Policy persistency and client retention are concerns for both the insurance carrier and the individual advisor.
A carrier’s quality of business is of paramount importance, as not all business is good business. Pricing is based on morbidity/
mortality, administrative costs and lifetime commission expenses, with a percentage for carrier profit. When business falls off the books too fast and does not meet persistency needs, the impact is felt at all levels. Premature cancellation increases administrative costs, impacts lifetime commission expenses and could affect morbidity/
mortality calculations. It also creates debt management issues when advances on commission are used.
For the advisor and agency, cancellations obviously affect debt management, income stream, cash flow, return on investment, administrative costs, lead costs and marketing costs. It is considered a sales industry standard that it is cheaper and more cost-effective to keep an existing client than to attract a new one. Furthermore, cancellations hurt not only the advisor’s income, but also the advisor’s mentality. The “why” of cancellations and the hard work that was put into the sale can reverberate to the next client, thereby affecting the next sales opportunity.
With the inception of the Affordable Care Act, policy/client persistency has taken a huge step — backward. Rising premiums, combined with advertising urging consumers to “shop your insurance for the lowest price,” have commoditized the health insurance relationship. The value of the agent has been minimized, yet has expanded given the overall complexity of the ACA.
Given the cause and effects, how can we impact the sales process to enhance the conservation of our sales efforts?
Working with varying distribution models across the country, we have identified six key best practice activities. When effectively executed, these tactics will enhance the quality of your business. Using just one or two of these practices will improve your business; executing all six of them will have an incremental effect.
 Pre-qualify your client
The best salespeople ask questions. These questions should be designed to explore your prospect’s socio-economic background. As an insurance professional, you may know, understand and empathize with the client. However, you cannot assume the same insurance package will fit each prospect.
I have found that health insurance clients who qualify for high subsidies understand the value of supplemental insurance products, but they lack the financial means to fund these voluntary insurance products. Thus, you must sell to their budget. Effective questioning can determine that budget, get a prospect in agreement, and find the appropriate financial solution to fill the financial gaps created by the high-deductible, high-coinsurance ACA plans.
 Become a specialist
Yes, you sell health insurance; you know your products, carriers and processes. But it’s important that you project an image of specialization and professionalism to your client. Let the client know you specialize in this field. Let them know you are the expert.
It “ain’t bragging”; it is a fact. Prospects respond to your experience level. They need and want to know what others in their shoes are doing. They will buy “the most common package.” They will respond to “this is the most popular,” “this is what others are doing” or “this is what I just recommended to someone else”?
Ben Feldman was a pioneer in the art of the package sale (read Ken Smith’s book Sales Lessons from the Masters). Create package sale option A or option B. Create the basic package or the premium package. Give clients options of good, better or best. Each sales professional, in preparation for open enrollment, should develop options A and B for the individual medical prospect, the couple and the family.
People are accustomed to buying a car using a monthly dollar amount they can afford. Selling the health insurance package should be the same way. Selling to a client’s budget, with the option they have chosen, will increase policy retention.
 Tell a personal story
Stories sell. The value of a critical illness and accident policy is best sold by a story of how the policy works and the benefits to the insured. Keith Leech has a four-step question process for this. “Whom do you know who has suffered a heart attack, cancer or a stroke? Were they expecting the heart attack, cancer or stroke? Did they suffer financially or emotionally? Would cash have helped?” These same questions can be used for accident and hospital indemnity plans as well. Stories sell; your current client base is where to start.
 Create a summation page
Create a simple, fill-in-the-blank template on which you outline the coverage purchased, the deductible/copay, the carrier, and the amounted debited from the client’s checking account or credit card. When package selling, it is important to differentiate each product purchased and focus the benefits of each policy toward the client’s financial solution.
Some of our top agents, agencies and call centers use the summation template email. Have the client sign the summation sheet just as they did in signing the application. Make it part of the sales process.
 Communicate with your clients
To increase retention, your client shouldn’t hear from you only when it’s renewal time or when a premium is late. Clients leave when they do not feel appreciated or when they feel neglected.
Create a defined client communication plan that means you touch base at least once every quarter. Early on, it is easy to contact the client: “Did you receive your insurance cards?” “Did you receive your policy via email?” “Are there any questions or concerns?” “Remember, there will be two withdrawals from your checking account.” These are great emails or phone calls to make within the first 30 days of the sale.
Communicating with the client in the second and third quarters requires more creativity. I am a fan of contacting clients for special insurance events such as June 28, National Insurance Awareness Day, a day created to review insurance coverage. October is National Critical Illness Awareness Month. September is Life Insurance Awareness Month. June is National Safety Month and May is National Disability Insurance Awareness Month. The more you search, the more occasions for contacting clients you can find. I prefer to use those months when we can offer a product as a solution. This makes CI, accident, DI, and life pertinent and valuable.
The fourth quarter is policy renewal time. It’s the time when successful agents have a plan to review and renew with each client. Life happens, and your clients experience life-changing events! You won’t know about them unless you ask. Work with your clients on a proactive basis before the competition can step in.
 Become their agent for life
This means two things: Do not sell a product. Instead, sell your services, build a long-lasting relationship and be there for your clients as their agent for life. A great agent is passed down from parents to children. Sell them life insurance! LIMRA research keeps showing us how underserved middle-income America is, and that the majority of workers only have whatever life insurance they are offered through work (meaning their life insurance could replace only one year of income if they die).
LIMRA research reveals one of the false impressions people have about life insurance is that it is too expensive. Offer them life, and solidify a long-
Ralph Waldo Emerson said, “Shallow men believe in luck. Strong men believe in cause and effect.” Don’t leave your renewal income and client retention to luck. Have a plan to keep them both.
Jeff Spain, CIC, AFIS, CWCA, is vice president, channel sales, of Chesapeake Life. Jeff may be contacted at [email protected]