Stefan Greenberg, a partner in the New York City firm of Lenox Advisors, made one of the biggest “little” sales of his life in the summer of 2001. Greenberg literally “saved the day” for a single mother and her son. After talking with her for months, he finally made a small property & casualty (P&C) sale — a $700 renter's insurance policy. Less than two months later, his persistence paid off. While his client's apartment was left in ruins following the collapse of the neighboring World Trade Center, the renter's policy covered the cost for a hotel close to her son's school until the apartment was habitable again. Since she had full replacement coverage, the policy also covered the cost of new furniture, clothes and other possessions.
This was the first step in a very profitable relationship. “After Sept. 11 she called to thank me,” Greenberg says. “She bought a life insurance policy from me, transferred her IRA to me and started a monthly investment program.” He's made thousands of dollars in commissions from a relationship that started with a renter's policy that pays less than $50 a year.
Helping to Build Relationships
David Stacey, a rep for State Farm Insurance, considers P&C to be an “easy” sale since most people must have homeowner's insurance if they buy a house and auto insurance if they have a car. Those required coverages get your foot in the door, so you can begin what may become a long-term, growing and profitable relationship.
P&C can be a particularly good door opener for those hard to crack prospects. “Four of my best clients work together,” Greenberg says. “They have a fifth associate who never did business with me until he married. Then he started small — with a $300 renter's policy and additional coverage for the engagement ring. I did the usual annual call and sent him my newsletter. Three years later he was making almost seven figures, his wife was pregnant, he'd bought a house and he was ready to get financially organized.” The end result: Greenberg's small-time client bought permanent life insurance, set up an IRA, rolled over existing retirement funds, bought disability income insurance and bought homeowner's insurance for his new home.
Sometimes it's the little things that matter. Sherry Hoffman, owner of the Hoffman Agency, a multiline agency in Ballston Spa, N.Y., uses auto insurance as her ticket to IRA rollovers. When a new prospect moves into the area, she provides them with information about auto insurance. Then, during the sales process, she asks about IRA and qualified plan money the client may have left “back home.” She lands a lot of rollover IRAs this way.
Stephen DiOrio, owner of the Stephen J. DiOrio Multiline Agency in Wayne, Pa., echoes the importance of the small P&C sale as a warm-up for bigger things. “Just a few weeks ago I had a very conservative client who finally revealed he had $300,000 in a bank account.” Turned out the guy lost lots of money a few years ago and was afraid of mutual funds. DiOrio explained that bank deposits are not risk-free — they are subject to inflation risk. At the end of the conversation he was ready to invest $40,000 into equities. His way in? He wrote the guy's homeowner's insurance and stayed in regular contact over the years.
Peace of Mind; Staying Power
In the worst-case scenario, if your clients are ever faced with a flood, hurricane, wildfire or other man-made or natural disaster, the first person they turn to is going to be their P&C agent. When having a P&C product prevents disaster or helps make someone whole again, they remember, and make referrals to, the rep who helped mitigate what could have been a disaster, that P&C agent may be the first person they think of.
DiOrio recalls a situation where he recommended an umbrella liability policy to a client. A few months later the client's teenage daughter was involved in a terrible accident. She ran over and killed a drunk student who had fallen in the road. The case dragged on for several years, and had she been found negligent the umbrella policy was there to pay the bills. Her father is now one of DiOrio's best sources of referrals. And Greenberg's Battery Park City client is another great source of referrals. Neither policy paid much, but both were critical stepping-stones to a rep's bread and butter — investable assets.
Writer's BIO: Janet Arrowood is the author of several insurance industry publications, including The Professional Advisor's Insurance Desk Reference.