How Independent Agents Can Talk to Customers About Natural Disaster Insurance

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  • After natural disasters, you’ll often see in the news a statistic that something like two percent of people in the affected area actually had homeowners insurance related to earthquake, hurricane or flood damage. How can independent agents nudge their customers toward considering natural disaster insurance coverage?

    It’s a hard sell because most of us are guilty of “it won’t happen to me” rationalizations, but of course, insurance is for those times when it does happen. Here’s how to initiate crisis coverage discussions and encourage customers to consider buying relevant insurance so they can recover from a natural disaster.

     

    Use Recent Events as a Launching Point

    Your first goal is to introduce the topic. Usually, the best way to do that is to talk about recent events that have made headlines. 

    For example, Hurricane Humberto swept through Bermuda in late September 2019. It reached wind speeds of 120 mph and left more than 27,000 people without power, reported Christina Maxouris at CNN. While it paled in comparison to more intense hurricanes in recent years like Hurricane Harvey and Irma in 2017, it definitely created destruction and is a disaster still fresh in many peoples’ minds. 

    There was also record-long flooding along parts of the Mississippi River in 2019, says Jonathan Erdman, senior meteorologist at Weather.com. Several states including Louisiana, Mississippi, Missouri and Illinois experienced major flooding that stemmed from heavy rains in the basin starting back in December 2018. 

    Sparking these types of conversations can help you segue into crisis-prevention and set up an insurance coverage discussion. 

     

    Offer Objective Data

    Providing some concrete numbers is important for making your point and should paint a more vivid picture of the threat that natural disasters truly pose. 

    For instance, flooding is a major problem throughout much of the United States. In 2019, 14 million Americans were affected by flooding and 200 million were at risk, according to the Center for Disaster Philanthropy, a disaster recovery fund. “Even structures that only have minor flooding will require significant work – according to FEMA, one inch of water in a home equals $25,000 of damage.” 

    You don’t want to overwhelm your customers with information, but providing a few pieces of relevant data should put things into context and give them perspective on the prevalence and costliness of weather-related disasters. That way they should be better able to grasp the magnitude of what would happen if an event like that occurred in their area.

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    Mention Common Disasters in Your Area

    The specific types of events that occur most frequently in one area of the country can vary dramatically from other parts. In Florida and along the Gulf Coast, hurricanes and flooding are the primary areas of concern, while in California, it’s earthquakes and wildfires. 

    As an independent agent, it’s your job to ensure your customers have sufficient coverage for the most pressing risks they face. So, break down common disasters in your area and let them know where their money will be best spent when purchasing a policy. 

    To speak with authority, you’ll want to perform some research and pinpoint which disasters are most likely and the odds of them happening. One resource you can use is from Tim Meko, deputy graphics editor at The Washington Post. It’s a set of maps that allow you to see at a glance which areas of the country are most susceptible to different types of natural disasters — something that can come in handy when you’re relaying (and showing) information to your customers.

     

    Don’t Resort to Fear Tactics

    Be careful that you don’t use fear-based techniques when having these discussions. While you certainly want to get your point across and let your customers know about the genuine threat of natural disasters, you don’t want to create any friction in the process. 

    Establishing trust is essential for independent agents and is crucial for building long-lasting relationships. Unfortunately, only 27 percent of customers find insurers to be trustworthy, and a mere 12 percent say they have strong trust in insurance agents, explains Jon Picoult, founder of Watermark Consulting, a customer experience advisory firm.

    In addition to steering clear of fear tactics, be sure to offer only that coverage a customer genuinely needs. “You’re in a sales profession, so of course you want to place new business whenever possible,” notes the team at Voldico, a network of independent insurance agents. “However, one of the quickest ways to lose customers’ trust is by trying to make a quick sale when the insurance product isn’t a good fit.”

     

    Explain the Limitations of Homeowners Insurance

    Homeowners insurance covers a lot, including damage from fire, lightning, wind and hail, according to the insurance comparison site The Zebra. In most cases, it even covers a home if a roof collapses due to the weight of snow, ice or sleet. But it’s limited when it comes to natural disasters. 

    The Insurance Information Institute specifically states that standard homeowners insurance does not cover floods or earthquakes. This isn’t something your average insurance customer is aware of, which could give them a false sense of security that they are covered by their homeowners policy when in reality they’re not. 

    So, it’s important to explain the limitations of standard homeowners insurance and let them know what it does and doesn’t cover.

     

    Offer Insurance for Natural Disasters to Fill Those Gaps

    From there, you’ll want to let customers know about some specific policies that will round off their coverage, with one of the most important being flood insurance. 

    “No matter where you live in the country, it’s important to purchase flood insurance,” says insurance writer Jenna Tropea. “Even if you don’t live in a high risk flood area, you’re still at risk of flood damage. In fact, 20% of flood claims are filed in low to moderate risk flood areas.” Therefore, this is likely a type of insurance that should be on your customers’ radars regardless of what part of the country they’re located in. 

    When it comes to earthquakes, there are several major US cities that are at serious risk, writes Sam Becker at The Cheat Sheet. This includes ones you would expect like Los Angeles, San Francisco and Seattle. However, others like Memphis, Dallas and Oklahoma City have experienced increased risk levels as of late. 

    Therefore, earthquake insurance is definitely worth mentioning if your customers are based in one of these areas. This and flood insurance should fill in the gaps wherever a standard homeowners policy doesn’t offer full coverage says the team at digital home loan resource Mr. Cooper.

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    Emphasize Greater Peace of Mind 

    When presented with a new type of insurance, the first thing that comes to many customers’ minds is that it’s an additional expense on top of what they’re already paying. And this is an understandable concern. 

    Perhaps the best way to overcome objections and pitch to reluctant buyers is to focus on the benefits of coverage rather than the cost. Most customers know that buying earthquake or hurricane and flood insurance will provide them with an added layer of protection, but they may not fully understand the peace of mind it offers. And that’s what you want to focus on with price-conscious consumers, writes sales coach Thomas Phelps

    For example, purchasing private flood insurance ensures customers have comprehensive coverage, are compensated for any losses they experience and there’s no lapse in coverage, explains the team at VOI Insurance Solutions, a full service independent insurance agency. 

    It’s also smart to point out the stress your customers can be spared in the aftermath of a catastrophic event. Florida-based insurance company Sturdevant-Beach & Associates makes a great point that the period after a natural disaster or even severe weather can be incredibly stressful. It’s a time when a person may be sifting through the wreckage of their home, while trying to look after their family members and pets.

    Knowing they’ll be covered even in a worst-case scenario is incredibly relieving, and they’ll be able to devote their time and energy to getting their life back on track rather than dealing with insurance matters. And this is priceless for many people. 

     

    Make Sure Your Customers Are Fully Protected 

    Natural disasters frequently make the news, but many people still have the attitude that it’s not something that will happen to them, making it one of the trickier forms of insurance to sell. 

    The reality is that the number of natural disasters are on the rise, averaging 15 per year between 2016 to 2018, up significantly from the average of 6.2 from 1980, explains science journalist Kat Eschner. So, you could argue that this insurance has never been more important to have. 

    Following the points outlined above should help you start this conversation with customers and provide them with the facts they need to make a well-informed decision. That way they’ll be focused on the true value of a policy rather than just the price. 

     
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