The Multiline Advantage

Cross-selling will put you on the right path toward building a profitable practice.

By Dave Willis

Imagine a city divided. One side is the picture of economic development and prosperity. Down the road, fully equipped office buildings, manufacturing plants, hotels and restaurants sit empty.

On the other side are people—young couples starting their lives together, with no place to live. Youngsters with lunches packed and backpacks on, but no school to attend. Sick and injured individuals, desperately needing a medical facility. Parents who want to provide for their families, but with no place to work.

Such a city is hard to imagine for most people, but arguably not for many insurance agents. Proof can be found in the agents’ client file cabinets. Some file drawers—those in the property and casualty insurance agency offices—contain policies covering homes, schools, office buildings, hotels and manufacturing facilities, but not the people who live, learn, visit and work in them. Other cabinets in life insurance agent offices, contain policies protecting the life, health and disability income of newlyweds, families, retirees, students, travelers and others, but not their cars, homes, schools or places of business.

Cross-selling is a must
David Gibson, CFP, agency manager for Country Insurance and Financial Services in Morris, Ill., is on a mission to integrate this city. Gibson, who oversees 30 multiline insurance agents in a multilocation agency, says advisors must realize the value of penetrating their existing books of business and getting a greater share of the wallets of their clients. “It’s imperative in today’s insurance business to cross-sell and vertically market current clients,” he says.

Nothing turns competence into confidence like experience.

Gibson believes that agents who sell P/C insurance have a certain advantage over those who don’t because in most states, certain auto insurance coverages are mandated. So when a new driver gets his first car and makes an initial insurance purchase, it’s generally for an automobile. As he gets a little older, he rents an apartment and ultimately buys and insures his home—his second insurance purchase. He often does this before he has thought much about life or health coverage.

When these younger buyers ultimately contemplate life insurance and financial planning, they already have a relationship with the agents who helped them protect their homes and cars for years and are inclined to look to them first for new coverage. For advisors who sell P/C insurance, that’s encouraging news. “It gives them an excellent opportunity,” Gibson says. “They have already established a client with the P/C casualty business.”

The merits of cross-selling
Gibson cites three advantages to cross-selling. First, as advisors know, one of the hardest things in the insurance business is to get in front of qualified prospects. Second, as the insured buys more products, the number of reasons to stay with an agent grows, increasing client-retention rates. Finally, companies that encourage their agents to cross-sell do a better job of retaining their agents because they are more profitable and fulfilled.

The barriers
The biggest barrier to cross-selling is most often found in the mirror, Gibson says. “It’s the agents themselves,” he says. Advisors can get over this by focusing on what he calls The Four Cs: Confidence, Competence, Communication and Credibility.

The first quality advisors should have if they want success in multiline selling is confidence. “They have to be confident that if they do this, it will work,” he stresses. Gibson is confident that it will. “The second thing they need is competence,” he adds. “Competence, in turn, will create more confidence.” Partnering, finding a mentor, professional education, cross-industry involvement and self-study are ways to gain competence. But nothing turns competence into confidence like experience. So getting in front of clients and talking about different kinds of coverage are also important.

The third element for success is communication. “Agents have to be able to communicate in an intelligent manner, many times through storytelling or by explaining how something works,” Gibson says. “It’s important to communicate competence, and that, in turn, builds more confidence.”

Through the process, advisors build credibility. “They become their clients’ teachers,” Gibson says. “When we are teaching clients and they feel like they are being educated, they are less likely to feel like they are being sold.”

Gibson warns advisors that by not taking a multiline approach, they risk losing customers to other advisors. “When you say you’re an insurance agent, most people think you sell all types of insurance,” he says. “When you say you’re in financial services, most people think you cover all financial services.” Advisors need to develop a comprehensive approach—focusing on process, not just products—if they want to be successful.

How to do it
At the 2005 NAIFA conference, Gibson explained how advisors can transition from monoline to multiline selling. It’s a process that involves positioning and client service.

First, advisors should create a positioning statement. “A positioning statement is a mini-commercial or elevator speech,” Gibson explains. “It sets the tone for your business.” This statement includes a thumbnail sketch of the agency and the advisor, as well as an overview of how the agency conducts business. “That lets prospects decide whether or not they want to do business with you,” he adds. “If you come across a prospect who doesn’t want that type of service, that’s fine. Advisors should want to work with the people who will become clients.”

Second, Gibson recommends conducting a thorough review for existing clients to move agents toward an overall process focus, bringing meaning to the term “financial services.”

“If multiline agents learn to do that, the sky is the limit,” he says. “People want convenience, yet; at the same time, they want advice. Our industry has not been all that good at doing both.” Advisors who can offer the convenience—the one-stop shop—and professional and accurate advice will be the most successful in the future. The professionalism evolving from this approach leads to Gibson’s fourth ‘C,’ Credibility.

Starting the discussion
When advisors commit to a multiline approach with their clients, they discover that the rubber will hit the road. Here are ways to talk to clients about other types of coverage, according to Gibson:

The key for advisors is adding value.

One idea focuses on deductibles. “A client may live in a $350,000 or $400,000 house, carrying a $250 deductible and complaining about his premium,” he says. “If they raised the deductible to $1,000, they’d save $200 or $300 a year. What they don’t realize until someone sits down and explains it to them is they’re paying $200 or $300 a year for $750 worth of insurance.” Changing the deductible can save clients money and free it up for other insurance purchases, such as basic life insurance.

He also suggests tying in insurance to the well-known story of the goose and the golden egg. He recommends asking clients, “Do you want to insure the goose or the golden eggs?”

According to Gibson, most people insure their homes, their cars and their worldly possessions. But they don’t insure the goose. The most undersold product in the country is disability income insurance. Unfortunately, most people don’t face major problems because they were involved in a car accident. “The big three—cancer, heart attack and stroke—those are the things that disable people,” he says.

A city united
Gibson says the key for advisors seeking success is to add value. People have heard that many times before, but it is now becoming more and more important. “If you can’t add value to what you are offering a prospect, there’s no reason for him to do business with you,” he adds. “The bottom line is that there will always be someone who is cheaper.”

Using P/C insurance as an entree and offering a full range of financial services, coupled with stellar service and expert advice, will add value to what you offer to your clients and prospects. This strengthens the relationship between you and your clients, which, in turn, boosts retention and ultimately generates higher profits.

Dave Willis is a freelance business and financial writer who is a regular contributor to Advisor Today.