Knowledge Center

Knowledge Center Items Podcast Episode 44

How to Find the True Value Customizing Renewals

Published on

There's a delicate balance that's hard to find when you create specific insurance solutions.

Sometimes you don't take it far enough and leave options on the table for your client.

Other times you can go overboard with changes that just don't make sense.

No matter what, if you focus on their biggest issues you'll be able to get it just right.

Rep Plasencia, Area Executive Vice President at RPS, talks about all the ways you assemble a quality renewal.

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Full Episode Transcript

Joey Giangola: Mr Rep Plasencia. How are you doing today, sir?

Rep Plasencia: I'm doing very good. How about you, Joey?

Joey Giangola: I'm doing all right Rep. I got to ask this before we get going. I want to know, is there an old school sales tactic that you are like surprised to see out in the wild today still being practiced?

Rep Plasencia: Wow. I'd say you still see the old school generalist, which every once in a while popping in. The folks that think they can be all things to all people and some have to be, but I just think that's pretty much old school. And I think the spaces moving further and further away from that would be my...

Joey Giangola: Yeah, that's definitely a good one that the expertise is something that has definitely come into play more and more, or I should say the specialization per se. For me Rep, I don't know about you, but I'm in a car salesman situation right now myself, and I'm just getting like message after message of "Hey, this is car salesman guy calling to talk to you about a minivan give me a call." It's just like that sort of hammer home sort of approach. And I'm like dude I appreciate it in some respects, but again just sort of hammering home that message.

I wanted to kind of talk about... Cause that's something that we have traditionally been maybe accused of in some way shape or form across the industry. But what have you seen over the course of your career in terms of that communication process, the sales process, where do you think maybe we get a little too ahead of ourselves, a little too excited versus maybe learning to take a step back and understand where that client is actually coming from?

Rep Plasencia: Wow. I... That's a big question, I think historically where people came from, it was whatever trade magazine or back to the days even phone books and directories where they would go prospect and try to find clients that were in their particular zone or area or just the town they were driving them through. I mean, when I first started in this business that the producers that kind of mentored me, it was like we were driving through whichever town and the company looked big, we stopped knocked on the door and walked up and it was "Hey, we're here to talk to you about your risk management and insurance needs." And that you really don't see that at all anymore.

It's a whole new space. And especially this year where we've all had to learn to communicate in a virtual format such as this, but at the end of the day, we have to be relevant and get someone's interest in what we're able to tell them and get them somewhat interested in hearing the next steps. So.

Joey Giangola: Yeah, there is something to be said in that last simplicity of just like "Hey, let's talk about insurance." Is there something that you think maybe... Is there certain... Maybe somewhere along the way that we got lost or is there maybe something that we should try to remember about that process that we could apply maybe in these new environments?

Rep Plasencia: I don't know if it's been totally lost. I think sometimes we're all moving so fast and there's pressure to do more and be more efficient that sometimes you do lose sight of truly taking time to really understand this client's need and their pain point and what are their motivators are and really what their issues that they're trying to process. So I think if you really step back, try to put yourself in that person's shoes. Which is sometimes hard to do, because we're all dealing with so many different things at once. So, really stepping back and trying to truly be empathetic and understand what the client is trying to process.

Joey Giangola: Yeah. And it brings me to a good point because you had wrote an article a couple months back talking about really diving into the value and where you can really manipulate it. And I sort of filed it away and said "That would be a good conversation, got to talk to Rob about that." But what do you think about that process of really dissecting the value and really trying to figure out on a more specific level for each client? What about that is something that really hit home for you? Is there maybe a time where it really clicked? And you said "Man, this is something that I need to think about a little bit more."

Rep Plasencia: Well, I think over my years in this business, which I'm not as young as I look, but they... We've just had a lot of issues that occurred that were market-driven pressures, that really we had to come back and sit down and talk to a client and deliver some difficult news and really be able to understand what we could present them that worked for them. Instead of here's the cookie cutter approach. And this is what the market's offering. It was, how can we make it customized and specific and tailored to your budgetary, your risk appetite, your ability to manage the risk profile of your particular operation.

And so many times people took it off the shelf and here's what it was. And this is how it works for you. And this is the price. And I think our business has continued to move away from that. And now it's a much more designable, customizable sector that you can really try to deliver something that matches up with exactly what your client wants to do. And just taking the time to listen and understand what they want to do. And sometimes they don't know, you just got to be able to pull that out, you know?

Joey Giangola: Yeah. And the further you get from that sort of out of the box solution, the more communication you need to them in terms of making sure they understand exactly what's happening. What challenges did you [inaudible] see when you actually had to go and say "Listen, this is different than what you maybe have experienced before." And how long did it take to get them on board with that and or to come around the ideas?

Rep Plasencia: It's challenging depending on your particular selling style or the team selling style when we're dealing with and what the buyer style is. There are certain clients that are much more financial, analytical people. There are people that are much more visual learners versus auditory learners and be able to sit down and explain it so many times in our business. There's so many acronyms, so much jargon, so many things that we are all used to speaking in every day. All of a sudden you got to sit down and speak to a client and turn those things off so that you make it something that they can follow along with. And that depends largely on the buyer's particular style. Sometimes they get lost very quickly and you have to be able to adapt to the way that they want to see it.

Which a good sales team is able to do and understand and present it in such a way that it's easy for them to understand, but it comes down to if you're a numbers person, you got to understand here's your upside and here's the risk, here's the reward. And here's the variables that can affect those numbers. So if we can truly show that to someone and say "Look where you can now get Mr. CFO." Or you need to be able to be... And to explain to your CEO or your board or your constituents, whoever it might be, that here's why we're making these decisions. We're going to minimize our risk transfer costs, but we're going to accept more risk. And here's how we protect that. And here's how we manage it on the balance sheet.

Joey Giangola: There's nothing that maybe stands out to you in terms of that renewal process that might get overlooked from? whether it be anywhere along the way, along the process from the agents aspect to the clients aspect. Is there something that over the course of the years that you've really just wanted to shine a light on and say "Man, we're just... This is the part that we need to pay attention to."?

Rep Plasencia: That happens every day, every renewal and depending on who you're dealing with, sometimes it happens in a more glaring fashion than others, but look our business historically, and now it's happening more so is the details really aren't delivered until after the transaction is made. So, the policy form that really has all the meat and potatoes involved with the coverage doesn't come till after we've sold it. So really certain clients don't want to see all the details. Certain brokers don't necessarily have all the details. It may not come from the underwriter and they're delivering a quote without all the details along, but really it's up to us as the brokers to do the best we can to explain the nuances, but there's a lot that really people don't catch up with until 30 days, 60 days, 90 days after the sale to understand it.

Joey Giangola: [crosstalk] Well, I want to say was it... Were we having this conversation where you were saying that you were talking to a client that you started talking about the renewal process and they said "Oh, we'll talk about this renewal when I get the policy from last period." Was that you? Or was that [crosstalk] the conversation with somebody else?

Rep Plasencia: That wasn't me, but I definitely could see it. And I mean, I've heard that complaint many times.

Joey Giangola: I mean, that's definitely a hole. Is that something that you think we might need to try harder on? Is there a solution to that process that would maybe enhance the renewal process as it exists currently?

Rep Plasencia: Look there's a lot of very smart people that are working on that and trying and there's our business has done a lot in recent years to try to speed that along, but the sheer volume. And then the sheer level of detail, when you really start talking of things that are not cookie cutter. I think that the business has gotten very fast with cookie cutter. If you're talking about your homeowner's personal lines, that stuff is really kind of popping out of the systems very quickly now. But you're talking about more complex risk transfer deals.

They're customized, a lot of times it's coming down to the end, people then want to make changes and that has to process through. And then if you have multiple carriers, we have to get some kind of agreement on the policy forms and then everybody still wants to make their own little tweak to it. So it definitely delays. We're working towards it, but we have plenty of room to go.

Joey Giangola: I do want to get back to something around that customization and sort of talking about... There's probably a thin line to walk. In terms of where you could probably take it too far to start stripping out coverage and manipulating it to where it makes sense. What does that... How have you balanced those scales over the years? And wherever you found the most like ROI, or sort of bang for your buck and making those adjustments.

Rep Plasencia: Wow. Look I think it comes back to really understanding what the key objective is. There's sometimes people want to customize just for the sake of customizing. And then you get into things where you have an untried section of verbiage or untried policy form that you think you have expectation, but there's no basis for it. And then all of a sudden you run into all these other problems. I think customization for the specific need, but not going over the board just to chase to have something custom. When I was dealing with a retailer one time, he told me he was a artiste of policy verbiage, which made me giggle.

But at the end of the day, every underwriter that we ran that by and it went to a number of corporate councils. Everybody thought that the wording had all kind of problems, but he was struggling to let go of this was what he thought it should do, but it would have been a complete nightmare and a claim. So fortunately we were able to come away from it in the end, but it was a desire to be customized just for the sake of being customized instead of going away from something that we know works.

Joey Giangola: I mean Rep, everybody wants to have their insurance possibly a little bit special, right? I mean, it's got [crosstalk]-

Rep Plasencia: Of course. And a little bit special is what we're here to do and make it customized for you, but we don't need to totally recreate the wheel unless we totally need to recreate the wheel.

Joey Giangola: So that's a good question. I mean, if you had maybe put a slider on a scale somewhere, how much of it is customized just for the sake of customization versus really truly the percentage of policies or situations that call for something? Do you think maybe the hands overplayed in some regards and we could look to standardize things a little bit more to maybe increase that efficiency or speed [inaudible] on the turnaround side, or do you think we're sort of hitting a sweet spot?

Rep Plasencia: No, I think honestly it... And you're seeing it happen right now in the market that maybe customization has been a little overcooked and you had a lot of broker manuscript forms that were moving throughout the business. And then you had custom client manuscript forms that were designed to handle some specific needs, sometimes in the full light of day, sometimes not. That people worked things into the verbiage that they thought would be catchalls. And you saw the carriers end up paying a lot of claims over the last few years on things that they didn't intend to pay.

So I think carriers now have become much more cautious when it comes to manuscript boarding and there's definitely a pushback on complete broker manuscript, client manuscripted forms because they don't want to end up paying claims on things that they didn't intend to pay.

So I definitely think... And sometimes it wasn't done in total fairness to the markets. It was totally client centric. And that doesn't necessarily always make it a good partnership in the long run. I mean a good insurance transaction has to have a fair premium paid to the markets to take the risk and a fair policy form that they're going to pay claims on, but they don't really want to end up accepting risks that they didn't price or contemplate and then pay significant losses.

Because as soon as that happens, the next year you're in for a difficult renewal. And then you have people that are upset with how the deal went down when they have to pay a significant claim on something they didn't even know was there.

Joey Giangola: Rep, this question might be impossible, but let's give it a shot anyways. If you had to leave an agent with something, in terms of the agent that kind of defaults to the out of the box coverage, they generally just go with what's there. Is there one area that they could look right off the bat that "Hey, listen if you haven't tried this, this really might help you hold onto a couple more accounts a year, really renew that business at a better place." And then on the other side of that. What's something that you see people getting out of control with the guys that are going to [inaudible] customize, to adjust the policy just to adjust it? What's one place that they should maybe draw that back, pull the reins in on it a little bit?

Rep Plasencia: Sure. The first thing I would do is really coming back to so many times people took over an insurance program either by BOR or they copied the existing policies. And you just took someone else's work. And now you're running with someone else's work. So really coming back and having that discussion, which is not always easy to get people to focus on and spend time with is understand the exposures of the insured and do your own work to realize what the insured is trying to cover. And how well is it being covered? Not just this is what's always been, it's taking time. And as a true professional insurance broker is to say "Here, I'm going to provide my value by looking at it as an independent person. And I'm going to give you our review as the way this should be covered."

So if you start with that and then look at if you get into the claims and you ask the questions of where were the pain points. Was it uncovered claims? Was it too much volatility in a particular claim? Is it premium related to a particular type of client? So if you really understand what it is that's driving and then focus on how do you manage that. If it's taking out small claims by increasing your deductibles or retentions and not get into this trading dollars with the carrier, it becomes a much smoother process in the long run.

So, it comes back to at the end of the day, Joey. Is really doing your due diligence, listening to the clients where the pain is and then trying to come up with that client's specific solution, but you can't make a tailored suit without taking the custom measurements for that particular client. Right?

Joey Giangola: Makes sense indeed Rep. All right, I have three more questions for you, sir. And the first one, very simply, what's one thing that you hope you never forget?

Rep Plasencia: Wow. The one thing I hope we never forget is that this business is about people and clients and you need to listen and deal with the people aspect. This is about trust and confidence, that people believe in you, that you're negotiating coverage that's going to be there in their time of need. I mean, our is there when people are in their darkest times. So, when you're looking at a business owner and there has been a critical accident or a fire or something is... That's when they're going to need us. So remembering the importance of what we do really doesn't really come out until there's something that's bad that's happened.

Joey Giangola: Now, even though you are not as young as you look, as you said. What's one thing you still have yet to learn?

Rep Plasencia: Oh, there's so much, yeah. The neat thing about this business, is there something new that happens and new products, new coverage, new exposures and I don't think you can ever know everything in this business. I mean, I think there's numerous things I've yet to learn and I would keep learning every day. I think that's the key to success is to go to bed, learning something new every day.

Joey Giangola: Alright Rep, last question to you. If I were to hand you a magic wand of sorts to reshape change, alter really any aspect of insurance that you saw fit, what's that thing? Where's it going? And what's it doing?

Rep Plasencia: Wow, Joey. This is hard at late in the afternoon. I would say if you could really take the commoditization out of our business, to especially in the complex accounts, getting people to really see it, for not just a financial transaction. A lot of times people... If you haven't had a tough claim, if you haven't had a dark situation where policy form and coverage really came into play, you lose sight of it. Insurance just becomes a true expense, but if I could wave that wand, without everybody having to experience a bad situation and where they really needed insurance, that would be the one. Cause I think if people paid more attention to it and didn't look at it in a negative way of "Oh, I've got to pay my premium again."

You probably do more things and you'd spend a little more time and make it be something that was more valuable in an easier renewal process each year to manage your insurance. When you really could appreciate that what this product or this expense does for you, as far as protecting your human capital, your financial capital and your balance sheet is as a whole. So tall ask but that's been the frustrating part of our business is sometimes we get so commoditized and people don't really always love insurance people. I don't know why, but it's just it's not their favorite meeting each year, I think.

Joey Giangola: Rep, this has been fantastic. So I'ma leave it right there.

Rep Plasencia: Well, thanks, Joe. I appreciate the opportunity.

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