As Main Street America revives from the setbacks imposed by the pandemic, insurance agencies have the opportunity to increase revenues at lower costs. A key problem for many agencies is their ability to service existing customers and simultaneously solicit new business. Agency resources—particularly in terms of manpower—already are spread thin to address these difficulties.
Expanding the number of service personnel would appear to be a simple solution, but many agency principals confront pressing perpetuation challenges. Many agencies employ staff with years of experience to service the book of small business accounts. As these staff members leave the agency, finding replacements with equivalent expertise can be a challenge, requiring significant recruitment and training expenses.
There is a way to solve these varied dilemmas—putting lower revenue small business accounts into a service center. By eliminating the need to expand or replace service personnel, a service center can cost-effectively address agency manpower resource constraints, while providing the same care and attention to existing customers’ service needs.
The strategy also presents the opportunity for additional revenue streams. The service center can cross-sell additional products like workers' compensation and cyber insurance to existing customers, and up-sell supplementary insurance coverages like building ordinance risks. Moreover, by taking smaller accounts off the deck, the service center frees producers to focus their efforts on prospecting and writing new business and larger accounts.
There are several service center platforms that offer their services in the insurance industry, each with its own value proposition. One platform, for instance, provides a potentially tangible value by assuming a participating agency’s errors and omissions liability, effectively limiting this liability by running agency accounts through the service center.
This platform also allows participating agencies to retain the small business account as its exclusive customer with full assurance the account will receive optimal service. At least three times a year, for example, the service center will reach out to the small business to ensure all is well. This interaction sets the stage to cross-sell and up-sell additional insurance products and coverages, increasing the agency’s revenue stream.
If a small business that is not an existing customer contacts the service center, the platform will provide a “warm transfer” to the participating agency at a pre-defined agency-carrier premium threshold, while quoting, binding, and issuing the insurance policy, with the agency receiving the full benefit of a commission on the new business. (For some carriers, enrolling existing small business accounts into a service center could lead to a percentage reduction in commission.)
Small business customer service centers are by no means a 'magic bullet' solving agencies’ perpetuation challenges. But at a time of resource constraints and difficulties both securing and writing new business, they may offer an opportunity to pass on the service burdens of low-premium small accounts while creating new revenue streams.
Molly Rondeau is Vice President and Seattle Branch Manager for Chubb.
The opinions and positions expressed are the authors’ own and not those of Chubb. The information and/ or data provided herein is for informational purposes only and is not a substitute for professional advice. Insurance coverage is subject to the language of the policies as issued.