What Should I Do When Customers Want Cheap Insurance?

Fran Majidi February 10, 2023
When Customers Want Cheap Insurance

The last thing an insurance agent wants to do is sell on price. But is there any way to avoid it these days, especially when it comes to products like car insurance? The fact is that insurance has become a commodity, even commercial insurance and life insurance. And while pricing is the top priority on customers’ minds, that doesn’t mean that you can’t compete in this market.

When you buy leads, for instance, you’re selling based on price, not value, right? Wrong. Pricing is how you get the customer on the phone but it’s not what will make a sale.

If someone is coming to you solely because they want to save money, chances are that they will shop around again. There will always be a lower price out there. But what can you do about this problem? How can you change the way it’s done?

Here are some strategies and solutions that can make quoting spendthrift customers a little more productive.

Quote Low

When you offer a quote, always start by giving the bottom price whether it’s life insurance or car insurance. Quote a price for the average healthy person. Or quote liability and whatever coverage is required in that state. Only after having a conversation and building rapport should you offer figures based on that person’s risk as well as for the coverages the consumer should consider.

In other words, sell in increments. Even in the later stages of the conversation, don’t put the customer into a situation where they have to make lots of decisions. Offer very limited options that you think fit well for them. Don’t overwhelm them with all the possibilities for coverage at once. Drive the bus, and show them what they need, but don’t be aggressive about it. And don’t be greedy about it. Remember, you want referrals from this person, not regrets.

What Is Value?

Value is not just another way of saying expensive. It infers built-in savings, often in the long-term. Something that is of good value may or may not be expensive, but it is the right purchasing price. If something is cheap, chances are that it will actually cost more in the long-run, just like cheap shoes end up having to be replaced, hence costing more in the long-run.

As basic as all this may sound, it’s important to define value for the customer who is simply worrying about what their next monthly premium will be. You’ve got to set that customer straight and do so with the basics, which includes why people ought to buy insurance in the first place. Accidents are very expensive. Insurance that has good value will cover those costs. Cheap insurance usually has people reaching for their wallets. More on this below.

Explain the Claims Process

Yes, immediately get your customer to imagine the worst case scenario. They had an accident, now what? Guide them through the steps they’d need to make if that happened. Then, discuss how claims are processed and paid. Discuss the difference between having collision coverage and not having it if the accident was your fault. People still think liability coverage protects their car too! Discuss how a lower-tier health plan may mean an $80 copay. Do this without lecturing, but by engaging the customer and asking questions to make sure they follow. Here is your chance to show your expertise and build some trust. In doing so you are providing value to the relationship and establishing yourself as a trust resource.

Most importantly discuss the importance of working with a trusted carrier to ensure that you do get paid for bills and damages. Supply anecdotal evidence of what you’ve seen done wrong and what you’ve seen done right. Explain why setting liability limits higher than the minimum is important for homeowners and car owners with lots of assets. Talk about the average cost of repairs on cars. It’s expensive! Or how much it costs to replace a roof -- not fun stuff. Any rational person would then understand that there’s no way these cheap insurance companies are paying claims fairly. With the premiums they charge, they’d go bust.

Remind the customer of the whole point of having insurance in the first place, and it’s not just because they have to buy it. Insurance is a very real safeguard against bankruptcy.

Explain Discounts

After talking with the customer and listening very attentively, you will be able to identify at least one discount that applies, maybe more. Tell the customer about this discount and put your heads together to see if that person qualifies for other discounts that you offer. Show them that you really want to get the price, and make it happen! Once a customer feels like you’re really going all out for them, they will compromise saving a few dollars for having a reliable ally.

Stand by Your Pricing

Whatever you do, don’t apologize and say you’re sorry that the product you’re selling is too expensive or anything of that nature. You can be disappointed in their decision but make sure you express that the price is the price for a reason and it’s a superior product compared with others on the market. Play up the customer service you’ll be offering and your ability to adapt to whatever channels they prefer to communicate with you in, whether it’s telephone, email or text. Always hammer home the idea that you get what you pay for.

Take the Sale Away

Everyone knows that insurance rates change all the time. Whether it’s someone’s health or the condition of their car, things change, and so do quotes. Make sure that after you’ve sold your heart out and established a good rapport that the price you’re setting is only binding for a limited time. This will add urgency to the customer’s situation and decision-making. Also, it doesn’t make you seem desperate for the sale.

Buy Insurance Leads

The more leads you quote, the more you’ll sell, regardless of price. It’s just a matter of finding the right lead vendor to get the right demographic. If you sell car insurance, you have to sell volume to make a profit these days anyway, so buy enough to make the commitment worthwhile. And don’t waste the leads. Thoroughly work them for a few weeks and ex-date them with permission to contact them again at renewal. Scrape each lead for all it’s worth. Think multi-policy deals!

People shop on price more than they buy on price. Persistence will carry you through, as long as you believe in the product and yourself.