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The Magic of Captive Referrals

By Alexi Papandon

Independent insurance agents and captive agents are known for competing with one another, but is there a place for working with one another? CJ Hutsenpiller of Hutsenpiller Insurance Services in Mt. Juliet, Tennessee would answer with a resounding yes.

Hutsenpiller has formed referral relationships with many captive agents in his neck of the woods. He lets them know that if they have a policy that they cannot write and refer it to him before the client comes to him on his/her own, then he will write that piece of business and not try to take the rest of the account.

This enables the captive agent to help take care of their clients while reducing the chance of losing them to another agent entirely.

Hutsenpiller has approximately 20 such arrangements in place which results in several pieces of new business each week.

Many of these new sales are a result of homeowners insurance policies that have been cancelled because of hail claims. Hutsenpiller says that captive companies will often cancel policies after one or at most two claims, which means that Tennessee’s hail storms provide him with many new clients.

Another cause for many referrals are DUIs. While many captives will not insure drivers with a DUI, Hutsenpiller has markets that can help these potential clients.

How can Hutsenpiller ensure that the referrals from captive agents are off limits to cross selling within his agency?

“As soon as you pull up a referral account in our management system, you’ll see in big red letters, ‘Do not solicit other lines — XYZ Company referral,’” says Hutsenpiller.

Hutsenpiller and his colleagues will even send clients back to the referring agent after the original reason for the referral clears up.

“What I know is that this agent has 4-5 agents underneath him that are constantly trying to drum up business,” says Hutsenpiller. “So while I send one account back to him, he will send threefold back to me.”

This helps Hutsenpiller become a true partner of the captive agent and he starts to see the number and quality of referrals blossom. Once the relationship grows like this, captives start sending anything they cannot write over to Hutsenpiller, not just their current clients who have a specific policy the captive company will not write. Maybe the referral is for an auto client who didn’t have prior coverage, or maybe it’s a commercial account that doesn’t fit into the captive company’s box.

“It ends up being a lot more than the non-preferred business that the captive agents send me early on in our relationships,” says Hutsenpiller.

One of Hutsenpiller’s hooks early on in these referral relationships is the stand-alone sale of an SR-22. The state of Tennessee requires an SR-22 for drivers who receive a DUI. This is in addition to the regular auto insurance policy and many captive companies do not offer SR-22s. Hutsenpiller does and will make a stand-alone sale of an SR-22 to clients that are referred to him by his captive agency partners. This allows the captive agent to retain the auto policy.

Frequently after referring an auto policy to Hutsenpiller, the policyholder’s homeowners rates from the captive — which are now monoline — go up so much that the captive agent will ask Hutsenpiller to write both policies.

“That’s great, because now I can sell a package,” says Hutsenpiller.

“It only takes one violation of the arrangement to ruin a relationship forever, so agencies using this technique must ensure that all agency employees understand that they cannot approach these referral customers with other coverages,” cautions Hutsenpiller. “We’ve never had a problem because we drive it home a lot.

“We gain about an extra 15-20 policies per month using this strategy, which isn’t a ton of extra business, but then again, our marketing dollars weren’t used to generate this new business. The captive company marketing budgets are providing us with these sales. It’s just icing on the cake.”

Alexi Papandon is senior vice president of products and services for PIA National. Email Alexi at alexipa@pianet.org.