Account Rounding – A Strategy for Cross-Selling to Increase Account Valu
In plain language: Account rounding is when an insurance agent or broker tries to sell more insurance products to their existing clients. It’s like when a waiter asks if you want dessert—customers might not have thought of it, but it could be a benefit to them and extra profit for the restaurant.
Technical definition: Account rounding, a common practice in insurance, involves agents working to increase the number of insurance policies sold to existing customers. They might be adding life insurance, employee benefits, or commercial insurance to a client’s existing policy. It’s typically done to generate more revenue, enhance client retention, and strengthen client relationships.
Account rounding is like filling gaps in your client’s insurance coverage while also growing your income. But if done wrong, it can feel like a pushy upsell or, worse, result in errors & omissions (E&O) claims.
TL;DR
- Account rounding is selling more policies to current clients
- It helps agencies increase revenue, reduce the cost of acquisition, and improve retention rates
- A common mistake is not understanding the client’s needs which can lead to unnecessary or inappropriate policies
- A quick win is to cross-sell personal lines and commercial lines based on the client’s profile and needs
What Is Account Rounding in Insurance?
Account rounding often appears when a producer or account manager in an insurance brokerage is reviewing a client’s portfolio or accommodations. It’s identified as a strategy to deepen the relationship with the client. This not only offers better comprehensive protection for the client but also opens up new revenue for the agency.
In the insurance world, particularly in the independent agency channel, it’s common to perform an account rounding strategy to fill in coverage gaps. For instance, if a customer already has a General Liability policy, the broker may suggest adding a Business Owner Policy or Employment Practices Liability policy. This strategy can serve both commercial insurance and personal lines, especially with clients who have multiple needs.
Key Related Terms to Know
- Cross-selling – Selling an additional policy or service to an existing customer
- Book of Business – The total of all policies held by an insurance agency’s customers
- Retention Rate – The percentage of customers who renew their policies
- Customer Value – The projected revenue that a customer generates during their relationship with the agency
Common Questions About Account Rounding
Why is account rounding important for an insurance agency?
Account rounding increases the revenue potential of an existing client and strengthens the customer relationship. By providing more value with tailored insurance products, agencies often see increased client retention and satisfaction.
Can account rounding be beneficial for clients too?
Absolutely! Clients can often get better deals if they hold multiple policies with the same agency. Plus, it provides them with comprehensive coverage, reducing their risk exposure.
How can agencies identify account rounding opportunities?
Regularly reviewing the client database and understanding the client’s needs and risks are key steps in identifying rounding opportunities. Customer accounts often reveal additional coverage that they may need.
What are some best practices for account rounding?
To be efficient in account rounding, producers and account managers need to develop relationships with their clients. Regular interaction and understanding clients’ changing needs can help in identifying new coverage and cross-selling opportunities.
Account Rounding vs. Cross-Selling
Cross-selling and account rounding are related strategies and often used interchangeably, but they aren’t exactly the same.
Comparison Area | Account Rounding | Cross-Selling
|
Primary use case | Increasing the value of existing clients | Selling new policies or services |
Coverage / concept type | Adding more insurance policies to a client’s portfolio | Selling one or more types of coverage or service not currently held |
Typical exclusions | None | Existing customers not open to new policies |
Who is most affected by errors | Insurance agencies and clients | Insurance brokers, agencies, and clients |
Common mistakes | Over-selling, selling irrelevant policies | Missing opportunities, not understanding clients’ needs |
Real Claim Examples Involving Account Rounding
Scenario 1: A client with personal lines of auto and home insurance experienced a catastrophic cyber attack on his home systems. If his broker had explored account rounding, they could have suggested adding cyber liability insurance to his existing policies. This event underscores the importance of account rounding in minimizing a client’s uninsured risks.
Scenario 2: A business owner had a basic commercial liability insurance policy. After an incident where an employee raised an issue about workplace harassment, she was slapped with a lawsuit. Her policy didn’t cover employment practices liability. If account rounding had been practiced, her broker could have suggested purchasing this coverage to protect her business from such risks.
Scenario 3: A high-net-worth individual with multiple properties, high-value items, and cars had standard home and auto policies. After enduring severe property damage due to a storm, he discovered that the loss exceeded his policy limit. A strategy of account rounding that included an Excess Liability or Umbrella policy could have ensured he was adequately covered.
Limitations and Common Mistakes
- Account rounding strategy may fail if the client’s needs and risks are not properly assessed
- Over-selling policies can lead to client dissatisfaction and harm client relationships
- Penalizing or pushing account managers to meet sales goals without proper training could lead to E&O claims
- Ignoring personal lines when considering account rounding for a commercial client is a common omission
How to Explain Account Rounding to Clients
Personal Lines client “Think of account rounding as a way for us to better protect you. We look at your existing insurance—like home, auto, and life—and see if there’s anything more or less you need. It’s like a check-up for your coverage.”
Small Business owner “Account rounding is when we examine your commercial insurance—we see if there’s anything missing that could be beneficial for your business protection. It not only optimizes your coverage but may also lead to additional discounts.”
CFO or Risk Manager “Account rounding is a strategic practice to ensure that all risks in your portfolio are covered. In the process, it can maximize the value from your insurance investments and assure comprehensive protection for your organization.”