We were honored to be interviewed by Chris Cline of Westfield Insurance for their “Closing the Gap” Podcast. In case you’re not familiar with the podcast the Westfield website describes it as “Closing the Gap is designed for you – the independent agent. We provide a unique carrier point of view to address issues that impact your agency, from the war on talent to IT partnerships, we’ve got you covered.”
The ValChoice interview was described as follows “Finding the “best” insurance is hard work. How can insurance agents compare carriers with data to find the best fit for their customers? Dan Karr, Founder and CEO of ValChoice, and Chelsea Zweifel, Personal Lines Manager at Evarts Tremaine are this week’s Closing the Gap guests.”
The Podcast
The podcast is inserted here for all who want to listen. For those who prefer an executive summary, the text below the podcast highlights key points of the interview.
ValChoice – A Unique Company Addressing Common Challenges
Chris @ 3:00: “ValChoice fills a couple unique spots in the industry.”
Chris to Dan @ 3:40: “the audience would find great interest in your personal journey and why you’re here today.”
Dan in response to Chris @ 3:50: “I was blissfully working in high tech in Silicon Valley…when I was hit by a car.”
Dan @4:00: “It was kind of a wake up call…In the long run I ended up switching my focus to become part of the insurance industry.”
Dan @4:15: “I was pretty badly injured…but had no idea what was ahead. What was ahead was a long physical recovery and even a longer financial recovery. The reason for the longer financial recovery was because none of the insurance companies involved wanted to pay the medical bills. It wasn’t a question of responsibility. It was a willingness to pay.”
Why a New Rating System?
Dan @5:00: “When it was all over I stopped and thought ‘how could I have avoided this, and what could I do to make sure no one else ever ends up in the same situation? The answer came down to a rating system that rates companies on how well they perform in value, claims handling and service.”
Dan @5:20: “When talking to people in the industry they say ‘why do we need another rating system?’ We already have AM Best, Demotech, etc. The difference is this wasn’t about the ability to pay a claim. All three companies had the financial strength to pay the claim. It was a willingness. What we’ve done is found ways to reliably rate companies based on willingness and then productize that in a way for agents to be able to sell value in a very price driven market.”
Selling Insurance Based on Value
Chris to Chelsea @ 6:00: “The word value seems to be at the center of all of this.”
Chris @6:45: “You mentioned three scenarios where positioning value over price is really compelling. Talk us through how these tools help on a day-to-day basis.”
Chelsea responding to Chris @ 7:30: “I get the question all the time ‘is this a good insurance company” What does that really mean for he consumer? ValChoice helps me explain what is a good insurance carrier.”
Financial Strength Rating vs. a ValChoice Rating
Chelsea @8:00: “Ability to pay the claim is one thing, but willingness to pay the claim is another. That’s why ValChoice was so interesting to me, because it’s such a great sales tool for us. The fact that Dan had to fight to get his claims paid, at Evarts Tremaine that is the opposite of what we ever want…ultimately, we want our clients to be informed. We have to be selling value over price, otherwise our clients could be in Dan’s position.”
Chelsea @9:38: “We aren’t just trying to sell policies. We want to make sure clients are properly covered…ValChoice helps me explain that.”
Chelsea @10:00: “It’s a great new business tool for us. We have users of the tool with all levels of experience…from people that aren’t licensed to a couple years of experience to over two decades of experience. It’s so easy to use. That’s another thing with digital tools…they’re not always user friendly. Helps spark interest with prospects.”
Chris @12:25: “The data is really cool.”
How Evarts Tremaine Uses ValChoice Tools
Chris to Chelsea @ 12:50: “Every agent struggles with remarketing and pricing.”
Chelsea responding to Chris @13:05: “During the pandemic we would get a lot of calls about remarketing and saving dollars. That’s when I started using ValChoice, as a retention tool…I would pull a quick report comparing companies…The ValChoice tool makes clients confront the fact of whether they would be willing to leave a quality insurance carrier for one that may not have the claims paying willingness as their current carrier. That’s something important that we always try to reiterate…The ValChoice really, really helps with that. It makes consumers confront these facts without a sales pitch. Agents can use with new and existing clients.”
Chris to Chelsea @16:00: “To go to an objective, third party source, this isn’t me trying to sell you something to stay, this is real data. I love that. It’s a real psychological thing to make the customer confront that fact that they’re asking for lower quality without making the agent a bad person.”
Chelsea to Chris @16:50: “Agents often hear “Is this a good insurance company?”…that’s really what makes the reporting tool (a comparison report between insurance carriers) that’s simple to read. It really makes a difference in these conversations.”
Tell us About the Data
Chris to Dan @18:30: “Lead with what ValChoice is. What is the tool? What is the report? Where does the data come from?”
Dan responding to Chris @18:55: “We’re a data analytics company. When we set out to do this we thought it has to be accurate, has to be reliable, has to be trustworthy or it’s of no value.”
Dan @19:15: “There’s a lot of data on the insurance industry, but there’s also a lot of data that isn’t very good quality. We were thrilled when we came across the complaint data being collected by state departments of insurance (DoI), across all states, for a couple decades now. With each complaint that’s filed, every single one is vetted. Someone from the state DoI, with expertise in insurance, is looking at the complaint and determining if the complaint is valid.”
Dan @20:00: “State departments of insurance tell us that process leads to the majority of the complaints being thrown out. I’ve heard numbers as high as 85% of the complaints get thrown out.”
Dan @20:20: “The majority of the complaints get thrown out. What does that mean? It means any rating system that’s out there that doesn’t have that same process in place, some level of expert vetting every single user survey response or every online reviewer, is basing their ratings mostly on bad data. When you think about that, that means that almost all the information that’s out there is based on bad data. That’s establishing company brands, customer loyalty. Every company should be worried about this.”
Dan @21:05: “That was the first problem we had to solve. We had to make sure it was accurate and reliable. We’ve done everything in our power that we can do to make sure it is. Next, we needed to make sure it was easy-to-understand.”
Dan @21:30: “We rate every company in every state. If you don’t do that then when you rate only a certain category of company based on size or some other criteria, you’re leaving a lot of companies out. But what was left out? Think about this like grading on the curve. Did the top of the curve get left out so everyone moved up? Did the bottom of the curve get left out, moving everybody down? You don’t know. The grading system can’t be reliable unless you grade every single company.”
Easy to understand
Dan @21:57: “With the fuel gauge style image that we use, if you can know it’s time to stop and get more gas, you can know how good your insurance company is based on our system.”
Dan @22:15: “Anybody who doesn’t really care about their insurance at all can understand what they’re buying. This is particularly important in a market that’s going through a pretty significant consolidation. Big companies are always going to sell on price. The reason they are always going to sell on price is because they have the best cost structure and can always win on price. For small companies to try and compete on price, it’s a losing battle in the long term. Selling value becomes critical…It let’s agencies provide the compelling value proposition that takes the focus off of price and talk about value.”
Dan @23:00: “We make data accessible to agents where they can visually view every company in the state so they can compare and decide how they use the information for a particular transaction.”
Digital Marketing
Dan @23:10: “Most agencies will end up using our tools because of all the digital marketing tools that we’ve built in. The digital marketing is pretty phenomenal. We use the data analytics as the foundation of everything that’s built on top of that. They can engage prospects for the first time, or close business or retain business.”
Chelsea – “We Need to Share This Information”
Chelsea @24:00: “What I talked about in competing with the large companies. Don’t you want to keep this information for yourself? Why are you sharing this? For me there’s a mindset that as independent agents we’re competing with each other. However, we’re really competing with the large companies with the huge marketing budgets. We need to share this information with other agencies. We need to be innovative and adapt to consumers needs. This really gives independent agencies an opportunity to compete with large carriers where you can never compete with the marketing dollars. It’s so helpful for clients.”
Chris @27:00: “Creates a set of objective criteria. Not agency data. Not carrier data.”
Chris @27:30: “Data analytics is a really important topic in our industry right now. How do we get better at data?”
Chris @28:20: “Dan will you be willing to go one layer deeper on the data?…I think it’s worth going there.”
Dan responding to Chris @28:55: “We collect all personal lines financial data and all complaint data across all states. Using different data sets in an interactive way is what provides the useful analysis…We categorize complaints and then present them that way so you can look at them very specifically…at what you care about.”
Dan @30:10: “Paints a perspective on the industry that hasn’t been available to either consumers or agents in the past.”
Chris – “That’s Fascinating”
Chris @31:20: “Bad complaints being ferreted out of the reporting is really powerful. It really lets it be reflective of what the customer purchased and what they have a legitimate expectation to experience. Which I think is a really important part of our industry.”
Chris @32:45: “What is really cool in what you’ve done: there’s no clout in saying my claim was denied if you haven’t purchased the coverage. The customer at that point can have a very objective conversation with themselves or their agent and make an educated decision on whether they are willing to sacrifice to save a few dollars.”
Chris – “Explain the Visualization”
Chris @33:50: “To the extent you can articulate the visualization, please do that.”
Dan @34:00: “Straight up and down is industry average. All the way to the right is two sigma above the average and all the way to the left is two sigma below. That is what we use consistently across all the different metrics we measure.”
Dan@ 34:50: “The point of this is that if someone cannot easily understand it, it’s not useful. I’ve looked at a lot of these rating systems and if you don’t study the rating system, you don’t have any idea what it’s telling you. For example, if they scored 850 out of a thousand, but if the lowest score is 820 and the highest is 900, what does that really mean? 850, does that mean they’re excellent?”
Dan @35:30: “The idea behind the fuel-gauge-style image is to make sure everybody could easily understand, but also so the industry could use it for differentiation.”
Marketing Without Any Spin – Just the Data
Dan @35:55: “Part of what we’re trying to do was provide a marketing aspect, but there’s no marketing. It’s just the data displayed on a fuel-gauge-style image. The marketing aspect is the differentiation. That’s where the value proposition come from. If you can show how you’re different, and the consumer can understand it, that’s when consumers are willing to pay more.”
Selling in a Price Driven Market
Dan @36:25: “The problem isn’t when someone else is promoting price as a competitive advantage. The problem is when the alternative, what you are selling against price with, isn’t compelling enough.”
Dan @36:40: “My view is, yeah, it’s a price driven market, but only if the tools you’re selling with aren’t really communicating how compelling your offer is.”
Chelsea @36:50: “I completely agree. How you describe that is exactly how they describe the sales process in sales training classes. You need to be able to sell the value in a way that’s compelling and induces the client to want to make that change…What really matters is that you tell that story. That’s what the tools help me do. They help me tell the story of why I’m making certain recommendations.”
Chelsea @38:20: “As independent insurance advisors, we all know that all insurance isn’t created equal. We all know that, but it’ very difficult for consumers and clients to understand that. ValChoice helps me explain that in a way that’s authentic, but not intimidating.”
How Sustainable Are the Ratings?
Chris to Dan @39:15 “Price is fleeting. There’s always going to be a cheaper price. I assume there’s some sustainability to the ratings…A couple bad complaints don’t necessarily knock your legs out from under you.”
Dan responding to Chris @40:05: “It’s sustainable for two reasons: 1) it’s sustainable because the management and the culture that has been established within the company. The companies that perform best tend to consistently perform best. 2) To accurately rate insurance companies, you can’t look at a point in time. You have to look over a period of time not a point in time. The reason for that is you really need for catastrophic events to have occurred during the rating period.”
Dan @40:55: “We will see pretty rapid changes when high level management changes occur within an organization.”
What’s the Mic Drop Moment?
Chris to Dan and Chelsea: “What is the mic drop moment?”
Dan @41:55: “The digital marketing capabilities that we’ve built in. It’s all based on the fundamental reliability and accuracy of the high-quality grading system, But it’s moving agencies into an era that frankly most agencies aren’t really prepared for. This market is absolutely going on line. We really see it in the 2019 and 2020 data. It’s been predicted for a decade. It’s happening. I don’t think a lot of people realize how fast it’s happening now.
The capabilities we’re delivering include things like:
- Branding for carriers
- Real-time leads
- Targeted advertising
- Social media content
- Web site content
- Prospect Network – totally unique. Nobody else is doing anything like this.
This is where a tremendous amount of the benefit will come from.”
Chelsea @43:20: “The industry has been talking about innovation as a huge reinvention. Innovation doesn’t mean reinventing the wheel. Innovation is as simple as adding these additional tools in your arsenal. Combining other initiatives with ValChoice gives agents the extra edge. Adding ValChoice can be such a game changer. I think ValChoice is a perfect opportunity for independent agencies and carriers.”
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