6 Months Vs. 12 Months Auto Policy: which Do You Prefer Writing??

BlockO

Guru
1000 Post Club
I know this only applies to agents in some states with some carriers .....

but when you have the choice between selling a 6 or 12 month auto policy to a customer, how do you handle it as far as your procedure?

do you:
A) offer both and let the customer decide?
or B) choose one automatically for the customer, since it usually makes very little difference?

from the agent's standpoint, it only makes a difference if the carrier pays commission on an earned basis. pros and cons to both a 6 mo. vs. 12 mo. if they pay on an earned basis. doesn't make any difference if the carrier pays on a cash flow basis.

from the customer's standpoint, it only makes a difference whether or not their driving/clue records are clean or not.

personally, I usually give customers the choice, but advise them to go 12 months if their record is clean and 6 months if their record is not clean (due to violations, accidents, etc not getting added/dropped until renewal).

I'm curious to hear other thoughts on this.....
 
I know this only applies to agents in some states with some carriers ..... but when you have the choice between selling a 6 or 12 month auto policy to a customer, how do you handle it as far as your procedure? do you: A) offer both and let the customer decide? or B) choose one automatically for the customer, since it usually makes very little difference? from the agent's standpoint, it only makes a difference if the carrier pays commission on an earned basis. pros and cons to both a 6 mo. vs. 12 mo. if they pay on an earned basis. doesn't make any difference if the carrier pays on a cash flow basis. from the customer's standpoint, it only makes a difference whether or not their driving/clue records are clean or not. personally, I usually give customers the choice, but advise them to go 12 months if their record is clean and 6 months if their record is not clean (due to violations, accidents, etc not getting added/dropped until renewal). I'm curious to hear other thoughts on this.....

12 month EFT every time! I don't write any as-earned carriers.
 
I usually only offer a 12 month policy unless the insured likes to pay in full and doesn't have the funds to pay for a 12 month policy but does a 6 month. If I know it's going to be an EFT or quarterly paid policy I choose the 12 month to run in conjunction with any other polices they have.
 
12 month is preferable unless the client has some activity on the driving record coming off soon that would help improve their rate
 
The 12 month policy was the original norm. But, carriers decided going to 6 months would allow them to roll a rate increase quicker and offset the additional cost of two renewals a year.

I prefer 12 months because I do not have to re-market as often. Every time a renewal comes in the client has to decide to pay or shop. I think getting two renewals a year is an irritation to some people and irritation leads to frustration leads to solution thinking which leads to shopping and that leads to changing, if only to end the frustration.

Carriers don't care how much time "you" have to spend on an account. It does not cost them anything to make you double your work. So use it as a marketing opportunity.

Send a "Thank You for the renewal letter" and let them know the rate increase was mild and expected. Invite them to call if they want to shop. Offer them a quote on other lines; Umbrella, Life, review. Be proactive. It lets them know you care.
 
I base it on what the customer might want as well as what I know about upcoming rate changes. If the rates are moving significantly one way or another I generally use this as my biggest influence on what I recommend. During tax season I almost always recommend one year paid in full so that I can capture them each year at the same time with their consistent tax refund there for my taking.

Gulliver
 
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