Distinguishing Your Agency in the Marketplace

By Michael J. Weinberg – REPRINT from The Automated Agency Report (TAAR)

How one agency uses a third-party service to render exceptional value-added service.

This article describes how a third-party service, called AcuComp, helped our agency to establish a unique identity in our marketplace.

For years, my partners and I worried that our agents could not answer the simple question, “Why should a prospective client buy insurance from our agency?” Sure, they knew all the right buzzwords, could tell wonderful stories about our agency’s longevity, and wax eloquently about the wonderful service we provided. But when it came to the bottom line, we felt our agents truly believed that the decision to purchase insurance always boiled down to price – “who offered the lowest premium?”

The trouble with selling price
Most of the products we sell, including workers compensation policies, have essentially transparent differences in coverages and benefits. In most cases, we can’t look a client in the eye and say that one workers comp policy or one BOP is significantly different or better than another. With this as the case, most agents know that they can either sell service or price. But service is intangible, is hard to quantify, and is even more difficult to sell. Besides, “don’t all insurance agents offer better service?” customers wonder. What’s left, then, other than price? Price is quantifiable, concrete, and easy to sell.

In our agency we have a real problem selling “price only” for several reasons. Fire, wheat you get on price, you lose on price. Second, and particularly true with larger accounts, initial price means very little. What really matters is the value-added services you offer to hold the premiums at the lowest possible levels year after year. Third, if we can’t articulate our competitive advantage and value-added services, neither our agents nor our prospects/clients will appreciate their worth. Fourth, a true belief in our value-added service is what will induce an agent to sell with conviction and a prospect to buy with confidence.

Harder to sell workers comp
In our area, one of the toughest sales is the larger works comp policy. For many years agents have told clients that, “Comp is comp is comp. We all use the same rates, the same experience modification factors, and the same discounts. There is no reason to shop.”

Then things changed. Agents began to sell value-added services – risk management, drug-free workplace and safety programs, managed care, etc. Our agency jumped on the bandwagon. We even presented seminars for local trade organizations and soon became expects in safety engineering as well. This worked fine; that is, until our competitors began offering those same services. Then, we began to look for a new “hook” to bring in the larger prospects.

About this time we detected an increased level of frustration with the way companies handled works comp claims. Many of our clients and prospects had experience a claim in which they felt that the injured employee was “milking the system” and that the carrier did too little to investigate, controvert, and minimize the claim. Also, insured seemed to realize that there was intense regulatory and tax pressure on carriers to create large loss servers, resulting in greatly increased premiums to the client. And while many of us where successfully doing a lot to minimize the number of claims, we were doing little to minimize their severity. No matter how hard we tried, some serious claims still happened.

AcuComp to the rescue
As our agency pondered the works comp problem a “white knight”, in the form of Jay Conant, founder and president of National Insurance Advisory Services (NIAS), rode in and presented his “AcuComp” services. This meeting proved to be a turning point for our agency.

AcuComp offers three primary services. The first is an experience modification verification program, which checks and verifies experience modification factors in all states. Yes, other programs do the same thing and many agencies offer this service. But what has made us give the nod to NIAS is that when a mistake in the calculation is discovered, NIAS handles making the correction in all states. This gave us a chance to take the typical service one step further by offering a capability we lacked internally.

Second, AcuComp creates numerous mathematical models. Using actual data, AcuComp will compare the client’s or prospect’s actual “mod” to a hypothetical “mod” that the client could have had if he had self-insured up to various levels. For example, a client who turned in a very claim and had a “mod” of, let’s say, 1.10, could have perhaps achieved a “mod” of either 1.00 or .90 had they simply paid out of pocket (or self-insured) all claims below a level of $2,500 or $5,000, respectively. The program then compares the client’s present premium at the 1.10 “mod” level to what the premium would have been with the lower “mods.” Finally, the program shows the extra claims cost versus the premium savings and allows a client to knowledgably and confidently select a loss sensitive program in the future that will yield the lowest possible total net cost. This is a great service for the client who recognizes the need for such analysis, but lacks the capability to perform it “in house”.

AcuComp’s third service is the coup de grace. We furnish AcuComp with actual loss runs for our largest client’s each month. Then, on a quarterly basis, AcuComp sends a team to each carrier’s claims department to pull all of our clients’ claims with over $10,000 in either paid losses or reserves. Too often, companies set large reserves for all the wrong reasons. AcuComp audits each claim, asks the company to justify or reduce reserves, and checks for possible third-party reimbursements for claims paid. After each visit, we receive a written report for each claim, which we forward to our clients with personalized letters.

AcuComp’s services have demonstrated to our clients that we can deliver on our promise, saving them tens of thousands of dollars in premium expense. The service is truly appreciated, and replacement by a competitor is virtually impossible.

A marketing tool that distinguishes us
Initially we purchased the service with a view toward marketing to new accounts. And it worked! We can now go to a prospect who had previously been told that “comp is comp is comp” and show that there is a difference in who you buy from. For the same price the client previously paid (and the same carrier, if desired), we could offer these value-added services that virtually every prospect could see as an ultimate premium reducer. And who could say “no” when there was no charge for the services? We’ll gladly bear the modest cost of the AcuComp fee for the ability to attract and retain quality business. Suddenly, we closed larger accounts than ever before and often doing it with agent of record letters!

Thus, with both new and existing accounts, the issue of our “unique identity” is clearly defined. AcuComp’s services are one of the tools we use to establish top-flight service in our market area. Now when a prospect asks, “Why should I buy from your agency?” our agents are prepared with a clear and strong answer.

REPRINT from The Automated Agency Report (TAAR)

Contact NIAS

National Insurance Application Systems, Inc. has only one mission – to create as many measurable differentiators as possible for our member agents – resulting in higher policy counts, profits, closing ratios and spectacular growth.

AcuComp® improves loss ratios an average of 30 percent and permanently lowers experience modifiers together with premiums an average of 27 percent over time.

National Insurance Application Systems, Inc.

5730 Corporate Way, Suite 230
West Palm Beach, FL 33407

Toll Free: 800-883-5600
Local: 561-697-4500
Fax: 561-689-1009
Email: info@acucomp.com