12/03/2002
Insurance Trends — For homebuilders, insurance income is a major revenue stream.
by Drew Gissinger, President & COO, Balboa Insurance Group, reprinted from Builder & Developer Magazine online
The new-home building industry is experiencing a remarkable boom in the majority of the nation's housing markets. In some areas, keeping up with demand takes up every waking hour. However, booms come and booms go. But partnering with an insurance industry leader and maximizing income with a compounding revenue stream ensures growth during market downtime.
The importance of homeowners insurance
Offering access to insurance solutions is an excellent way to accomplish two major goals: increase revenue growth for your business and enhance satisfaction among homebuyers.
For builders, insurance income is a superior revenue stream. Year-after-year, revenue compounds as a homeowner's policy renews. In addition, insurance income can go beyond the homeowner's policy sale and renewal commissions - there is also income potential from the cross-selling of other insurance-related products pertinent to homebuyers, including the increasingly popular home warranty plans, and life and disability insurance.
Strong relationships with homebuyers cement your deal, and adding value for the buyers increases their satisfaction. One of the best ways to add value is providing a simple purchase process with as many elements as possible - including insurance - handled at a home's point-of-sale. In other words, consumer demand for a one-stop shopping experience is rising.
In "Consumer Perspectives on Realty-Based One-Stop Shopping," a study published by Murray Consulting in April 2002, survey respondents were asked their preference for a home purchase option of a simplified one stop shopping process where all services required for the transaction were provided through one source. Forty-seven percent of respondents answered that they would "Consider Strongly," and an additional 36 percent answered "Consider Somewhat." In a similar study conducted by the National Association of Realtors in 1999, only 18 percent answered "Consider Strongly" to a similar question.
Work with an insurance leader
It is easy to perceive homeowner's insurance as a commodity. These policies have standard sections and state regulatory oversight enforces a fairly high degree of conformity. However, success in growing your business and maintaining customer satisfaction depends on the expertise, and dedication to customer service levels of the insurance product and service provider.
Working with an insurance leader that offers comprehensive programs is critical to maximizing the benefits of providing homebuyers with insurance solutions. Look for an insurer that can tailor a program to individual needs. For example, industry leaders should be able to offer these two options: full-service, managing the solicitation, sales and servicing of homeowner's insurance; or partial service, working in conjunction with your existing insurance agency as an underwriter.
Beyond options tailored to your business, there are general areas of excellence that define an insurance leader. Following are some of the qualities and abilities to look for in an insurance business partner. They include:
- Competitive Rates. Valued insurance products at competitive rates should be available despite the fact that today's property and casualty insurance rates are on the rise across the industry.
There are also some value-added benefits that truly differentiate a leader from a good insurer. Among these benefits are: Internet-based quoting, online applications, technology-enabled solicitation based on a builder's lead file and online claim processing capabilities.
Finally, choose a leader who makes insurance simple and easy, then sit back and watch this portion of your business grow.