We recently met with Steven Petty, the Sr. Risk Manager of Insured Solutions, and a 44-year veteran in the workers’ compensation field. We wanted to know why workers’ compensation is such an under-rated and undersold form of insurance when agents stand to gain so much from its offerings.
According to Steve, when it comes down to it, many agents are either quickly perplexed by the perceived nuances of workers’ comp or are intimidated by potential liabilities from sizable claims.
Ultimately, this is attributed to pure lack of information on the part of the insurance agency. In fact, on average, one can make anywhere from 6-12 percent commission on a policy, with natural variations from agency to agency. Bear in mind, workers’ comp premiums are among the highest offered. In some states, the commissions are required to be even more.
Again, the income potential is too often lost because policy writers give it little to no attention. When it comes time for annual licensing, insurance agencies often gloss over workers’ comp (if they touch it at all), and there is a resulting ripple effect. In ignoring the niceties of workers’ comp, they miss out on knowledge that can convert to additional offerings that will make their services to clients more attractive. This means far less fruitful presentations to insurance prospects.
Sometimes, you have a policy provider that has a generic bundle package that includes a very ‘vanilla’ offering of workers’ comp benefits, which is nice in that it is better than nothing, but still does very little to set your services apart from competitors.
Though this is a prevalent scenario, it is not irreparable!
In order to reverse course, start by asking if you are operating in a hard or soft market, because you will need varying tactics in each case. Now in 2018, we are in a soft market: premiums are lower, carriers offer more policies, underwriting criteria is less stringent, and there is more competition. For those interested in offering workers’ comp, this if fertile ground for opportunity.
Next, as an insurance agent, you need a strategy: You have to know precisely what you can bring your prospects that is not likely to be found with other carriers. How can you take your package from standard to enticing? If you can honestly accomplish this in your pitch, then you will sell with more confidence; and you will sell higher premiums as a result, because you will persuade and gain the confidence of your prospects.
A common challenge agents have in approaching the sale of workers’ comp is that they have anxiety about personal liability when a claim is filed. Steve told us that, in his 44 years of experience, as long as an agent was demonstrably truthful in their marketing, he never saw them held accountable for a claim. In the end, the financial liability of a claim still lies with the employer.
Another challenge insurance agents encounter is a doubtfulness in their ability to convey the maximum benefit of individual workers’ comp policies to each prospect. This is especially problematic when the pressure of sales is greater than the dedication to offering service. A client can end up with a poorly selected workers’ comp policy that either costs themselves, or the insurer, exorbitant amounts of money when paying a claim.
This is where specialized knowledge becomes your best asset. Knowing, for instance, that your highest risk industries tend to be construction or jobs that involve truck-drivers. Know the nature of the industry, know what you plan to offer, and be sure that it stands out. If you know that you know these things, your probability of success will be much higher.
Then there are the little things that can have big effects if you know to include them in your discourse with a prospect. These include drug tests/screening, diligence in reporting any/all claims, and return-to-work systems. Rudimentary elements like the aforementioned go a long way in protecting your clients.
Finally, one might ask, “How long will it take to learn all this stuff?”
It comes down to interest and how aggressive your insurance agents are to learn. How motivated are they to help your agency stand out? How much is it worth to their bottom line? Start with a basic framework of information and build on that. As employers learn, so can their agents, and a positive ripple effect of information is generated.