AINS 101: How Do Insurers Reach Customers?

Welcome to part 5 of my AINS 101 series. This section of The Institutes’ course is only 15 minutes long compared to the previous sections which are 20+ mins each, so lucky you, you get a short article as well!

The introduction to this series is in my previous post, where I tell you about the process of obtaining the Associate of Insurance (AINS) certification, of which the first step is to complete the AINS 101 course that covers the core basics of insurance. We previously went over claims handling in my last post. For today’s post, let’s go over how insurers market to and communicate with customers.

1. Walking Through the Sales Team

Producers are the most important connection between insurers and the public as they are the individuals customers will be communicating with directly. They perform some or all of the following activities:

1. Sales
2. Risk management review
3. Policy issuance
4. Premium collection
5. Customer service
6. Claims handling

Why Are Producer Sales So Important?

Sales are a producer’s most important activities as they are essential for the success of the agency, brokerage, or insurer. Along with benefiting their employer, sales will also benefit the producer’s personal success as they rely on income from commissions.

A producer will speak with a prospective customer and assess their prospect needs. Afterwards, they will prepare a proposal for coverage and close the sale.

As sales are the by-product of a producer’s relationship with a customer, fostering a strong relationship is essential to creating the possibility of future sales.

How Risk Management Reviews Build Producer/Customer Relationships

Producers help customers address their risk management concerns. For an individual or family, they conduct interviews or ask to fill out questionnaires about their property and activities. For businesses, producers analyze property, products, services, employees, and liabilities to determine appropriate risk management strategies.

A loss run, which is a review of previous losses, can guide the producer. Loss runs include at least the lists of losses and their total cost.

2. How Customer Service Representatives Add Value

Customer Service Representatives (CSRs) can assist customers by:

1. Helping them identify their coverage needs
2. Providing knowledgeable advice on how to meet coverage needs
3. Creating a positive interaction
4. Fulfilling requests in a timely manner
5. Responding promptly, professionally, and empathetically when a loss occurs

In addition to selling products, a CSR can :

1. Respond to general inquiries
2. Handle claim reporting
3. Answer billing inquiries
4. Process policy endorsements
5. Review and explain quotes to customers
6. Explain coverage

Why Is Building Customer Loyalty Important?

The answer to this is pretty obvious. Profitability is directly linked to customer retention, thus, CSRs play an important role in ensuring customer loyalty through positive interactions.

Some reasons to retain customers instead of continuously pursuing new ones:

• It costs more money to attract new customers than keep existing ones.
• Writing a piece of new business takes more time than renewing an existing account.
• Superior service creates sales opportunities and attracts new customers to the organization.

3. How Producers Serve as Risk Consultants

The Risk Consultation Process

Producers need to look for potential alternative risk management techniques that might produce even better results for their clients. They must also keep an eye on changes to their loss exposures. To do these, they walk through the Risk Consultation Process:

1. Work with client to establish standards of acceptable performance.
   • Measure how well a program is working by measuring results and the activities that produce them.
   • Results-based standards focus on the goals of the program no matter how much effort is required to achieve them.
     • E.g. Eliminating theft of data by hackers or reducing on-site accidents by 50%.
   • Activities standards focus on quality and quantity of risk management activity rather than looking at outcomes. They are also necessary to measure the success or failure of a risk management program.
     • E.g. Installation of new safety equipment
2. Compare actual results with standards.
   • Take the standards developed previously and combine them in a way that allows the actual results to be compared with the goals.
     • E.g. Aim to reduce number of accidents that occur from year to year (results standard) by beginning employee safety training (activity standard), then examining the results.
3. Correct substandard performance or revise standards.
   • When performance is substandard, producers must reappraise the situation and correct the issues.
4. Evaluate substantially exceeded standards.
   • Goals should be challenging but attainable.
   • Cost of risk (otherwise known as total cost of risk or TCOR) is used to measure the performance of an organization’s entire risk management program and not just its premium cost. It is the total cost of all aspects of the organization that relate to managing risk, such as:
     • Cost of retained losses
     • Insurance premiums
     • Resources devoted to risk management

4. Conclusion

Now we have learned why customer relationships are important and the process of providing quality insurance. Next, we will go over What Goes Into an Insurance Policy?