Why You Should Be Selling More Insurance (and How to Do It)

by Dr. Robert Joselyn, CTC

The latest in a series of columns offering insights and advice based on an analysis of financial benchmarking data from the 124 agency members of TAMS, where Joselyn is president and CEO.

The TAMS benchmarking service provides agency members with more than 500 financial metric comparisons every quarter. Unfortunately, one of the most important benchmarks – sales of insurance policies per cruise and tour sold – highlights an appalling level of disservice both to customers and to agencies themselves.

Robert Joselyn
Lisa Simon

Having conducted customer service and sales training hundreds of times over the years, I no longer am surprised to find frontline counselors who are reluctant to sell travel insurance.

It’s not a trick
For some, it is a matter of not understanding the product or feeling incompetent about explaining it. For others, it reflects a failure to recognize the importance of travel insurance both to the customer and the agency.

Worst of all, some travel counselors believe that offering insurance to customers after they’ve already made a travel decision is some foot-in-the-door, high-pressure pick pocketing scheme or sales tactic.

Is this really an important issue? Yes!

In the first half of 2012, TAMS agencies sold insurance on their tour and cruise sales, on average, just 34% of the time. As disturbing as that statistic is, the range among TAMS members goes from a high of 80% to a dismal low of nearly 0%.

Professional obligation
Why should we care? First and foremost, we have a professional obligation to inform consumers of the financial risks associated with canceling a trip that costs thousands of dollars and of the potentially enormous consequences of becoming ill or injured during their travels.

Recent TAMS data indicates that the booking cycle for cruises and tours has been lengthening rather dramatically this year, with many bookings for travel in late 2013 and even 2014.

You don’t have to be an actuary to understand that as the length of time between a booking and travel lengthens, so does the risk of events that cause cancellations. Simply put, the longer the gap between booking and travel, the more important cancellation insurance becomes.

Protects agents too
Second, cancellation insurance not only protects the customer but can, and should, also protect the agency against losing the revenue associated with trip planning and the transactional costs associated with a booking.

While some cancellation policies include commission protection, it has long been my position that for any sale that involves a meaningful agency investment, the agency should set its own cancellation fees. When these fees are applied consistently and the insurance provider is notified accordingly, most non-supplier insurance companies will allow the agency to sell cancellation insurance that covers both the supplier and agency cancellation fees.

Third, insurance sales can be a meaningful source of revenue, especially in an era when the yield on supplier sales continues to decline.

Keys to selling insurance
The first step in selling more travel insurance is making sure counselors understand the benefits to their customers, the agency and, if they are on a revenue-based compensations system, to themselves.

Ideally this training includes examples of unfortunate customer situations where insurance was not purchased, as well as positive examples of how insurance came to the financial rescue.

At the end of the day travel, counselors must understand that selling insurance is not an attempt to pick the customer’s pocket, but a professional obligation to the customer and the agency to protect their investments.

Once counselors embrace the importance of selling insurance, it is time to train them in explaining the benefits and details of the policies being presented. The bottom line is that people sell what they know and have confidence in.

Don’t give up after one try
Finally, travel counselors must understand that selling travel insurance is not a one-time event.

While insurance should be offered at the time of sale, the fact is that many customers simply are not ready to buy insurance at that time. For one thing, at the moment of purchase excitement, no one wants to think about having to cancel, or what might happen during their travels.

Beyond that, customers can be in a bit of a daze about how much money they have just spent on an intangible purchase of a product to be delivered sometime in the future by people they don’t know who are someplace else in the world. This often results in a “no thank you, we have spent enough today” frame of mind.

So give customers time to feel comfortable with their initial financial commitment, then contact them again later about insurance.

If they’re still not interested, contact the travelers one last time – just before preexisting conditions associated with the policy take effect.

What to sell
Choosing the travel insurance provider to feature involves individual factors that you must evaluate for yourself.

Generally, based on quality of coverage, I tend to recommend insurance provided by third party insurers, as opposed to policies offered by suppliers, even though third-party policies may be more expensive.

There are exceptions of course, especially when a supplier policy includes price protection. Even then, selling an additional third party policy may make sense.

Baffled
There must be a reason travel consultants aren’t selling insurance to every customer who purchases a cruise or tour. But for the life of me, I just can’t think what that might be.

Dr. Robert W. Joselyn, CTC, is president and CEO of Joselyn, Tepper & Associates, Inc., a travel agency consulting firm, and of TAMS, LLC (Travel Agency Management Solutions), a travel agency financial analysis, benchmarking and networking organization with 124 members in the U.S., Canada and the Dominican Republic.

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