Thursday, June 24, 2010

Tague Alliance - Don't Get Caught In The Price Trap

Here is a great article that was posted by Safeco Insurance. Our Tague Alliance members and independent insurance agents in general need to be more than "order takers". It is unacceptable that a teenager working the McDonald's drive-thru line can be more effective at selling value than licensed and educated insurance agents. Think about it...what questions are you asked every time you go through McDonald's? "Would you like to make that a large combo?" "Would you like to try our Mocha blah blah blah?" "Would you like an apple pie with that?" So as insurance agents we need to be sure that we are offering our clients all the protection they need. Just as McDonald's is "rounding out" your meal by offering you additional products; we need to be doing the same thing by offering to write the home/auto/umbrella, etc.

Remember one simple fact: Those who sell on price will die on price!

Selling value: Don't get caught in the price trap 6/24/2010
Insurance sales conversations frequently start with an apples-to-apples price comparison. If that describes the approach you take, Josh Stirpe, director of Safeco's Licensed Sales department, wants you to tip the proverbial cart over and use a more effective approach.

"Once you start a conversation with price as the focal point, it becomes difficult to engage the client in a conversation about the value of a particular insurance policy, even if it costs a little more than their current policy," explains Stirpe, whose background in the industry includes a stint as an agent. "It's imperative to present a total package of benefits to them. Agents first must sell value, explaining what coverages and services the client will get."

"Statistics show that more than two-thirds of clients are willing to pay a higher price for maximum protection."

— Josh Stirpe, director of Safeco Licensed Sales

He recommends that you:

Avoid falling into the “price trap” by positioning yourself as a way to save the client money.
Find out why the client is shopping. Uncover the catalyst for the quote inquiry.
Take the time to understand all the risks in the household (not just those that are covered in the requested quote).
Tailor the presentation to the overall risk exposure.
Above all else, invest time in educating the client by providing examples he or she can relate to … Insurance is more than the lowest price; it is something that can protect the client's way of life in the event of a tragedy.

Value-selling policies results in loyal, long-term clients — boosting your retention. But that's not all your agency will gain.

"Producers also are more satisfied because they get away from being 'quote generators' and instead are doing what they got into this business for in the first place, to educate their clients and protect people," he says.

Benefits vs. price
While many consumers certainly look to save money wherever possible, research shows that price is seldom the primary reason people make a buying decision. According to comScore's Auto Insurance Survey, when offered a choice between low-cost/minimum coverage and high-cost/maximum coverage, the majority of consumers fall in the middle to upper-middle range. What that indicates is exactly what value-selling is all about: People are more interested in feeling protected than in saving a few dollars.

"Statistics show that more than two-thirds of clients are willing to pay a higher price for maximum protection," Stirpe notes. "A high percentage of clients will go that road with their agents who value-sell the protection."

The value-sell approach involves bringing to the forefront what you as an independent agent can provide that insurance consumers can't get elsewhere:

Expert advice
The ability to identify coverage gaps and overlaps
A knowledge of industry trends that affect consumers
The ability to customize a plan that meets each individual's protection needs
A variety of policy choices

"When insurance consumers initially meet with an independent agent, they may start out with a desire to see how they can save money, but quickly become ecstatic if an agent first educates them on benefits," says Stirpe.

He says price should be the last resort in the sales process. At the point that price does enter the equation (and of course it will for many people), you can remind customers that Safeco offers a variety of cost-cutting solutions, such as discounts when they purchase multiple policies, including Home, Auto and Specialty policies. Eighty-five percent of insurance consumers will consider hearing how bundling their coverages can translate into a discount.

"Clients will be less likely to shop elsewhere – including online – when agents value-sell and show that they are looking out for their clients' future."

Friday, June 11, 2010

Tague Alliance - Inducted Into The Safeco Insurance H.K. Dent Society

Tague Alliance is excited and proud to have been inducted into the H.K. Dent Society. This is an elite group of independent insurance agencies who represent Safeco Insurance. Only 7% of Safeco's 12,000+ agents are part of the H.K. Dent Society.

Many thanks to all the members of Tague Alliance for their Safeco production over the years which has allowed us to qualify for this honor.

Friday, June 4, 2010

Tague Alliance - Carlsbad Condo Court Case Overview

The court case review below provided by Rough Notes is an interesting case where some more complex coverage triggers are discussed.


Insurance Company of the State of Pennsylvania (ISOP) insured the City of Carlsbad (City) under a general liability policy that covered bodily injury and property damage losses to third parties resulting from City's negligence. It defined property damage as "physical injury to or destruction of tangible property, including all resulting loss of use of that property." However, an exclusion provided that ISOP would not defend or pay for claims or suits brought against City for property damage arising out of land subsidence for any reason whatsoever. The definition of land subsidence included landslide.

As a result of City's negligent maintenance and repair of a fire hydrant and water line located within the La Costa de Marbella Condominium Complex (Marbella), an earthen slope above it became saturated with water and failed. The resulting landslide damaged or destroyed 15 units and part of the common area. The Marbella Homeowners Association sued City, seeking damages for property damage and emotional distress. ISOP defended under a reservation of rights. City settled the lawsuits for $12,670,000. ISOP indemnified City for the bodily injury claims but denied coverage for the property damage claims. City sued ISOP, alleging breach of contract and breach of the implied covenant of good faith and fair dealing.

Both parties filed motions for summary judgment. City asserted that it was entitled to indemnification under the "concurrent causation doctrine" because the exclusion did not explicitly negate coverage that resulted from more than one cause, that the exclusion was illegal, and that it did not apply to landslides caused by man-made forces. ISOP argued that the exclusion unambiguously applied to all property damage arising out of landslide, that the concurrent proximate cause doctrine did not apply because there were not two separate and independent acts of negligence to cause the damage, and that the exclusion applied even if the concurrent proximate cause doctrine applied.

The trial court heard the motions together, denied City's in its entirety, and granted ISOP's in its entirety. City appealed on essentially the same basis as its initial motion. It asserted that the trial court erred because the exclusion was ambiguous as to whether it covered landslides regardless of cause, that it did not apply to landslides caused by man-made forces, and that it was entitled to indemnification under the "efficient proximate cause" doctrine and related Insurance Code. The Court of Appeal determined that, based on the evidence, there was no need to interpret policy language and that the issue was a pure question of law.

Under the "efficient proximate cause doctrine," when a loss is caused by a combination of covered and specifically excluded perils, it is covered if the covered peril was the efficient proximate cause of the loss. On the other hand, the loss is not covered if the covered peril was only a remote cause of the loss, or the excluded peril was the efficient proximate, or predominant, cause. An insurance company is liable for a loss where a peril insured against was the proximate cause, although a peril not contemplated by the policy may have been the remote cause of the loss; but is not liable for a loss where the peril insured against was only a remote cause. However, this doctrine is limited to first party cases, where an insured seeks coverage for its own property interests. In third party cases like this one, where coverage is sought for liability to third parties, the concurrent proximate cause doctrine applies. As a result, the first party cases that applied the "efficient proximate cause doctrine" that City relied on were irrelevant to the appellate court's analysis. City did not assert coverage under the concurrent proximate cause doctrine that applies to third party cases. Even if it had, it would not have applied because it applied only where there were two negligent acts or omissions, one of which independent of the excluded cause rendered the insured liable for the resulting injuries. The Court of Appeal affirmed the trial court's judgment in all respects.

Court of Appeal, Fourth District, Division 1, California. City of Carlsbad, et al., Plaintiffs and Appellants, v. Insurance Company of the State of Pennsylvania, Defendant and Respondent. No. D053843. Nov 20, 2009. 180 Cal.App.4th 176. 102 Cal.Rptr.3d 535