Handling the premium-hike objection at renewal

Renewal calls used to be the easy ones. The customer already trusts you, the policy already exists, and the paperwork is mostly done. Then the renewal notice arrives with a higher premium on it, and the easiest call of the month becomes the one most likely to end in a lapse.

The premium-hike objection is rarely about the number alone. It is about surprise, and about a feeling that loyalty has been punished. If you answer the number, you lose. If you answer the feeling first, you usually get a chance to talk about the number.

What the customer is really saying

“Why has my premium gone up?” can mean several different things. Your first job is to find out which one you are dealing with, before you explain anything.

• I was not expecting this, and I feel caught out.
• I think you are taking advantage of the fact that I will not bother switching.
• Money is tight this year and this is one more bill.
• Someone has quoted me less, and I want you to match it.
• I am not sure I still need this cover at all.

Each of these needs a different answer. An explanation of medical inflation is useful to the customer who feels caught out. It is useless, and a little insulting, to the customer whose cash is tight this year.

The first two minutes

Acknowledge the surprise in plain words, then ask a question that lets them tell you which objection it is. Something like: “That is a fair question, and I would rather you asked me than found out at the payment page. Before I explain the change, can I ask what caught your eye most, the amount itself or the fact that nobody told you?”

That question does two jobs. It shows you are not going to hide behind a script, and it makes the customer choose. Now you know whether you are in a conversation about fairness, about budget, or about a competitor.

Explain the change once, briefly, and in their terms

When you do explain, keep it to what is true for this policy. The common drivers are an age band change, a claim on the policy, a change the insurer made to the product, or a rise in the cost of care that the insurer has priced in. Say which applies, if you know. If you do not know, say you will find out, and give a time.

Avoid the phrase “everyone’s premium has gone up”. It may be true, but to the customer it sounds like you are telling them their problem is not special. It is special to them.

Offer choices, not a defence

Once the customer feels heard, move to what they can actually do. Most renewals have more room than a single take-it-or-leave-it number. Depending on the product and your company’s rules, that might include a different sum insured, a voluntary deductible, a change in payment frequency, dropping a rider they no longer use, or the value of any no-claim bonus they would lose by switching.

Put two or three of those in front of them and let them pick. People defend decisions they made themselves.

What not to promise

This is where renewals go wrong on compliance. Under pressure, reps are tempted to promise that the premium will not rise again, that a claim will definitely be paid, or that a discount exists when it has not been approved. Do not. If a customer asks for a commitment you cannot give, say so and tell them what you can check.

A customer who stays because of a promise you could not keep will leave next year, and tell people why.

How to practise it

This call is hard to rehearse with a colleague, because colleagues are too polite. They accept your first explanation. A real customer does not.

The useful drill is to run the same renewal call several times with a customer who has a different hidden reason each time, and to be marked on whether you found the reason before you started explaining. Record what you said in the first thirty seconds each time. You will hear the difference between the call where you listened first and the one where you defended the number.