We’ve been hearing anecdotal evidence for awhile about how the economy is forcing your customers to cut back on their insurance coverage. Now, an Insurance Research Council study is suggesting a positive spin on that trend that casts agents and brokers in a key role as consultants (see the survey at www.irc.web).

According to the study:

28 percent of the respondents with auto insurance coverage reported shopping for lower rates when they normally would not have done so. Among those with auto or homeowners insurance, 15 percent said they had increased their insurance deductibles or reduced the amount of coverage in order to reduce premium costs.

The rest of the story suggests that consumers are giving up more that mere insurance: While 9 percent of survey respondents with at least one household vehicle reported canceling or not renewing vehicle coverage in response to the economic downturn, 31 percent of those canceling auto insurance coverage also reported selling a vehicle. Only 5 percent of homeowners and 14 percent of renters reported canceling homeowners or renters insurance coverage.

While this study clearly illustrates that the penny-pinching trend is now a way of life, the unwritten subtext involves the enhanced consultative role that agents and brokers should be playing in a tough economy.

We may be running the risk of belaboring the obvious here, but another survey from J.D. Power, just released this week, reiterates the importance of customer retention, especially in recessionary times.

Although focused on auto insurance, the report is interesting in its findings about consumer buying practices. The report looked at more than 275,000 auto insurance customers evaluating more than 30 insurance carriers across the industry, including AIG /21st Century, Allstate, American Family, Farmers, GEICO, Liberty Mutual, Nationwide, Progressive, State Farm, The Hartford, Travelers and USAA.

The report finds that in the past 12 months:

30 percent of households with annual incomes below $50,000 shopped for a new insurance carrier, and 45 percent of those customers eventually switched carriers;
26 percent of households with annual incomes of $100,000 or more shopped for a new carrier, and 31 percent of these eventually switched carriers

The message shouldn’t be a surprise: while everybody may be feeling the pinch, the buyers most likely to switch carriers (probably based on price) are those with less revenue at their disposal. I’d extrapolate to say that this probably applies to commercial buyers, too, who are similarly looking to cut back during these tough times.

Another no-brainer confirmed by the study is that increased retention rates are related to bundled insurance products. Retention rates averaged 95 percent among customers who bundle home and auto policies with the same insurance carrier and 92 percent among those who bundle auto and rental policies. Conversely, retention averages only 83 percent among mono-line auto customers and only 85 percent among policyholders who do not bundle their auto and homeowners insurance.

Again, this is a reflection of the fact that the more closely you tie customers to your agency with products and services, the harder it will be for them to move their business over to another agency.

Well, actually, I’m not. A friend invited me to open a Twitter microblogging account months ago, and it instantly annoyed me. Why should I want to receive 140-character, instantaneous outbursts on things I don’t care about from people I don’t know? My gut reaction was that it’s another narcissistic time-waster for teenagers who need to constantly validate their existence through technology. On a personal level, many of my friends are old jazz and film curmudgeons and other Luddite types who are still trying to wrap their minds around e-mail; and on a business level, I didn’t think I needed it.

It may be time to reevaluate.

Twitter reported signing up more than 5 million new users in March, bringing the total to 9.3 million all told. And this growth is being driven by a surprising demographic group: 45-to-54-year-olds, at 36 percent above average (another surprise: 18-to-24-year-olds are actually the least likely to use it!).
That’s a lot of Twitterers, many of whom are bound to be your customers, colleagues and friends.

Just this week I heard from Dana Rogers, a young agent who has her own technology blog to promote Twitter and virtually all other social media techniques as smart marketing tools for independent agents
(http://newgamemarketing.blogspot.com/).

And no less a personage than longtime agency marketing strategist Rick Morgan is promoting Twitter as an invaluable tool for sharing thoughts, resources and information among insurance professionals. Rick quotes the “Five Stages of Twitter Acceptance” (kind of like Elizabeth Kubler-Ross’s classic stages of grief): denial, presence, dumping, conversing and microblogging.

In spite of all this rah-rah, we’re still left with two burning questions: “Does it work?” and “Do I have the time for it?” As the author of a blog and the editor of a magazine, I’m more concerned with eliciting a reaction from readers of these two mediums than launching yet another. The answer to the second question would be a resounding “Yes!” if I could generate reader input by using it.

So, using Rick’s stages as a measurement, I’ve gotten as far as Phase 2: presence. I’m right there at @Lmazztoops, so send me a tweet today and turn me into an official Twit!

Having lived through and written about the Great Mold Crisis and other scares, I’m watching with interest the development of another potentially hazardous-to-your-health building issue: Chinese drywall.

You’ve probably already seen the reports: Material shortages after Hurricane Katrina caused U.S. builders to start using drywall imported from China, which allegedly emits sulphurous vapors that corrode metal and could adversely affect health. In common use since 2008, it’s estimated that enough of the drywall has been used to construct 60,000 houses of 3,000 square feet each.

At this point, the issue is still just a blip on the radar, with little or no insurer reaction in the form of policy changes or exclusions. Most insurers seem to be taking a wait-and-see attitude to determine the exact trigger of the problem (some say moisture activates the nasty fumes) and whether the threat is real or exaggerated.

Policy maven and all-around cool guy Chris Amrhein reports that at this point the threat may be primarily in the minds of hungry class-action attorneys. “I haven’t heard a word on the insurance side of the room,” Chris says. “All of the smoke and fire seems to be coming from Congress and Florida/Louisiana homeowners, who obviously hate the smell of rotten eggs coming from this allegedly Chinese drywall.” In fact, the Florida Health Department, which is currently studying the drywall, recently observed that there is no “specific” health hazard arising from its use, and that its sometimes rotton-egg odor is caused by strontium sulfide, a material absent from good old American-made drywall (there doesn’t seem to be a consensus about the damage to pipes or property).

If it turns out that the drywall is causing a real problem, resulting in homeowner reimbursement from the manufacturers and distributors–and ultimately their insurance carriers–there appears to be no coverage provided. “From a purely coverage form standpoint, the industry response will no doubt include the total pollution exclusion and any number of variables on the EFIS endorsements,” Chris says.

You’d think that Congress has enough to worry about right now, but some sources I spoke with say they wouldn’t be surprised to see the issue escalate to federal attention. Chris took me down Memory Lane by naming some scares of the past, including overhead electrical wire radiation, silicone implants, Alar-treated apples, and of course, witches–all of which got their share of official political attention.

Good advice in the meantime? Advise your homebuilder customers to review their policies and their liability limits–and maybe consider using greener products in their buildings.

I’m taking a break from the unrelenting bad news to brag about the culmination of something we have been working on for awhile: the establishment of an American Agent & Broker editorial advisory board.

Now that everyone is finally committed and onboard, I wanted to share the list. They are:

Bart Anderson, SVP, members, NAMIC
Ted Besesparis, SVP Communications, PIA National
Richard M. Bouhan, executive director, NAPSLO
Anita Bourke, executive VP, AICPCU
Ken A. Crerar, President, CIAB
Tim Cunningham, president, OPTIS Partners
James Hackbarth, president and CEO, Assurex Global
Bernd G. Heinze, executive director, AAMGA
Demmie Hicks, president and CEO, DBH Consulting
Gregory Maciag, president and CEO, ACORD
Deb Ropelewski, director of education, PLUS