Have you ever wondered how to fire an insurance client?
Maybe there is a client that you have that is rude, cranky and mean to your team.
You would love to never hear their name again. But, you aren’t sure what to do. You spiral into them, fire them, they will leave a bad online review or they tell everyone in town.
You negotiate with yourself on what to do – and unfortunately, you end up doing nothing. You wait it out until the next outburst happens.
It’s a vicious cycle and you are a hamster on a hamster wheel.
When you get into this habit instead of ignoring it I want you to think about the true cost to your agency and team:
- Most of the time these clients are unprofitable so you are losing money on them
- When you say yes to the bad client you are saying no to getting proactive and serve the right customers
- Is there a way to put up business boundaries to make the relationship easier (online access, EFT, appointments?)
- Team morale suffers
What is the cost of doing nothing and keeping the client?
“When you say yes to the bad client you are saying no to getting proactive and serving the right customers.” Kelly Donahue-Piro
Now let’s identify what the costs are to donating this client to the competition by you firing the insurance client:
- They may leave a bad online review (that you can respond to)
- They send their friends in and the problem grows because you can’t turn down a referral right?
- You end up bending the rules and it costs you in the long run just to shut them up
- A great team member leaves because they no longer want to deal with this customer
Now that you have the pros, cons and implications let’s identify how to fire this client.
When To Fire An Insurance Client?
What Behaviors Identify A Problematic Insurance Client
In my opinion agencies are far too lax in addressing problem clients. We believe inaction just allows the problem to disappear.
Your agency needs to get very clear on how to spot a time vampire unprofitable client that is sucking the life out of your agency.
Here is how you spot a potential client terrorist:
- Bad payers: Consistently late, payment issues lapses, reinstatements
- High claims: People who are not in general good risks and always have some insurance issue
- Remarketing Demands: Client who want to be shopped every 6 months
- They Are Just Nasty: Swearing, yelling, belligerent
- Unethical: Lying, cheating and not telling the truth
- Below Standard: The client will not budge their coverages to agency standards
Here is the thing – if one of your clients hits two of these items they probably need to be rehabilitated and if they aren’t rehabable, termination is next.
What Is The Impact On Your Insurance Agency?
So let’s break down how these items above impact your agency in a real life scenario.
If this math doesnt blow your mind you’re destined to keep your insurance agency terrorist on the books forever.
- Payments: Cost You 3 Hours Per Year Per Client
- Do the math – if 1 client costs you 3 hours per year look at the commission on that account are you making any money?
- $1000 policy @ 13% commission = $130
- Labor costs: $75 ($25 per hour with benefits, taxes etc)
- Taxes on that money @ 15% = $20
- Overhead (management system, E&O etc) = $20
- Total Cost: $115
- Total Commissions: $130
- You made $15. Are you ok with that?
- High Claims: What’s the cost of a high loss ratio client
- Missed profit sharing
- Loss ratio issues with carriers
- 3 Additional hours of team time on the claims (cause you know they will call every day)
- Remarketing Demands: Reshops take 3 Hours
- 30 Minutes: Refreshing the information with the client
- 60 Minutes: Shopping the account
- 30 Minutes: Sharing the quotes with the client
- 30 Minutes: Binding the account
- 30 Minutes: Post bind questions (escrow, inspections underwriting memos)
- 3 Hours = $75 of team time
- You can’t reshop them every 6 months!
- Just Plain Nasty: The impact on your team
- Quiet quitting: The team gets burned out and does the bare minimum
- Replacing a good team member: $2500 in recruiting fees, your time, training time
- Decreased cross selling, upselling and new business selling as everyone is burned out
- Unethical: The true cost is here
- Loss of a carrier contract
- E&O Claim
- Tarnished carrier relationship
- Below Standard: The cost of a client who doesn’t believe in insurance
- You will always spend more time with these clients
- Its dangerous in the event of a claim
- They aren’t your people
When you sit down and go over this checklist it may hit you like a ton of bricks – your spending too much time on the wrong people and its causing you and your team to not get out to the right people.
We do believe efforts should be made to rehab these clients. Check out our guide on how to get a client on EFT!
What Are The Pros and Cons of Firing an Insurance Client
Benefits to Terminating the Client
While firing a client may be really awkward (kind of like breaking up or firing a team member) it’s also very freeing in the long run.
Let’s outline the benefits of kicking this client to the curb:
- Boosted morale
- Showing your team you won’t tolerate bad clients
- Reduced E&O gaps
- Freeing up team members time
- Identifying who your agency serves best and keep getting better at working with them
Potential Risks to Terminating an Insurance Client
While we strongly advocate you fire the wrong customers we need to also identify there are some risks that you should be aware of.
You can take steps to mitigate these risks:
- They could leave a bad online review (they can do this as a client as well)
- They may speak negatively about your agency in the community (but really will people believe them?)
- They leave and then go direct to a carrier that download and assigns the client to you (turn that off)
- They get upset (generally they are upset now)
Most of the downsides to terminating a client can actually happen with them on the books as a client!
What you want to consider is what are short term issues (remember people like this generally find a new target pretty quickly) and which are long term. Most of the downsides are all very short term scenarios.
Making the Decision To Terminate an Insurance Client
You want to create an open door policy for your team that they can come to you if they identify a client terrorist. This should ultimately be the decision of the owner or team leader.
The power to terminate a client should not be at the desk level. Sometimes there are personality differences and the client can be rehabilitated with another account manager.
As the leader you can have a critical view of the account that is non-emotional.
Once identified, take the list above and review the impact on the agency. Do the math! Create a client firing checklist if they fail you know the answer.
Also, as the leader you can call the client and have a business conversation with them. The client may also be ready to depart.
You can consciously uncouple. Make the decision more about facts than feelings. Make a business decision on the clients fate at your agency.
How to Fire An Insurance Client
This is probably the biggest question I get when talking about letting a client go. What to say and how to do it!
We have a few strategies that we recommend to make the process easier.
Making Firing An Insurance Client Easier on the Agency
Most likely if you aren’t excited about the client the carrier may not be either. A great first step is to contact the carrier and see if they are willing to non-renew the account.
This makes your conversation a bit easier. In my experience it’s a 50/50 shot but if it makes half of your terminations a bit easier take the opportunity.
Next, you want to make sure you educate the team that you will be terminating this relationship. You want the team to finalize any work and alert you to any new requests.
This will help you manage the process. Even though this client may not be a great fit for you – you still want a professional departure.
It may help to research some potential agencies that could be a better fit for them. For example, some of these clients may be better at a non-standard agency or a niche market.
How To Have the Call
This is when you just need to buckle up and make the call. This should be a phone call rather than an email. In our podcast on 6.30.23 we actually role play terminating a client.
It’s very much a listen event:
- Greet the client and introduce yourself and your role in the event they are not clear
- Alert them you have reviewed their account
- Let the client know that based on the review it looks like there may be some mutual challenges
- Alert them that at renewal you are recommending that the client finds another agency
- Offer to send them a copy of their policy to making moving simple
- Let them know they can leave earlier
- If they are not getting the message you will need to be direct and clear
- End the call by documenting the file
Managing the Client Transition
As the client transfers to another agency there may be additional friction points. Work to make things as simple and easy as possible (remember there is an end date).
Encourage the team to document the file, double check their work and be diligent in follow up and follow through. If the client is increasingly frustrated the leader and or owner may need to be involved.
Dealing With Potential Challenges In Firing A Client
When the Client Does A 180
You may see the client do a complete turn around. Send flowers and be sweet as honey. This may have you rethink your decision.
Don’t – it’s a ploy. Instead you need to hold your ground. Many times a zebra doesn’t change their stripes it may be something that you regret if you hold back your standards.
Handling A Negative Online Review
This is one of the biggest fears that agency owners have. Getting the dreaded online review! However, it is something you can overcome.
We have a list of ways you can minimize the impact:
- Agencies should focus on getting positive reviews as a general strategy. When you see 1 bad review and 30 good ones the good out weights the bad
- You can contest reviews on most sites – take action
- On many review sites you can also respond to show you care and are active
In our experience a bad online review is never fun but it can be overcome.
Stopping A Future Client Terrorist From Joining Your Agency
What we know in advance we can prepare in advance. You want to make sure you do not fire a client and replace them with the next time vampire.
Every agency needs agency standards to help identify who you serve best and how to best find and keep those people. We recommend that every agency has agency standards that they hold to for new business.
Here are some of the standards you may want to solidify in your agency:
Personal Lines
- Rate Increase $
- Rate Increase %
- Auto Liability Minimum
- Auto Deductible
- Rental Car Reimbursement
- Towing
- Repair/Replace
- MedPay/PIP
- Glass
- Home Liability
- Water Sewer Back-Up
Commercial Lines
- Rate Increase $
- Rate Increase %
- EPLI
- Cyber
We have a saying at APP – bad lead bad client. Don’t let a bad lead sneak in.
As an agency leader it’s your responsibility to create agency standards. But often agency leaders are unclear on their role. We can help fix that with our agency job descriptions.
Conclusion
For many agencies they want a happy and healthy book! In order to do this from time to time you need to identify the clients who are holding back your ability to serve the best clients. You also may want to review our Agency Efficiency Program to learn how APP can help your team master being productive and reducing backlog and staffing needs.
While firing clients can be challenging it’s also necessary. Remember that when you say yes to something you are always saying no to something else.
By holding on to the wrong clients your team doesn’t have the time to deliver the service you desire to your best clients.
Like what we shared here? Our Agency Efficiency, Agency Assessment & 2 Year Programs can help with firing clients. Book at time to meet!
