With Kim Benton, Agent and Insurance Agency Optimization Coach
Length: 4:42
Value-based conversations are especially important to help your customer understand premium increases. In this blog, Agent Kim Benton covers factors behind auto insurance premium increases and the role of inflation. She offers clear explanations and actionable tips that will help you empower your customers to make the most informed decisions for their needs.
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TRANSCRIPT
Hi, I’m Agent Kim Benton and today we’ll be discussing a topic that is impacting all of us lately—auto insurance premium increases.
We know that the current inflationary environment over the past few years is driving price increases right now, but it’s still very important to be able to have a value-based conversation with each customer.
As insurance professionals, it’s important to help customers understand the factors behind premium increases and how inflation plays a role in the cost of auto insurance. Let’s delve into some simple language explanations to ensure our customers are well-informed.
You may want to start by clarifying the concept of inflation. Tell them that inflation refers to the general increase in prices over time. Just like the cost of groceries or other goods, insurance premiums can also be influenced by inflation. We know that customers may be tired of hearing about it, but we also can’t avoid the fact that it has a big impact on what it costs for us to pay customers’ claims. However, it’s crucial to note that auto insurance premiums aren’t solely driven by inflation, but it is a factor to consider.
Next, you’ll want to Help customers understand how inflation impacts the auto insurance industry specifically by focusing on rising costs. Explain that inflation affects various aspects of the auto industry, including:
1. Vehicle repairs – As a result of the increased cost of parts, labor, and other repair-related expenses, insurance companies may need to adjust their premiums to account for these higher repair costs.
2. Medical Costs – Inflation can also impact medical costs, which are a significant component of auto insurance claims. Rising healthcare expenses can contribute to higher premium rates to ensure adequate coverage for medical payments.
3. Vehicle Prices – Inflation affects the price of new and used vehicles, making them more expensive to replace. In the event of a total loss, insurance companies may have to pay more to settle claims, resulting in adjusted premium rates.
Whenever you’re discussing premium increases, it’s essential to address the financial stability of insurance companies. Explain to customers that insurance companies must maintain sufficient funds to meet their financial obligations, including claim payouts.
Inflation, rising costs, and other factors can put pressure on insurance companies to adjust premiums to ensure their long-term stability and ability to cover claims. We have to be able to deliver on our promise to each and every customer.
While explaining the impact of inflation on auto insurance premiums, you’ll also want to provide customers with some strategies to help mitigate the increases. I would share a few suggestions:
1. Explain any remaining discounts that the customer may want to opt for. The defensive driving course they didn’t want to spend the time taking may be quite appealing at this point. Or, they may be willing to participate in our telematics program to earn a discount for their safe driving. Whatever it is, make sure you’ve explained and offered any discount they are eligible for.
2. Consider policy adjustments: Review the customer’s policy to identify potential areas where coverage can be adjusted to better suit their needs. Sometimes, modifying coverage or deductibles can help manage premium costs. We don’t want to sacrifice proper protection for a lower price, but there may be some instances where changing coverage makes sense.
3. Maintain a good driving record: Remind customers that maintaining a clean driving record can positively impact their insurance premiums. Safe driving habits can lead to discounts and lower rates over time.
4. Shop around: Encourage customers to compare quotes from different insurance companies to ensure they are getting the best value for their coverage.
By discussing inflation’s impact on auto insurance prices and providing actionable tips, we can empower customers to make informed decisions about their coverage and understand the reasoning behind premium increases.
They’ll appreciate the knowledge that you’ve given them and will be more likely to continue to choose your agency moving forward!
