This October marks my 31st anniversary in the insurance industry. Many things have changed since my first insurance sale. Initially, my experience and confidence level precluded me from effectively pursuing larger or complex accounts. As my knowledge base, and experience level grew, so did the size, and complexity of the account I felt comfortable approaching. The other major change was the process involved in positioning my agency to write and retain larger accounts. This process and approach is the topic for this blog.
One point of clarification: Larger does not mean better or more valuable. Larger means what I intend it to mean…larger.
First, let me define what I consider to be a larger client. There are many different perceptions of what constitutes a large client. My agency considered any customer that approached 25 Million in annual sales, approached 100 employees, or generated $50,000 in agency revenue to be in that category.
Knowledge base shift: The first difference I noted in working with these companies involved my knowledge base. On smaller accounts, it proved valuable to have experience within their specific industry group. It helped if the prospect perceived you as an industry expert. As companies grow, they lose the herd mentality, and while it is important to be an expert in their industry, it becomes more important to be intimately familiar with their business.
Sales Cycle: The next difference involves the sales cycle. While there are always exceptions, and the exception is not the rule, smaller accounts typically can be located, rated, and closed quickly and efficiently. Middle market accounts normally require 30 – 90 days with a minimum of two visits before providing a proposal. The larger sale has a much longer percolation period and can require 6 months to 2 years and involve a significant investment of agency time and resources.
Selling at different Levels: Normally, we sell to the owner, partner, or perhaps a controller of a smaller company. With larger accounts, several people can affect the insurance buying decision. You may be required to sell at different levels, with multiple visits and several people. Your first visit may start with the controller to negotiate the internal vetting process. You may meet with the Human Resource Director on claims reporting, claims handling and review procedures. The risk manager or safety director may want to review exposures or compliance issues and your agency support services before you can move forward. Interfacing with outside consultants becomes more common as risk managers become involved in the insurance buying process. The more complex and expansive the insurance program, the more time is required to develop the necessary relationships to uncover issues, analyze needs, develop solutions and prepare a platform on which to sell.
Coverage: On smaller accounts, price often makes or breaks the deal. While price is still important in the large sale, other facets of the insurance program become more important. There are more “conditions” required by larger accounts. If your agency and carriers cannot meet these conditions, it can prevent you from developing a business relationship. Some of the more complex coverage and service conditions, which can be difficult to satisfy, include:
Rating requirements. Larger companies are required by their board of directors, stockholders, banking partners and clients to meet coverage, and financial requirements. Most can’t consider a carrier with less than an Excellent, AM Best company rating. This knocks many in today’s market out of the running.
Umbrella Limits: Companies with significant sales volumes, difficult product exposures, large fleets, or large employee populations choose higher umbrella limits to protect against catastrophic loss and litigation. It is important to secure competitive layers of excess umbrella for these clients. Failure to do so precludes many agencies from doing business with larger more complex accounts.
D & O, E & O, and EPLI: These and much other coverage, which normally become advisory recommendations on proposals for smaller companies, become critical and non-optional protection for owners and executives of larger companies. These personal issues influence the coverage decisions for the company policy. Larger firms may also ask for certificates on E & O coverage as well.
Business income and contingent coverage: Executives of larger companies are aware of the role contingent coverage plays in preserving their company’s ability to conduct business. Contingent coverage is considered for anyone that could affect the company’s ability to operate. Limits and terms become critical negotiating points. Calculating appropriate limits for exposure, assessing and anticipating potential losses and helping to determine the risk tolerance of your prospect is an opportunity to cement relationships and show competence.
Values & Limits: Larger clients pose additional challenges when it comes to limits and coverage. Fleets become massive, employee populations pose catastrophic exposures and property values may exceed many companies ability to provide adequate coverage. Re-insurance becomes as important as primary coverage. Some clients have several companies sharing layers of risk. This makes it difficult for smaller companies and agencies to compete, brokers can help you find companies willing to provide additional layers or share risk. Each company will have its own set of coverage conditions that you must meet. We must make sure all of these conditions are uncovered and confirm that we can meet them before going too far down the road.
Risk Management: This area of specialization allows us to become an integral part of the extended management team for a large company. Your ability to assess risk, and investigate alternatives and options to improve their bottom line by small percentages is valued by large clients. Deductibles, reinsurance, self insurance, risk sharing, and risk shifting become viable alternatives, which must be explored.
Service: Beyond price and coverage, larger companies seek partners they can leverage to access talent and infrastructure without additional investment. Loss control, safety, human resources, industrial hygiene, claims management, risk management are valued by larger clients, and a team approach to service is often required. Technology becomes a critical asset for your agency, as larger clients want access to information to make decisions quickly and efficiently, without waiting for a return call. Your agency’s ability to provide this access will separate you from the competition. In addition, collaborating with professionals from outside your agency to meet the needs of a larger client is common.
Relationships and Roles: The role of the insurance agent changes when working with larger companies. My role became more of a coordinator who orchestrated the mix of people and products to meet my client’s needs. The agent actually becomes less important in the over all service scheme. When you recruit good talent and direct a coordinated service plan you will be rewarded for many years, as large clients may stay with your agency longer than smaller firms. Why?
Retention and longevity: The larger client becomes dependent upon the relationships & service your firm provides. Larger clients truly comprehend the importance of their insurance and risk management programs. It’s not an “apples to apples” and “keep my agent honest ” price driven sale that we see so often in smaller, less complex transactions. Larger accounts recognize the huge investment of time required to “Shop” their insurance. They perceive and understand the risk involved in a change which has the potential to create disruption at many different levels. Their criteria or qualifications effectively thin the field, making the search for a qualified agent/agency challenging. All of these reasons make moving a terribly difficult process.
I don’t claim to be a large account specialist, but the experience I have gained working with large account experts has been invaluable. Perhaps my perspective may help position you to pursue and write larger accounts. Many of you have knowledge and experience with larger clients. I invite you to share your personal insights and experiences with the rest of us.