In the insurance business, agents sell a lot of things. Distressingly, many sell a cheap price and others sell things like, “service” or “relationship.” Regardless of how you close deals, and what convinced your prospect to become your customer, the most important thing bought or sold is the promise to make someone whole after a “claim” occurs.

What is a claim? For those of us in the business that get frequent calls about wrecks, fires, floods and other kinds of “occurrences,” it is all too easy to think of them as paperwork, losses, problems, extra work or something similar. Something to be “processed.”

To our clients they are huge inconveniences. Disasters. Personal tragedy.

When a claim occurs our client’s lives are disrupted, and often permanently changed. This can mean large, unplanned for, and potentially personally difficult financial costs. It can mean permanent dislocation, or life trajectory changes, or massive pain and suffering. Claims are always a big deal to those they happen to.

My home flooded on New Year’s Eve. At the beginning, it was bewildering to move unexpectedly out of our home into temporary quarters. Then it was maddening as contractors and others made the damage worse, and frustrating and emotionally unsettling as every aspect of our lives from getting dressed and going to work, to what we would do in our free time, suddenly changed. What followed was a period of nothing happening to get our lives back. That made us feel angry. Now we are faced with moving back into our home which fills us with dread at all the work ahead.
Our insurance company has paid the bills and been easy to work with, a not altogether commonplace victory. We’ve heard regularly from our adjuster, not just about money, but about how we are doing. They are building a raving fan customer for life, while fulfilling the promise they made when they bound coverage.

Our agent hasn’t had to even get involved, but how could they have been? They could have called regularly to check on how things were progressing, how we were getting along, asking if we needed recommendations on anything. In short, they could have reached out and, instead of just talking about “service” or “relationship,” demonstrated it, and they would have built a raving fan customer for life.

What do you do when a client has a “claim”?

Tony Caldwell used to specialize in Workers Comp. Let him tell you a little about the most profitable line of business in an insurance company.

Insurance companies have made agents’ work easier, by establishing claim hotlines and other services to assist when their customers have a claim. This reduces the agent’s workload, and usually improves the customer’s experience, with speed of settlement. But, it may also destroy an agent’s opportunity to create an unbreakable client relationship.
It doesn’t have to be that way. Certainly, the agent can still be involved in the processing of claim notices and the process of getting the claim properly and timely paid. The agent can be an advocate for the policyholder. These are increasingly optional tasks for many agents. If that agent is satisfied with high customer turnover, and focused primarily on building business through premium savings, then it may even be an acceptable business model.
On the other hand, if the agent is a good business person, she will recognize that customer retention is far more profitable than customer acquisition. She will see claims as the biggest opportunity she ever gets to build her business for the profitable long term.
Clients for life are not created when a policy is sold, they are created when a problem occurs. There is no bigger problem for a client than a life altering claim.
Here are some suggestions for ways to make a permanent relationship impact when your client experiences a claim:

1. Show up. Go to the claim whether it’s a body shop or a burned hulk that used to be someone’s home. Go visit in the hospital. Meet at the body shop.
2. Care. There are a myriad of ways to do this. Showing up is the first. Listening is important. Doing things that help instead of just offering to makes an indelible impression.
3. Communicate. At the beginning, and regularly, throughout the claim. Explain what to expect. Ask if expectations are being met. Intervene whenever, and wherever necessary to solve problems. Demonstrate that service is more than a slogan.
4. Explain. Help your client understand what they are entitled to, and when necessary, what they are not, and why.
5. Do the unexpected. Send a note, text, flowers or anything else that just says, “we’re thinking about you. Let us know if we can help in any way.” This used to be commonplace in life. It’s not any longer, so common decency stands out.
6. Wrap it up. When the claim is over, recap what happened including all the things that were done on the client’s behalf.
7. Ask. Did it go as the client expected? Worse? Better? Is there a way you could improve next time?
All of this is easy to manage and simple to do. I guarantee that if you do it, all the time, your retention AND your referrals will skyrocket.

About five years ago, every insurance company we represent suddenly got focused on something besides new business flow.  They began focusing on something they always knew about.  They knew it was important, but seemingly not as important as sales.  Then I guess they all went to a seminar, did the math, and discovered how valuable focusing on retention is.  Now, I don’t have a single carrier meeting where that number isn’t discussed, in detail.

It’s just as important for agents to focus on and it’s the best way I know of to make a lot of easy money.

Let’s consider an agency with $250,000 of annual commission income, and an industry average retention of 80%.  This agency is losing $50,000 of income every year!  Just to stay even they must have an incredible new business machine.

What if they could move their retention from 80% to 90%?  Obviously, changing this number would increase agency revenue by $25,000 per year, and agency value tremendously.

This was our challenge a year ago with an agency we acquired.  We aren’t there yet, but in one year, we’ve gotten to 89%.  Here’s how we did it:

  1. We focused on it.  That number is reported every month and everyone on our team looks at it.  There is an old business saying that, “what gets reported gets done.”  It’s true.
  2. We did a coverage review on every customer. This has all kinds of benefits, but it drives retention too.
  3. We shopped every customer’s insurance and we do it every year. Let me ask you, “what the hell good is an independent agent that acts like a captive?”  Captives only have one product to offer.  A huge part of the IA value proposition is choice.  But, if you don’t offer that, you’ve thrown away a competitive advantage.
  4. We quit writing monoline business. This business has the highest acquisition cost, the highest turnover, and the lowest profitability.  Why would you do it?  And, if you are going to do the second most important thing to drive retention up (cross sell) you need to lock the door on customers first.  Don’t write monoline!
  5. We aggressively cross sell. Our agency goal is 2.5 policies per customer.  We aren’t there yet, but we measure and report this number every month. Every study since the beginning of time shows that retention goes up when the policy per customer count does.
  6. We increased communication. We contact customers about something every month.  We don’t let them forget us.  The side benefit is there is a much-improved chance they’ll think of us when they decide they need some other kind of insurance.

What are you doing to drive retention, agency income, and value in your business?

I’ve written about the critical importance of cash flow, and the difference between that, and profits, before. These two things, and understanding them, are critical to the new business’s survival.

Critical to its continued growth is a healthy balance sheet! To revisit Accounting 101, the balance sheet is the other half of any business’s financial statement. Their report shows the assets of the business, its liabilities, and how much equity the business has.

Obviously, it’s important to have more assets than liabilities at all times, but there are a few other things every business owner should measure every month:

– Quick Ratio. This is the ratio of current assets to liabilities. The ratio should always be greater than one. If it isn’t insolvency on the horizon, you should be taking immediate action to collect or generate cash! Target a ratio of 1.25.

– Days of Working Capital. This is simply how much cash you have (some include short term receivables, but I don’t recommend this as you may not be able to collect when you need to) divided by your monthly overhead. In other words, without taking expense reduction measures, how long can you stay alive if you don’t receive the income you expect in any given month? Everyone has a different risk tolerance, and new businesses never have enough cash, but I recommend a minimum of 30 days. You’ll sleep better with 60 or more.

– Debt Coverage Ratio. When you apply for a loan, your banker is going to calculate this before he gives you an answer. If you want the answer to be yes, make sure you have free cash flow (not profit) for the last 12 months, and preferably 36, equal to 1.25 times the proposed debt service.

If you have Agency Bill businesses, or other receivables, I recommend 25% for 30-60 days, 35% for 60-90, and 50% for anything uncollected between 90 and 120 days. If you have receivables older than that you’re kidding yourself if you think you will ever collect. Write them off.

I find a shocking number of new businesses owner’s don’t have a balance sheet or don’t understand what it means. If that’s you, find an accountant to help you, and explain to you what you’re looking at and show you how to do these simple calculations. They will keep you safe and keep you growing!

I was having lunch with a very bright and talented young friend, this week, when he observed that he “should have” done something in his past. He was expressing regret for missing an opportunity that won’t come again.

Everyone has things like this in their lives. As we go through the years, sometimes there are too many choices for the time or resources we have available. There are also opportunities that we either don’t recognize or for which we don’t see value when they show up.

As we look back and recognize these missed opportunities, we have a choice about what we do with them.

Many, like my young friend, feel regret and a certain sense of wistfulness at the missed opportunity. Others punish themselves feeling that they were foolish, immature, or cowardly for not having taken a certain path. I believe such feelings are misplaced and potentially destructive because they tend to be confidence robbers.

When I was a senior in college I was accepted to Naval Aviation Officer Candidate School. But, I didn’t go. Years later the movie, “Top Gun” with Tom Cruise, came out and sent me into a tailspin of regret and self-criticism. When I finally pulled out of that I decided to let this experience be a lifetime teacher. I resolved not to see my decision as one of failure but of learning. I learned that when opportunity comes, take it.

This attitude is a risk forward way to approach life. I think it has been essential to my progress as an entrepreneur. It taught me that when I learn from experience, there is no failure. I now see my choice, not with regret and recrimination, but with gratitude. This experience, along with many others, have been my teacher and thus valuable.

So, as we think about roads not taken, experiences not had, and decisions we would like to have made differently, we have a choice. We can reflect on them in a way that is destructive to our confidence as we tell ourselves we, “coulda, shoulda, woulda,” or we can use them as motivators for our future, as we say instead, “can, will, and yes.”

OAA has invested in a new video studio, stocked with equipment, sound proofing, and backdrops for our agent needs! This room is open, free for use to all members.

Words from OAA’s CEO, Tony: “While there is a lot of written material that can be used to promote your agency, statistics indicate that video content receives much more engagement online. The fastest growing content sector is podcasting. While both of these can be compelling and effective in driving your individual brand, prospect engagement and sales most small business efforts miss the mark in terms of what consumers are interested in by a wide margin. Most videos are too long, have poor production values (poor lighting, audio, editing, etc.), or are boring.

Typical studio rental for production is several hundred dollars an hour, and post production editing costs can run several hundred additional dollars for a 30 to 60 second video. We wanted to be able to help you produce great content for your marketing without the eye watering expense. So, we have recently made an investment in our own production studio in order to have the ability for ourselves, and for you, to be able to create video and audio web content with high production values, inexpensively. Interesting and not boring are still up to you!

I’d like to invite you to take a look at our modest facilities, whenever you would like. Sam, Creative Marketer here at OAA, is also available at any time to discuss producing a video(s) or podcast with you. There is no charge for this, unless you decide to actually record something, and then it will only be at our actual cost which is about 10% of using an independent studio. If you would only like to use our facilities for recording, and do your own video shooting and post processing, the use of the studio is free!

Having a website that is mobile friendly is no longer enough to attract customers and merely writing content on Facebook isn’t either. Video and audio are where the game is today. ”

If you would like to stop in and film a video for your agency, contact Samantha Cassidy, at Let us help you with your online presence!

There are so many, many days written in blood and sacrifice. Tens of thousands, millions probably, of men and women dead, wounded or permanently changed. Some were volunteers, but all answered the call when it came. They fought for thousands of reasons and died for their families, their friends, the man crawling next to them. But they also died for me. So that I could have the life of freedom and opportunity that I enjoy.

I’ve only known one man in my life who was on the beach in Normandy those many years ago. I’ve had the privilege of knowing a number who fought elsewhere, and in other wars. It seems to me that those of us who they fought for, and who were never called ourselves, cannot know in any meaningful way, what they sacrificed for us. Watching newsreels and the news growing up, as well as powerful movies or reading books like “D-Day: The Climactic Battle of World War II” by Ambrose, I’m filled with fascination and horror. Mostly, I am filled with gratitude.

Most of the men and women who fought for me, and you, at the battle of Concord, Antietam, Belleau Wood, Inchon, Khe Sanh and thousands and thousands of other places where young people gave all they had, and more are gone now including almost all of those who fought at Normandy 74 years ago. I wish I could say thank you to each of them for the gifts they have given me. I can’t, but I hope wherever they rest, that they know I’m grateful.

When I was a little boy my grandmother used to tell me the story of the “Little Train That Could,” whenever I got frustrated, because I didn’t seem to be able to do something.  Perhaps you remember it too:  the little train had a very steep hill to climb, steeper than it had ever climbed before, but as he chugged up the hill, the little train kept saying to himself, “I think I can, I think I can,” all the way to the top!

Grandmother also used to tell me when I was struggling, “If at first you don’t succeed, try, try again.”

I’m a pilot, and by most measures that matter, a pretty good one.  Recently I took some training for an advanced pilot rating.  It was a miserable experience!  I couldn’t seem to operate the radios, to remember how to fly procedures I fly every week, or to maintain heading and altitude.  I had other problems as well and it was incredibly frustrating.  I remembered my grandmother’s admonition to keep trying but all I got was more tired and less effective.

This reminded me of how I felt when I started my business, in fact how I’ve felt at different points in the entrepreneurial journey, as I’ve tried to do new and difficult things.  Does this sound at all familiar?  In my pilot training, I realized that I had completely lost confidence in myself.  I began to question whether I should even fly airplanes at all?  The more I tried, the worse I flew.

Suddenly, I remembered how important confidence is!  I didn’t think, “I could”, so, of course, I couldn’t.  Unlike the little train, I’d lost that most important asset that I needed for success: belief in myself.  I believe that every entrepreneur goes through similar points, in the effort to start and build a successful business.  That off balance sheet asset, confidence, is spent and she runs out of the ability to move forward.

What do you do about it?

I decided to go backwards, just a little, to a place where I have always performed well, to something familiar.  As I flew my Decathlon airplane I found I was crisp on the radio, I could maintain heading, and altitude with precision and every procedure I attempted was well done!  What this teaches me is that trying is important but believing in yourself is critical.  That belief sometimes needs to be restored by returning to something you’ve been successful at previously so you can refuel the confidence tank.

When you get stuck, and try, try, trying isn’t working.  When you lose your self-confidence, back up to something you’re really good at, restore your greatest asset which is your confidence, and then say, “I think I can, I think I can,” all the way up the hill!