Growth is an essential part of any operation. Strategic plans often focus on new business acquisitions, like lead generation and prospect marketing. However, an often-overlooked growth opportunity already exists within an agent’s book of business. Existing policyholders are an efficient and reliable source of revenue growth as they have an established, trusting relationship with the agency. To maximize policyholder value, agents can find opportunities to upsell and cross-sell additional products.
Read on to learn more about ethical upselling and how to use it to optimize policyholder value.
Ethical Upselling is Risk Protection
Agents may hesitate to offer their policyholders upsell or cross-sell opportunities because they fear appearing too sales-focused. However, ethical upselling is an extension of an agent’s role as risk advisor. For example, many policyholders do not realize they may have coverage gaps in their insurance programs as their exposures have changed over time. Agents who ask questions at renewal about new risks and offer products to close coverage gaps are using ethical upselling in a strategic way to help policyholders reduce their exposure.
When agents are proactive and identify new risks and gaps, this educates policyholders and provides an opportunity to sell the correct coverage through an endorsement or new policy. Considered in this context, upselling is a part of a responsible renewal program centered on risk mitigation and management.
The most effective upselling opportunities are those that address common coverage gaps that are frequently misunderstood. For personal lines policyholders, that may include:
Umbrella policies.
For many policyholders, an umbrella policy provides a helpful additional layer of coverage for an affordable price.
Scheduled property.
Jewelry, collectibles, and other high-value items may exceed typical limits of a standard homeowners policy so scheduling these items helps close this coverage gap.
Flood insurance.
A common gap in understanding is that homeowners expect flood damage to be covered under their homeowners policy, but it usually is excluded and requires a specific flood policy. Many homeowners also believe that their home is not at risk of flooding because of its flood zone designation, not understanding that any location could flood.
For commercial clients, agents might find opportunities for ethical upselling in:
Cyber liability coverage.
Businesses of all sizes have cyber risk, but many small and medium-sized enterprises are underinsured for this growing threat.
Employment practices liability insurance coverage.
For businesses that are scaling quickly, outgrowing their EPLI coverage is a risk that should be addressed periodically as its exposure to employment-related claims rises significantly as more employees are hired.
Higher liability limits.
As operations expand, liability limits should be increased to match new exposures.
Ethical upselling means addressing these changing coverage needs to align coverage with a policyholder’s evolving risk profile.
How to Maximize Policyholder Value Through Ethical Upselling
Timing matters when considering how to maximize policyholder value with ethical upselling. Typically the best opportunities arise when policyholders are thinking about making a change in their coverage.This could be at renewal, when they are already reviewing their risks and coverage, or when a major life change happens, like a marriage or the purchase of a new home. For businesses, the right time could be when hiring new employees, expanding operations in different regions, or manufacturing a new product.
Technology boosts results by identifying upsell and cross-sell opportunities across a large book of business, making it more efficient to analyze and identify coverage gaps. For example, an agent could run a report to identify policyholders that have a homeowners policy but no umbrella policy, or businesses without cyber coverage in place. Agents could also automate proactive outreach efforts to target policyholders approaching renewals with specific offers based on their individual needs.
Offer education to start the conversation, rather than beginning with a sales-oriented message. Ethical upselling should be about solving a coverage problem for the policyholder rather than selling them a new product they may not need. Use education to align coverage with actual coverage gaps and needs to provide maximum value to policyholders. By explaining risk factors and exposures, policyholders can make educated decisions about their coverage while relying on their agent as their advisor.
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