By Ken Kukral
This question can conger up all sorts of images, but the one I am interested in is when is it time to “fire” a customer or just let them go? Sometimes it is in your best interests to let a customer know you cannot satisfy their demands or expectations and they might be better served by going to another agent. Although this may be an agonizing decision it can be a healthy one for your agency.
First of all, why would you want to “fire” a customer? There can be many reasons, but some are:
- Loss ratio – There are those customers who see the “value” in insurance IF they get back MORE than they paid in premiums. They don’t see insurance as a “catastrophic” type of backstop, but see it as a reimbursement type of contract. I paid this much in premium and I should be able to get that much back in loss payments.
- They do not look to improve their risk exposures and are not willing to do systematic updates to their property to prevent future losses. They see an aging roof as an opportunity to have a roof loss so they can get a new one, rather than scheduling periodic updates and scheduling of repairs or upgrades. You can see the handwriting on the wall, knowing the next big storm is going to get them the repair they have been putting off.
- Payment issues – You only make money if they pay their premium. If you have to follow up for payments or have cancel/rewrite issues, are you doing yourself a favor by retaining these customers. The chronic late pay clients will be the first one pushing to maximize their loss settlement and get paid quickly. Just when you thought direct bill would solve all the payment issues you were wrong and they still crop up.
- Accounts that use all of your time. Ultimately you need to make money on an account. If they take considerable “hand holding” and they do not value your time, can you afford to keep them? Even worse, they ask for your advice and then ignore it!! It still needs to be a cost/benefit decisions and needs to make dollars and cents sense.
- What about accounts that refuse to deal with other members of your firm (especially customer service personnel and claims personnel) and will only deal with you? If they are your largest account, then “maybe” they are worth it. Tough decisions but something to discuss with your office staff and your client of they aren’t “getting it”. Even worse if they are rude or obnoxious with the others at your office. The rest of your team will start losing respect for you if you don’t nip it in the bud and set them straight.
- I previously mentioned the issue of clients not taking your advice. There are times that you have to stand your ground and let them know that if they chose not to take your advice, you can no longer be their agent. If they get so “cheap” with their insurance program, that IF they were to have a loss they would have major coverage issues, then you may want to let them move on. Those “savings” are not worth the future hassles, lawsuits and potential for that business to not survive in the event of a major loss.
So what are you to do?
- Be straight forward with your clients. Be willing to “walk” if they cannot make responsible decisions based on your advice. You are looking to put together an insurance program that best fits their needs and not accepting your recommendations can seriously jeopardize their coverage.
- Simplify the issue/coverage/decision/problem and walk them through the pitfalls. They need to know that you know what you are doing, what the consequences are of their decisions and how they could inadequately be protecting their assets.
- Have a system for addressing problem accounts and putting them on the path to “recovery” if that is even possible. There will be those “unethical” clients along the way and remember you are judged by the company you keep.
The accounts you lose sleep over…. Might be the ones….
The account you tend to shake your head as you hang up the phone with… might the ones….
Sometimes it is “addition by subtraction”…..
I am not saying just go out there and start firing your customers…. Just ask the question, is this a client I should be firing? Do something about it…. Get them on track or move on…. Your time is too valuable!
Kenneth Kukral, CIC – VP of Special Risks – That means, call me if you need help on placing a unique, difficult, large or more complex risk. Kennethkukral@intlxs.com 800-937-3497 ext 2079