Cross-selling is an important tool for independent insurance agents and brokers, but it must be done ethically. Policyholders benefit from their agent’s expertise and knowledge when cross-selling is done well. Learn more about the ethics of cross-selling and how to use it to help policyholders in this blog.
The Ethics of Cross-Selling
According to Merriam-Webster, cross-selling means to “sell or promote (a different or related product or service) to an existing customer.” It can be a very beneficial practice for agents and policyholders alike when done ethically. It helps to ensure policyholders are covered for their exposures without gaps in coverage and is part of an overall risk management strategy.
Agents and brokers rely on trusting and transparent relationships with policyholders, which means ethical cross-selling matters. When done ethically, it can help build long-term customer trust and loyalty while also reducing E&O risk by ensuring policyholders understand their policies and have the right coverage in place.
There are many resources to help agents and brokers learn more about the ethics of cross-selling and insurance. Consider taking an ethics for insurance course, reviewing your ethical code of conduct, and discussing ethical concerns with colleagues and mentors.
Cross-selling can become unethical if:
- Policyholders feel pressured to purchase coverage they do not need
- The benefits of additional policies are not adequately explained by the agent or understood by the policyholder
- The agent does not consider the policyholder’s full insurance and financial situation
- Insurance policies are bundled together as a one-size-fits-all package without customization for individual clients’ needs
- Additional coverage is pushed to the policyholder to meet sales targets or commission goals, not because the additional coverage is in the best interest of the policyholder
To ensure ethical cross-selling, agents and brokers can try these best practices:
Start by educating policyholders. Instead of focusing on sales, try educating policyholders about their risks and current coverage. Discuss risk management and mitigation techniques, instead of what policies you can sell them.
Conduct a thorough risk assessment. Before recommending different insurance products, conduct a thorough risk assessment to understand the policyholder’s current situation, coverage, and gaps. Rather than offering policies without knowing the full situation, use this risk assessment to personalize coverage offerings.
Provide transparent information about policy costs and benefits. Make sure policyholders fully understand the benefits of additional coverage — and its costs. Give examples of how the recommended coverage will fill existing gaps to benefit the policyholder and help them see the value of the policy.
Make cross-selling a normal part of policy reviews. Instead of only focusing on cross-selling techniques during renewal time, consider adding holistic policy reviews of coverage and gaps throughout the year and when something changes for policyholders. This makes cross-selling a natural part of policyholder conversations.
Cross-selling is not unethical, but it should be considered an opportunity to help policyholders fill coverage gaps and enhance risk management. When done transparently and with the policyholder’s best interests in mind, ethical cross-selling is beneficial for both the agent and the policyholder.
Become a Member of the American Agents Alliance for More Great Content
The American Agents Alliance empowers independent P&C agents and brokers to thrive through educational content, networking opportunities, and valuable business discounts. Become a member today to enjoy these benefits and many more!
External Links:
- https://www.merriam-webster.com/dictionary/cross-sell
- https://www.mckinsey.com/industries/financial-services/our-insights/unlocking-the-potential-of-deeper-customer-agent-insurer-relationships
- https://web.theinstitutes.org/ethical-decision-making-risk-and-insurance
