Each month an independent agent starts with a fresh set of business objectives. New Goals, new strategies, new sales plans. To remain competitive, an agent must keep up with insurance trends and technology.
How to Increase Agency Revenue Through Retention
One critical concept you can’t ignore while working on expanding your customer base is retention. All your effort in generating new business may soon translate into decreased productivity or even a negative net outcome if you underestimate your retention rate.
The margins in the insurance industry are rather slim. A couple of percentage points separate a record profit from a record debt ratio.
The average national retention rate is 84%. If your retention rate is 80%, but your book business increases by 20%, your business book remains flat on the paper. One main factor to consider is how much your margin is reduced when you look at the time and effort required to find a new policy compared to handling a policy renewal. This is especially true for Small Commercial products such as business owner policies (BOP), in which the effort required to quote often outweighs earnings.
The simplest solution to manage this is to utilize insurtech, especially for business owner policies (BOPs) and other time-intensive insurance products. Consider sufficiently reviewing your business records. You're more likely to discover which products generate the highest profits. Therefore, it's critical to ensure that each new policy fits your business model, not bind every conceivable policy.
What Independent Agents Should Consider
When examining retention and how to maximize it, your agency should consider the following points:
- For growth, are your agents using “instant quotes” (APIs) to pull multiple quotes from your partnered carriers?
- Are your agents using a Competitive Differentiation Table™ to collect quotes and organize them quickly to see which fit best for your client?
- Are your agents using a Smart Client Proposal™ to provide easy-to-follow transparency to potential clients?
Providing your agents with insurtech solutions makes their jobs smoother. It creates a proactive sales experience as opposed to a reactive one. When you first address the most frequently asked questions, it determines whether this potential client is a suitable fit for your brokerage, which is critical.
Insurtech Can Help Maintain a Healthy Retention Rate
Using insurtech to handle current insurance is highly recommended. With it, independent agents have the information required to maintain a high retention rate and increase the profitability of policies with traditionally low profitability like business owner policies.
Moreover, one obstacle that insurtech addresses is the ability to pull and use the data more effectively. The more easily and quickly agents can gather data, the less administrative time is required to examine and flag the appropriate policies.
Give your account managers, brokers, and agents a concise list of customers to cross-sell to. They have more time to analyze the client and make more thorough recommendations with a shorter, more comprehensive list. When clients need new insurance lines due to life circumstances, they are more likely to remain if they are already clients.
And the policies that were not chosen are equally essential. You now know the products and customers that work best for you moving forward. By reducing your least profitable business solutions, you'll increase your retention rate and cut down on administrative expenses. This makes the most of both time and energy.
Contact us to find out more to help your independent agents achieve easy revenue increases.