Tale of two captive agents
For coverage of my home and 2 cars, I have been with the same insurance company / agent for the last 6-7 years. My insurance agent (Agent A) is a business like person whom I have spoken to only the phone. She was referred to by my friend who told me that she can get me the best deal for car insurance. On the phone, she comes across non sense but very efficient and quickly helps me complete the transactions. She has called me to prompt me if I forgot a payment, ensured that I had all the possible discounts and been very responsive to any phone requests. Every once in a while, I have compared rates (mostly online) in response to a TV ad and found the alternatives to be far costlier than what I currently pay for the same coverage.
Two of my neighbors recently told me about the outstanding claims experience they had with another agent (Agent B)/ insurance company. One of them had a major water flooding in his home and the insurance agent was personally there with a day or two with a check that adequately covered the repairs .After some procrastination, I finally did reach this agent yesterday and the experience was dramatically different. When I mentioned who referred me, she spoke warmly about my neighbors and how they were second family to her (a little corny for my preference). She spent some time enquiring about me and my family, spoke about her family, tried to understand what I liked most about my current agent / insurance company and why I was with them for such a long time. She reviewed my cover ages and pointed out some opportunities to optimize it from a coverage / premium standpoint. She cited some examples of my current insurance company running into lawsuits with the state department of insurance and also about some misleading practices they sometimes engage in to get their customers really low prices (again did not like this part but appreciated the information that I was not aware of). She also mentioned that insurance agents don’t always do the best for their customers because they are paid commissions on the premium and they are looking to maximize it for themselves (sometimes by adding coverages you don’t need).
I waiting for her to give me the quotes today so I can make my decision. I should mention that both of insurance companies are reputed insurance companies with strong credit rating and a national brand.
Some questions I would love to hear your opinions about:
1. Which agent is likely to be more successful going forward as insurance companies with dedicated agencies are looking to go direct ?
2. From an insurance company standpoint, which agent is likely to bring in a more profitable book of business?
3. At a more personal level, should I go with Agent B even if she comes back with a price that is 20% higher just because she said all the right things and I have proof of great claims experience
Comments
Srikant,
This is an interesting riddle to solve. Here are my thoughts....
1) In the direct mode, the key aspect is CSR interaction (where Agent A is doing good) and the claims support (where Agent B has proven the point). I think both have good chance, but I would pick up the Agent "C" as the winner who will have both these qualities.
2) Here I would probably put my money on Agent B. Agent A has done nothing wrong, but purely based on your write up, I didn’t see any attempt for Up-selling or Cross-selling by her. A customer loyal for 6-7 years needed more attention and are ideal to try other offerings. Nothing like that you mentioned. She should have interacted with you, outside usual transaction, to keep the relationship warm. Your needs may have changed since she sold the original policy. So she should get the new needs and address the same. Since there were no claim experience, she could highlight the company’s position from claims perspective. If all these would have happened, probably you would not have spent the additional time from your busy schedule to go to Agent B.
3) You didn’t mention your true needs - apart from just having a policy, what else you are looking for, how much premium you are ready to put for relationship or better claims experience. Having said that, it seems from the data that you didn’t have much claims experience. So a good claims support will not be a key factor for you. It seems, you are happy with Agent A now. It doesn’t look like it makes any business case to pay 20% extra money to move to a new agent.
Souvik
Posted by: Souvik Roychoudhury | October 21, 2009 4:43 PM
Souvik – Thanks for your responses. My personal opinion is that Agent A will struggle to compete with company’s direct channel offering. She did not create any barriers to switching (either to the company’s direct channel or a competitor) by building a strong relationship with me, positioning herself as an advocate for my cause with the insurance company and/or deliver value as a trusted adviser.
In a continuation of my earlier note, I went ahead and switched to Agent B. She did come back with a quote that was significantly cheaper (by 20%), better coverage in general (with higher deductible though) and a better structured policy. It was a no brainer.
JD Power Survey in 2009 stated that retention rates average 90% + among customers who bundle home and auto policies with the same insurance carrier but averages only 82 % among mono-line auto customers. (JD Power 2009). I did contribute to that trend by sticking with the same carrier for the last 7 years. It will be interesting how the next few years play out !!
Posted by: Srikanth Srinivasan | October 27, 2009 11:58 AM