Renewals: How advisors can prepare
BY Alex Gillis | October 17, 2011
To compile tactics, tricks and tips, we spoke to Dave Patriarche, owner of Mainstay Insurance Brokerage Inc., which has 65 to 70 small-business clients, each client containing two to 20 employees. He’s been in the business for 13 years, working with clients in the US and Canada and, through Canadian Group Insurance Brokers (www.cgib.ca), running seminars for advisors.
Prepare for the renewal conversation
Start early, years in advance, discussing the renewal process with clients. “People think of renewals as a transaction, but they’re more of a long-term process,” says Patriarche. “You’re laying the groundwork for future renewals.”
Obtain reports from a client’s insurer, analyze the data and set up an appointment with your client.
Start the transaction process early. Patriarche begins 60 or 45 days before the renewal date to give him time to prepare and meet the client. For first-time renewals, you need 12 months of data for a proper assessment of renewal rates. Given the lag time of claims getting submitted and processed, most insurance companies discuss renewals two to four months after the anniversary date.
Look at demographic changes. Renewal rates can go up as claims go up due to new hires or in cases where the company merges with another company, says Patriarche. New employees may be more inclined to check teeth, buy new glasses and used other health and dental services wen they sign up for a new benefit plan at a new workplace. If a client’s company is growing quickly and it’s a new-to-benefits group, you want to renew quickly, to get rates adjusted properly for the size of the company. Also, rates can go up as a company lays off staff, because remaining staff get jittery about their losing own jobs and, as a result, use insurance services before a feared future lay-off or benefit cut.
Maintain a relationship. The key to a successful renewal (and a successful relationship) is to know what’s going on with your client. Call or email quarterly to offer updates, tidbits of advice or to simply ask how things are progressing. You need to find out if the type of business is like a “security-guard company” (lots of employee turnover, therefore higher claims and, eventually, higher renewal rates) or more like a “mom-and-pop shop” (stable staffing, therefore stable claims and rates).
For background for yourself, look at rising dental and health rates in the industry. Overall, these costs go up faster than inflation (faster than the Canadian Cost of Living Allowance (COLA) that the government uses to measure inflation). Dentist charges increase every year, as does drug spending. For up-to-date numbers on drug spending, check out the website of the Canadian Institute of Health Information. In 2009, for example, drug spending rose 5.1%, which was the lowest annual growth in a decade. Increases are usually much higher. For dental rates, see the of the Canadian Dental Association’s site.
Read Part 2 for the challenges an advisor will face when managing a renewal.