There’s an adage in the service industry that it’s much cheaper to maintain a client than it is to gain a new one. The sales and onboarding process is expensive, but once a client moves to the ongoing business phase, maintaining them is very cost effective. Unfortunately, most businesses have no way of knowing if any given client is likely to stick around long-term or take off in a year due to someone else’s low introductory rate.
In the insurance industry, things are a bit different. Insurance records are tracked in a database that all the companies can access. If someone routinely shops around looking for better rates, every company can see that they are a “shopper” and will actually quote a higher rate! In the case of insurance, it’s cheaper to stay a client than it is to become a new one.
Why Does Shopping My Insurance Result in Higher Rates?
Insurance underwriting involves far more data than most people understand. Underwriters are reviewing many applications a day, and their priority is to make sure they are bringing on quality business for their companies. Initial underwriting costs could include any of the following:
- Reviewing insurance history
- Running credit checks
- Inspections
- Checking driving and motor vehicle records
- Reviewing medical history
- Verifying information
- Running risk models
The insurance history part of the review process verifies an applicant’s current company and how long they’ve been with it. If the applicant changes companies every year, the underwriter knows that this client will leave them after a year as well. They will not produce a comprehensive quote that includes the company’s best coverage, discounts, or credits. The quote the person receives will be based on trying to recoup as much of the first year costs as possible, because that’s all the company can expect to make on that client.
If you’ve been shopping your insurance every year to always get the lowest rates, chances are you’re paying far more than a long-term client at any given company.
What Are the Benefits of Remaining with My Current Insurance Carrier?
When individuals and businesses stick with the same insurance company for several years, and participate in a communicative relationship with their agent, they often realize significant savings over time. The exception to that is if an agent is not very responsive or proactive about a client’s account. These agents may take ongoing business for granted and neglect to update policies for better pricing. In those cases, it actually is time to find a company with better customer service.
When conditions are good, however, loyalty pays off. Renewal or longevity credits are one way a company thanks clients for keeping their policies current. Through premiums, they have recovered the cost of the initial onboarding and can offer incentives to continue being profitable at a lower rate for the consumer. Discounts may also be available, and these are easier to identify when the agent is familiar with the client’s account.
Building a Lasting Relationship with Your Insurance Agent for Long-term
Savings
If you’ve been working with an insurance agent for a while, one way to know they are looking out for your best interests is if they reach out for an annual review to let you know they are researching some credits or discounts to apply to your renewal. This is not just a gimmick to keep you; it’s a legitimate benefit of maintaining your policies with the same company. If that’s not your experience, contact us to review your policies. At Smyrl Insurance, we educate, nurture, and empower individuals through insurance to help them maintain solid long-term coverage at the best possible rates. We pride ourselves on continuing relationships with families and businesses for multiple generations in Hatfield, Lansdale, Souderton, Harleysville, and throughout Montgomery County, Pennsylvania.
