Insurance is supposed to help policyholders manage their risks, but if policyholders can’t identify the right coverage for their needs, problems can arise. Insurance companies miss out on sales. Policyholders end up with uncovered risks and out-of-pocket costs. As risks continue to emerge and evolve, matching customers with the right policy can take more work. A consultative sales approach can help.
The Risk Landscape Is Changing
The world is changing, and people are facing new risks as a result.
Natural disasters are on the rise. FEMA recently released a new pricing system call Risk Rating 2.0. According to Redfin, 81% of FEMA policyholders will see premium hikes as a result. Meanwhile, wildfires in the West are driving up insurance costs and making coverage increasingly difficult to obtain. The Sacramento Bee says that tens of thousands of homeowners, mostly in rural areas, were dropped by their insurers and could end up paying two or three times as much to find replacement coverage. Hurricanes, tornadoes and other disasters are also leading to major losses. In 2021, there were a total of 20 separate weather and climate disasters with losses of at least $1 billion in the U.S., according to NOAA.
Natural disasters aren’t the only concern, either. During the pandemic, it appears that roads have gotten more dangerous. The NHTSA estimates that there were 42,915 traffic fatalities in 2021. This is a 10.5% increase compared to 2020, when there were 38,824 fatalities. It’s the largest annual increase in record, and it’s the highest number of fatalities since 2005.
Cybercrime is another growing concern, both for individuals and businesses. The Internet Crime Complaint Center (IC3) received 2.76 million complaints in 2021, including 51,829 reports of personal data breach, 51,629 reports of identity theft and 323,972 reports of phishing, vishing, smishing or pharming.
Rising Costs Are Impacting Coverage Needs
While navigating new and evolving risks, policyholders are also having to deal with rising costs. Consumer prices increased 8.5% during the 12-month period ending March 2022, according to BLS, the largest increase since 1981. As a result, many people are having a harder time making ends meet and are looking to cut down on their spending. This may lead them to shop around for less expensive insurance options.
Rising costs are also impacting claims and insurance needs. Whether you need to fix a roof or replace a car, it can be more expensive now, but policyholders aren’t necessarily adjusting to the higher costs. For example, according to the Insurance Journal, a report from the American Property Casualty Insurance Association has found that only 30% of homeowners have increased insurance coverage limits to compensate for rising building costs.
Creative Insurance Solutions Are Needed
Policyholders need insurance that covers their risks without costing more than necessary. Creative insurance solutions can make this possible.
For example, drivers looking to save on their auto insurance coverage may be interested in usage-based insurance and telematics-based options, especially if they are safe or infrequent drivers. Homeowners may likewise benefit from insurance programs that provide discounts for smart devices.
Parametric insurance solutions are emerging as another way to help property owners prepare for natural disasters, while standalone cyber insurance is emerging as important coverage against cyberthreats.
Matching People with Policies
Both individuals and businesses can struggle to navigate the challenging insurance market. A one-size-fits-all coverage approach simply doesn’t work, and finding the right coverage requires both an understanding of the policyholder’s specific needs and expertise of the insurance market and available options.
In short, it takes a consultative sales approach.
This sales strategy sees insurance professionals acting as advisors, taking the time to listen to the customer’s needs and making personalized insurance recommendations. This can result in more suitable coverage, increased sales, and better retention. It’s a win-win situation.
Outsourcing Your Consultative Sales Services
If your insurance company doesn’t already have a consultative sales team, establishing one now may take more resources than you’re willing to allocate. This is especially true right now, when high turnover rates can make hiring and training workers expensive and time-consuming.
Outsourcing provides a solution. By turning to Covenir, you can capture opportunity now. Our onshore, licensed P&C insurance professionals know what questions need to be asked, and they’ll take time to listen to the responses. We can assist with all or part of your sales process – whatever you need.
Are you ready to boost sales and satisfaction with a consultative sales approach? Learn more.