My favorite line of business to sell is an Umbrella policy.  There are a number of reasons for this. I’m going to give my top seven reasons why this is my favorite line of business to sell.  These are in no particular order except when it comes to the last one which is my number one favorite reason!

Price

If you have read any of my blogs, you know that I hate using price as any sort of justification for writing a policy.  Just because I hate to do it doesn’t mean that I’m never going to use it. I don’t like to use it to justify choosing me over another agent or carrier.  But when discussing the value of a particular coverage, or line of business in this case, it certainly can help show value. For most people, we are looking at premiums of $20-$30 per month.  That is certainly easier to sell than policies that are in the hundreds every month. When you add limits of $1MM or more this policy holds the most value of any line of business.

 

Having a Discussion About Protection Over Premium

Now that we’ve gotten pricing out of the way, once we get to the point that we are discussing an umbrella policy, we are actually talking about providing protection.  We can move past worrying about providing an “apples-to-apples” comparison (that may be my most hated term in our industry, but that is a blog for another day…) and focus on doing what is in the best interest of the client.  Even if the client decides not to bind the umbrella policy, they are more likely to take a higher limit on the underlying policies because they can see the value of the coverages.

 

Client Education

That point leads me into my next reason which is client education.  Right now the only real message coming out of most advertising is about saving money.  Whether it is directly naming your price, or saving 15% in 15 minutes, the messages about having the right protection are lost due to the volume of pricing advertising.  By educating our clients, we are helping them understand how to best protect themselves financially. There is too much focus on saving a couple of bucks in premium and too little in the tens and hundreds of thousands of dollars that can be lost due to inadequate coverage.  As I once heard it put by an agent, “We are not here to save YOU money; we are here to save YOUR money”.

 

Shows Expertise

An additional benefit of educating the client is being able to show your expertise.  If the client learns something from you, the odds of them listening to other recommendations or pieces of advice increases.

A customer that is willing to have a conversation with you on protection over premium, is educated, and looks to you as a subject matter expert is going to be very likely to be make smarter decisions surrounding protection.

 

E&O Protection

Let’s get a little selfish here and look at one of the major reasons why at least offering an umbrella is good for the agency.  In the unfortunate event of a large loss that maxes out the underlying policy, the lack of at least an offer of an umbrella policy puts the agency at risk for an E&O claim.  Be sure not only to offer but to document that you made the offer!

 

Increased Premium/Revenue

Obviously the actual premium increase and commission we are receiving from selling one $1MM umbrella policy is not really contributing to the overall growth of the agency.  There can be a slight movement of the needle if you are able to dramatically increase the percentage of clients that have an umbrella, especially if the limits are higher. However, the real win in selling the umbrella policy is in the retention rate improvement.  We all know the stats on how retention is improved with the more lines of business written. Combine the general idea of more policies driving a higher retention with the other benefits that we have discussed with having more educated clients that were educated by us and it is very likely that you have made a client for life.

Note from Tony: In one of the carriers I worked for we looked at retention by numbers of lines of business and found something like monoline = 77%, 2 lines 95%, 3+ lines 99%. Basically if you have home, auto AND umbrella that client is probably staying.

 

 

Identifying Additional Exposures

We come to our last (and as I mentioned in the first paragraph, my favorite) reason to sell an umbrella policy.  Once we start having the discussion on the umbrella, we must discuss the underlying exposures. This gives me the opportunity to cross-sell these policies without having to ask about every possible underlying risk that could exist.  This is especially true in personal lines where although it is pretty easy to cross-sell from home to auto and vice versa, it can be more difficult to figure out the next line to sell. You don’t know if they have rental properties, second/seasonal homes, boats, motorcycles, etc. without walking through each one of them or throwing out a blanket statement about “any other exposures/risks”.  If you are having a discussion on the umbrella policy, these risks will naturally come to light!

These are my top 7 reasons to write umbrella policies.  Did I miss any? Which lines do you prefer to write? Contact me at david@agencyperformancepartners.com or leave a comment below.  Selling umbrella policies as a cross-sell to both a new client and an existing client are major components in our AppX Sales and AppX Retention programs.  Also, contact me to learn more about either of these!