Diversification is the key to maximizing profitability in today’s insurance market. The ability to present a comprehensive portfolio of solutions allows agents to establish a trusted advisor relationship with clients, so they will seek out the agent’s counsel when looking to resolve specific business challenges.
Also, agents who limit the scope of services they provide leave the door open for others to compete for the client’s attention and loyalty. This not only erodes the client-agent relationship, but is tantamount to leaving money on the table.
For maximum impact, diversification must extend beyond product lines to include capturing new markets. It is no longer feasible to focus solely on small business or large group sales, for example. A diversified market mix is just as critical to success as a diversified portfolio.
Consider the challenges faced by agents specializing in group health. Employer-sponsored health insurance has been declining since 2001, dropping below 60 percent in 2006. To survive, savvy agents expanded their portfolios to include high-deductible plans and voluntary products that allowed employers to beef up their benefits packages without adding to their overall costs. They also took advantage of the opportunity to move into the individual health market, building a profitable niche by meeting the needs of employees whose employer-sponsored coverage was reduced or eliminated.
While diversification can be an intimidating prospect – especially when it comes with a steep learning curve – it doesn’t have to be. The trick is to follow a proven process focused on gaining insight into the full scope of a client’s needs, and to establish partnerships that provide access to expert resources and support.
Uncover Overt, Covert Needs
The importance of diversification is definitely not lost on agents. The problem is that few agents believe they can do so successfully. In fact, one survey found that less than half of agents believed they were effective at cross-selling despite believing that it was very important for success.
However, by putting into practice a proven process that places the focus on becoming a trusted advisor rather than on making an immediate one-off sale, an agent can glean the information necessary to identify specific needs and challenges, regardless of the client’s business. Further, by letting go of the fear of not having an immediate answer, agents can take the time to investigate potential solutions and return with a comprehensive proposal that delivers real value to the client.
Integral to this process, particularly in the case of new markets, is posing the right questions to elicit responses that paint a comprehensive picture of the client’s needs – including those the client may not be aware they have or realize that the agent can help address. This requires leaving personal agendas, such as a goal of selling a group medical plan, at the door and focusing instead on identifying the client’s full scope of needs.
For example, if a client says they are looking for a new dental plan, the agent should hone in on the issues behind that need. Is the current plan simply too expensive? Are they unhappy with the benefits? Are they concerned about something with the carrier? Or perhaps the real issue is that the premiums for their medical plans were increased and the budget is no longer there to continue providing dental coverage under the same circumstances.
Unless an agent is attuned to the messages the client is sending, they will miss opportunities to introduce new products that may not have been on the radar previously.
Armed with a clear understanding of the client’s needs, the next step is to identify solutions. Particularly when the opportunity calls for a new product, this may involve setting a second meeting at which time the agent can present their suggestions for meeting those needs.
When building a relationship, it is acceptable to walk away from the first meeting without making that sale. In fact, it is preferred, as doing so will give the agent time to compile a comprehensive, tailored solution.
When the agent does return to present that solution, success depends upon their ability to clearly communicate the value of what they are offering. Identify the benefits as they relate to the client’s situation, along with any key differentiators, so that the client understands the value they will derive.
Throughout the entire process, the agent should be:
- Checking for acceptance to ensure that the client remains engaged in the process, that the agent hasn’t missed any key concerns or hesitations, and that they have not headed down a wrong path by selling to a need or promising a solution that does not exist
- Acknowledging and addressing concerns, including misunderstandings by the client regarding what the agent can or cannot offer, skepticisms about whether or not promised benefits can be delivered, and drawbacks such as benefits that simply cannot be provided
The overarching goal of this process is to instill in the client confidence that the agent respects their needs and will address them to the best of their ability. It is by establishing that level of trust and following through on the promises made that an agent can capitalize on opportunities to cross-sell into new markets.
Effective Diversification
One of the main concerns agents have when faced with the prospect of diversifying their portfolios and markets is the resources it can take to achieve the level of expertise necessary to effectively advise their clients. It’s understandable. No one wants to be faced with a question they cannot immediately answer.
A second concern is the ability to effectively support the new products an agent is offering when they do not have an intimate understanding of the nuances involved in underwriting and other back-office functions. Again, the concern is valid.
This is where partnering with a full-service organization comes into play.
The primary benefit of partnering with a full-service organization comes from the consultative support it can provide. Armed with the needs identified during the four-step sales process, an agent can make one call to access the expertise required to effectively evaluate their client’s needs and generate a proposal offering a best-of-breed portfolio of products.
The best organizations will provide support during the presentation, acting as the “silent partner” to provide agents with the information they need to address specific concerns and questions raised by the client. They can dig into the granular details, walking the agent through the value propositions of multiple products and carriers so that they can convey to their client the full scope of benefits they will receive from the recommended solutions.
Full-service organizations that handle enrollment and underwriting as well as back-office administration, including billing, payment processing and customer service, also create a competitive advantage for the agent by offering seamless support from the front-end to the back-end of the process. Along the way, they help the agent by simplifying the appointment process with multiple carriers.
Top-tier service providers also do not vanish after the initial sale. They work with the agent through the life of a policy, including identifying retention opportunities by adjusting plan designs or tweaking offerings to meet the changing needs of the group.
When evaluating a service provider to handle the heavy-lifting of diversification, agents should look for organizations that provide access to live representatives who will consult with the agent rather than simply provide quotes. They should also turn proposals around within 24 hours, offer the same level of compensation that the agent would receive by going directly to the carrier, and offer “best-of-breed” carrier offerings for multiple product lines versus a single carrier that offers multiple lines of coverage.
Finally, the partner organization should provide services to the agent beyond sales support, and focus as much on helping an agent retain business as on helping the agent write new business.
By following a proven sales process focused on identifying the full scope of a client’s needs, and by leveraging the strength of a full-service organization, agents can efficiently and effectively overcome the obstacles to diversification.
Jay McLauchlin is senior vice president of sales and distribution with HealthPlan Services.