How Insurance Agents Can Cope With Rate Increases in 2024

Fran Majidi January 5, 2024
insurance rates increase

Insurance agents are bleeding loyal customers who are comparison shopping for lower insurance rates. If you’re an agent struggling with the rate increases on homeowners insurance and auto insurance but can still write policies in your state, you’re ahead of the game.

Inflation is hurting most people, and they are making decisions based on price alone in many cases. Although insurance is not a commodity, pricing is people’s bottom line right now.

The good news is that there are a few things you can do to offset the losses your agency may be experiencing. Here are some tips and goals that can help your agency prosper even in this climate.

Don’t Risk Under-insuring Your Clients

Don’t under-insure your clients for a shiny, low price tag. Both new and old customers want cheap rates right now but you must remain honest or else they’ll bounce and with some heavy words against how you do business as soon as they have to file a claim.

Even though it may seem unreasonable for homeowners and car owners to demand cheaper insurance when carriers are raising rates, you can not sell them bare-bones coverage without fully making them aware of how vulnerable they are with a cheaper premium.

Don’t compromise your good name by, say, selling them liability-only car insurance with the lowest limits or an HO-1 policy for their home just to get the sale. If they keep pleading with you for a bigger break, you must have a thorough conversation with the client, explaining that with a bare-bones policy on a home or car, they will be left paying for losses if there is an accident or sudden loss.

Start the Conversation on Rate Increases Before They Do

Don’t avoid a conversation on price hikes. In fact, bring it up before the client does so you don’t seem shifty when they ask why their insurance bill is so much higher. Explain that costs have risen for repairs and that that is why rates have increased. Tell them that most carriers have had no choice but to raise rates, especially due to the heavy costs of severe weather.

Your customer must understand that if they are under-insured, they will be left to pay for the remainder or entirety of a catastrophe out-of-pocket. This conversation can’t just be in passing either. Make them agree that they understand the repercussions if they continue to insist on the lowest rate you can offer.

Customer Service Can End in Win Backs

Don’t compromise your stellar customer service if that used to be your selling point. While it may seem counterintuitive to continue selling service over price right now, you’ll see how many clients will come running back to you after having to file a claim with an inferior carrier or a less-than-helpful insurance agent.

Train Customer Service on How To Handle Rate Hikes

Customer service representatives tend to be peacemakers, trained to please the customer. They must be trained on how to handle a customer who is facing a painful rate hike that you can do very little to ease.

It’s important for your CSRs to go over all discounts to see if any apply. Also, cross-selling to make a client eligible for a discount may save them money and make your agency more money. Go over these strategies with your CSRs and practice role-playing some difficult conversations with them.

If your agency works with multiple insurance carriers, you may be able to switch policies for a client who may otherwise leave your agency. However, it is a good idea to first see if you can lower the rate with the original carrier if the client has no other complaints. Focus first on applying discounts and bundle discounts first. If that fails, there’s also the option of increasing the deductible to lower their monthly bill.

If they are still dissatisfied with the pricing, they may shop around, but if you’re courteous and empathetic, they may stay with you when they realize that prices are high all around.

Allow More Time for Policy Reviews To Ensure a Renewal

There are tough discussions to be had so allow enough time between renewal calls and calls for new business to ensure that you are giving your existing clients enough time to absorb the reality of a rate increase. While it may not prevent them from shopping around and possibly dropping your business, you’d be surprised at how important this conversation is and how it may win back that client in the end.

Let the customer blow off steam before you do a deep dive on discounts and cross selling for a multi-policy discount. Adjust the deductible to lower their monthly bill. If you’re able to level the increase somewhat, they may stay with you to avoid the hassle of the unknown. So be polite, apologetic but firm in your determination to serve them the best you can under the circumstances.

Whatever you do, do not skip out on an insurance review this year (or any year for that matter). The plan of avoiding rustling feathers won’t work. People notice when their bills increase. It’s a much better plan to reach out than having the client call you asking about the increase.

It’s important to:

  1. Educate the customer about rate changes in your state.
  2. Show empathy and explain that it’s affecting your business too.
  3. Use numbers to show how much of a change is taking place in their account and how you can offset it with a discount or bundle.
  4. Increase their deductible to reduce their monthly bill.
  5. If they are paying upfront or in two payments, see if breaking down their premiums into monthly payments makes it more manageable. (See if you can waive the administrative fee).
  6. If you’re an independent agent, you may be able to find a less expensive rate with another carrier.

Most agencies do not have a plan for renewal review calls in place. You may be ahead of the game by implementing one now.

You’ll need to keep your pipeline full of insurance leads because you will inevitably lose some customers, maybe even your most loyal ones.

Bringing in New Business Is Crucial

More than ever, you’ll need to keep your pipeline full of leads because you will inevitably lose some customers, maybe even your most loyal ones. However, you can purchase data leads, which are not expensive, and live-transfer calls, warm leads that usually have a much higher close rate.

Most of the new leads coming in will be customers who are looking for an alternative after a rate hike. Everyone’s scrambling, so see who sticks.

While one insurance agent may have incredible success with data leads, another agent with the same carrier swears by warm live-transfer calls, which cost more but guarantee that you have someone shopping for insurance on the line.

It’s always a good idea to test both for a couple of months after adjusting filters as needed and seeing which has the best cost per acquisition (CPA). Every insurance agency is different, so it’s good to talk to other agents but the best thing to do is give both a very fair shot yourself.

With SmartFinancial leads, you’ll have the same account manager for the life of your account. Your account manager will help you set filters and make the most of what you spend so your agency grows despite nationwide rate increases.