What To Do When A Client Wants To Cancel A Policy

As an insurance agent, you will most likely be faced at some point with a client who wants to cancel the policy that you sold them. Even if that does happen, though, it doesn’t mean that it’s all over: you still have the opportunity to keep that client by speaking with them and helping them to understand certain things about their policy. To keep your clients’ business, or to prevent them from canceling a policy in the first place, you will need to take the following steps so you can continue to grow your business.

Understand Why They Are Leaving

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Reach out to your customers to understand why they want to cancel, and to see how you can help.

Clients don’t just wake up one day and decide that they no longer want an insurance plan; they usually spend time thinking it over, and they might have multiple reasons for wanting to cancel. They might be unhappy with your customer service or with the cost of the plan, or they could be going through a major life change, which means that the plan they have will no longer fit their needs. Take the time to talk with your customers and figure out the reason they have decided to cancel the plan you found for them.

Create Loyal Customers

Studies show that 89% of consumers are more likely to make another purchase after a positive customer experience; on the other hand, a customer who is not happy will generally not think twice about canceling their plan and will not come to you to find other options. This means that working to create loyal customers is hands-down the best way to avoid losing business: when someone is happy with your service, they will want to continue to work with you, and instead of immediately canceling their policy, they will be more willing to talk to you about finding a different plan.

Another great way to keep your customers happy is to check in with them on a regular basis with calls, text, or emails. This will show them that you care about them and their needs, and will make them feel more comfortable about reaching out to you with any issues they have, including doubts about their policy. After all, 83% of customers agree that they feel more loyal to companies that respond to and quickly resolve their complaints.

Addressing Common Reasons For Cancellation

Unfortunately, sometimes there is nothing that you can do when a customer wants to cancel a policy. It happens, so don’t take it personally, but knowing the common reasons clients cancel can help you better address these issues. The main reasons include:illustration of a man in a suit holding a for sale sign in front of a building

  • Change in assets– A business owner or an individual might want to cancel a policy because they are closing their business, downsizing, or selling their property. Notify your clients that you can make changes to their current insurance policy to better fit their needs and budget; you can offer to reduce their coverage, or even add new coverages if need be.
  • Prices went up- This happens all too often: an insurance company raises their prices, and your clients want to cancel their policy and find a cheaper one. Remind them that you can help them find a better plan when you compare quotes and policies, and reassure them that you will do your best to find a plan that matches their needs, and is in the same price range as their original plan.

Notify Them Of The Risks

Many clients are probably unaware that they will be harming themselves by cancelling a policy and not having a new one ready. There are risks that come with cancellations, not least of which is that stopping and starting coverage is a red flag for many insurance companies, meaning your client could end up paying more for a new plan. Not only that, but if they are cancelling a commercial insurance policy, they could risk losing their business licenses and permits, and will also be fully financially responsible for any damages or theft that could occur while they are uninsured.

Inform your clients about any and all risks they might face – not to scare them, but to show concern for them, and to make clear the repercussions they could face for going uninsured. But in the event that they still choose to go, how you handle it can make a friend or foe: if you handle the situation with grace, you can stay on good terms and keep an open line of communication with the client. In that case, you will be able to ask them about their experience with you, and what you can do to improve your customer service. Knowing how you can change or what you can do to help can make all the difference to your business – and remember, a client wanting to cancel their policy is not the end of the world, so take a deep breath, and proceed with turning a cancellation into an opportunity.

Preventing Your Clients From Leaving

Your customers are the foundation of your business, so your number one priority should be holding onto your existing customers. New business is important, but customer retention is more important, especially when it comes to your bottom line. In fact, did you know that it costs 6 times more to gain a new customer than it does to keep an existing one? That’s right, so approaching customer retention with the attitude of “I’ll just find more leads and more customers” is not a great idea. graph of bars going upward with money signs on the first and last bar

When it comes to growing your business, sometimes it’s about quality, not necessarily quantity. You need a solid base of loyal customers. Once a customer is gone, odds are they are gone for good- about 90% of customers who leave a business never return. You can prevent this from happening by building strong relationships with your customers and by resolving any problems that arise – doing so will increase a customer’s loyalty by 30%. To improve your customer retention rate and prevent your clients from leaving, you need to look at what customers want and how you can give it to them.

Why They Are Leaving

caucasian woman with her hand on her chin looking down
If you don’t tend to your customers except when its renewal time, then you will most likely lose them as a customer.

First, you need to look at why customers might leave your business. Most of the time it’s not because of the price of your product, or because a competitor lures them away. The number one reason customers walk away is that they feel like their agent does not genuinely care about them.

Are you making this common mistake? You sign up a customer for an insurance plan, and then you don’t make contact with them again until it’s time for renewal, or until they need to make a claim. If so, your customers will feel like there’s no personal touch in your relationship with them; your relationship will feel like a mere transaction. Similarly, if you are not returning your customers’ calls or answering their messages in a timely fashion, that lack of communication will take a toll on your retention rate.

What You Can Do

In short, you have to keep your customers happy, and that means going above and beyond with your customer service. You need to:

  • Build a customer database – Collect information about your customers and keep it in a database such as a CRM. This will keep track of the contact that you’ve had with them, what you’ve spoken about, what they’re interested in, and any problems or complaints that they have.
  • Keep in touch – One way that you can keep in touch with your customers is by sending out personalized emails to let them know about any updates, or any new plans that you think would benefit them. Make sure these emails feel tailored to your customers, otherwise they will just come off like sales pitches.
  • different apps on a cellphone screen.Offer different channels of communication – This is the most important thing that you can do to retain your customers. You need to give them multiple ways to reach you in case one way doesn’t work. Ask your customers how they prefer to communicate with you, so that you are ready to communicate in that way, whether it is via email, phone calls, texts, or through social media.
  • Thank your customers – People like to feel appreciated and that they are more than just another sale. Go out of your way to thank your customers for their business.
  • Resolve any issues immediately – What many business owners and agents do not realize is that customers who are unhappy don’t usually complain – instead, they just end up leaving. So, if a customer does complain, take that opportunity to try and resolve any issues as quickly as you can. Your customer will appreciate your attention, and will be more likely to talk about you to others.

Having a lot of customers is great! That means your business is booming. But sometimes it’s not all about getting more new customers – sometimes it’s about keeping your current ones happy. Having a loyal customer base is a more sustainable business model than that of constantly finding new customers to replace the ones you’ve lost. Do your best to keep your relationships with your customers strong, so that they never get to the point of wanting to leave. After all, it is not about competitors or price – it’s all about communication, which is completely in your control.

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