less important in the process as many other individuals from both company & agency become involved with the larger client.
Fear not! If you garner and direct the team approach effectively, larger clients tend to stick with you for many years. Why? Larger clients understand the amount of time required to "Shop" their insurance. Their criteria or qualifications are very difficult to meet, thus effectively thinning the competition. The larger client becomes directly involved and dependent upon the many people & services you bring to them. This can make moving a terribly difficult process.
There is much more to write about the larger sale, I'll close by saying my career goals and personal dreams remain the same as the day I started in this industry. My plan of action & approach to achieving them has changed. I prefer to write 10 large clients and service them on a monthly basis for ten or twenty years, than write 100 small companies and try to develop and sustain an effective plan of action for retention.
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