Author: Chris Boggs
Face it, most personal lines clients are functionally illiterate regarding insurance.
Don't misunderstand, it is not that your insureds lack intelligence, the issue is most have never been taught insurance fundamentals. Even clients who bought their first insurance policy 40 years ago only know what they hear on commercials, read on the Internet, or are told by their friends and neighbors - who are just as illiterate. In fact, most of what your personal lines clients think they know is actually lies and misinformation.
Insurance practitioners who wallow around in the insurance muck every day forget that insurance" is a unique and foreign language to our clients. We fail to realize our insureds don't know the basis of the insurance contract they purchased; they just know they bought the policy because someone or something made them buy it (contract, statute, or mortgagee).
Without correct information, only price matters. Remember, somewhere between $6 and $7 BILLION is spent on television advertising telling consumers insurance is all about the best price. That's a lot of dollars to support a lie.
When misinformation and lies are replaced with knowledge and truth, the insurance purchase becomes more about protection than price. Give buyers the correct information needed to feel empowered and they feel better about their decisions; and they also feel better about the person who gave them the information. What better reason to teach your client's kids about insurance?
Why Focus on the Kids
Every parent worries about his or her kid(s). Are they eating well, getting enough sleep, studying like they should, dating the right person (or not dating the wrong person), and learning how to be an adult?
Being an adult, a contributing member of society, requires the ability to properly manage financial affairs. Insurance, though not always portrayed this way, is a key part of personal financial management; that's why you want to focus on your client's kids.
When you teach their kids about insurance, you help your client prepare their children for life; and if you do it right, you help your client be better prepared themselves - without them looking like they need the help. No 42-year-old will go to a homeowner's or personal auto training session on his own (they don't want to appear unprepared themselves), but tell them the class is for their kids and you will get them as well.
The key to getting and keeping the parents in the room - the topic and its hook." Want the parents to stay? Conduct a class about the realities of personal auto coverage for new drivers. Discuss the insurance implications surrounding going away to college, or getting your first job, or your first apartment, or whatever is changing in the kids and parents lives. Parents will gladly come because they feel they are helping their kids, not because they don't know themselves even though they don't.
Beyond educating the kids and their parents about the realities of insurance, you are creating and cementing long-term relationships with your current clients while concurrently developing contacts with future clients - you know, the kids who will one day buy insurance. Insurance is a relationship business, build the relationship before the kids are in the market for insurance. (A side note: the industry needs new talent as thousands retire every year; this exercise may trigger some kids to explore insurance as a career.)
Who to Invite
Use the information in your agency management system to run a list of your client's children. Remember, the personal auto policy application requires all residents of the household to be listed on the application, not just drivers. (The application requests, RESIDENT & DRIVER INFORMATION [List all residents & dependents (licensed or not) and regular operators].") The same requirement is not found in the ACORD homeowners' application, but a proprietary application may ask for such family information.
Invite the 14 to 19-year-old kids. These are the ones learning to drive, just beginning to drive, getting ready to graduate, headed to college, and looking towards their futures. Encourage them to bring their friends (because no kid wants to go anywhere without a friend) and their friend's parents.
How to Invite
Have personal invitations printed. Kids rarely get mail and the invitation will be special to them in a strange way. Send a separate letter to the parents explaining the topic or topics you plan to cover and personally invite them to attend with their child(ren) so they can continue the conversation at home."
Place open invitations on your website, Facebook page, or any other media you use.
Ask for an RSVP so you know how many to expect.
Make this a big deal! An event! Have snacks and drinks and even a door prize if you want.
But remember, your goal is to teach not sell.
What to Teach
Initially focus on the personal auto policy. Parents feel the economic pain of a new driver, and the new(er) driver hears about this pain quite often from his/her parents I know, I keep telling my daughter how much she is going to cost me. Plus, personal auto coverage is the focus of most TV advertising's half-truths and neighborhood lies.
The PAP Outline
Every state Department of Insurance makes available some level of basic personal auto training for consumers. We are including a link to every state's personal auto policy resources. If you look at multiple states, you will notice the level of detail and focus varies by state.
If you want to provide more detail than the state provides or just want to develop your own outline, you can use the following outline for ideas to build your own personal auto program.
I. Help Me Understand My Personal Auto Policy Coverages?
A. Liability Coverage
- Who or what is protected?
- Minimum Limits are they enough
- What's with the three numbers (i.e. 100/300/50)
B. Medical Payments Coverage
- Coverage for an Insured"
- Coverage for Others
C. Uninsured/Underinsured Motorist Coverage
- Uninsured Motorist
- Underinsured Motorist
- Is this coverage required
D. Physical Damage Coverage
- Comprehensive Coverage (aka Other than Collision)
- Collision Coverage
E. Personal Injury Protection (PIP) (No Fault" Coverage)
- Who/what is covered
- When does PIP respond
- What is PIP isn't enough
- Is this applicable in every state
II. Who is Covered by My Policy?
- Who is a You"
- Who qualifies as an inured"
III. What Happens if I Hit Someone and it is My Fault?
- Liability Coverage
- Limits of Coverage
IV. What Happens if Someone Hits Me?
V. How do I Keep My Premiums Low?
VI. How to Evaluate Coverage
VII. Special Situations
- Renting a car
- Driving in another country
- Uber, Lyft and other such services
- Out-of-State coverage while at college
Regardless the source, the state, or an internally developed outline, limit the class to no more than 90 minutes with a 10-minute break in the middle. But because there is so much needed information, consider holding two sessions over a couple weeks a basic class and an advanced class (but come up with better names Beginners and Masters, or something like that).
And lastly, give a Certificate of Completion to each person. If more than one session is held, indicate the level" completed: John Jones has successfully completed the Masters Training in Personal Auto Protection." You get the idea.
Kids Are the Key
Parents want their kids to be prepared for life; insurance is an important part of life especially when something bad happens. As independent agents we strive to help our communities through coaching, volunteering, and various other ways. Why not use our knowledge to increase our community's insurance IQ"?
Remember, your goal is to teach, not sell. But by doing this, you will be seen as the trusted advisor you are which will likely gain you new clients.
Last Updated: January 31, 2020
First Published: February 3, 2017