The Proactive Agent Series 2: Handling Rate Hikes
Be Proactive When Handling Rate Hikes
When you buy the same thing over and over, you develop expectations. Say you’ve budgeted $5 a day for your morning Starbuck’s. You get a venti chai latte for $4.25 and toss your change into the tip jar before you head out to your car.
But what if the cost goes up 20 percent overnight? Now the beverage itself is $5.10, more than you had been paying with a tip included. What are your choices? You could either increase your daily budget to $6 (because you don’t want to skimp on the tip, after all) or downsize your order and get a grande instead. Neither situation is going to feel good. You’ll either have a thinner wallet or you’ll be getting less of what you want.
The same is true for your clients when their insurance premiums increase, which they will. They can pay the increase or save money by choosing higher deductibles or fewer features. Again, though, they are going to feel it either way.
Here are a few ways you can lessen their pain:
When a client’s renewal comes up and there is a sizable increase in their premiums, your antenna should go up, especially if it’s 20 percent or more. Think through the questions and concerns they might have as a result.
Give Advance Notice
If you see that your clients may or will be subject to a rate increase, let them know as soon as possible. “I just wanted to give you a heads-up” is a great way to signal that you are still on their side, even if you have unpleasant news to deliver.
But wouldn’t it be easier to not say anything? Maybe they won’t notice…
There is a segment of customers who won’t pay attention to a rate increase, or at least won’t care enough to do anything other than pay it. And there is a segment that will anticipate increases and shop ahead of time to see if they can get a better deal.
The majority fall somewhere in the middle—aware that their bills are higher, but possibly too busy or polite to complain. Don’t take their seeming complacency as acceptance, though. Just because you haven’t heard from them doesn’t mean they aren’t growing dissatisfied with you and the products you are selling them.
The more specific you can be, the better. “Your son and your husband both had auto claims this last year” is clearer than “Sometimes rates go up.” Even if it had nothing to do with the client’s behavior—like a nearby natural disaster—if you can offer an explanation, the increase will make more sense.
Do some research before you call or email with the bad news. Present other options you’ve found or explain why their current plan, even at a higher price, is still the best choice. Your efforts to mitigate an unpleasant reality will be appreciated.
This is the second of three blog posts about how to be a proactive agent. Click here to read our first post about avoiding claims before they happen.