According to wifitalents.com, approximately 72% of U.S. businesses carry some form of commercial insurance. If you are a commercial insurance provider or own an insurance business, then you definitely have the headache of generating or acquiring quality commercial insurance leads.
Throughout this session, we will discuss the process, the criteria for qualifying a prospect, and the core questions to ask when qualifying a commercial insurance prospect.
What is Qualifying a Commercial Insurance Prospect and Its Core Aspects?
Qualifying a commercial insurance lead or prospect means assessing the potential customer to determine if they are a good fit for your service based on their genuine need, budget, authority to buy, and matching the ideal customer profile.
Picking the perfect prospect for a closing deal can reduce your time because an ideal customer for your commercial insurance is already seeking the service, so things become easier.
In case you select a prospect that may take commercial interest but not be ideal, like out of budget, or you are trying with someone not in a decision-making position, then you are on the wrong track.
Must check aspects to qualify a prospect:
- Legal documents
- Need identification
- Budget & financial capacity
- Authority (decision-making power)
- Timing
- Ideal customer profile (ICP) fit
There are more things you can check to accept a prospect as a good fit for your commercial insurance service. You can consider location, industry type, company size, etc.
5 Core Criteria to Qualify Commercial Insurance Prospects
Core criteria to qualify commercial insurance prospects include business authenticity structure, industry classification, risk class, buying intent, decision-making authority, readiness, etc. Most of the core criteria are covered with those mentioned aspects, so let’s break them down in the discussion below.
1. Business Legitimacy and Structure
First and foremost, the thing to check for a prospect to count as a good fit for is legal documents.
- Legal Formation Documents:
- Sole Proprietorships/Partnerships: legal information documentation for Business licenses, DBA registration. It proves that the prospect has legal authority to run a business for which they want the commercial insurance.
- LLCs and Corporations: Articles of Incorporation/Organization, which officially establish the entity with the state.
- Federal Tax ID (EIN): You must check the federal tax ID, or EIN, which stands for employee identification number, which proves the tax-paying status of your targeted prospect’s business.
- Financial Records: Current and previous financial statements for transaction transparency proof, tax-paying receipts, business plan, etc.
- Operating Address Verification: O. boxes are typically not sufficient. So check that the business is running from a place that has legal authority and permission.
- Licenses and Permits: Licenses and permits include the industry your prospect’s business service has legal authority to operate within the permitted location or place
If you consider an illegal business to provide commercial insurance, then it can be dangerous for your business in the future. So be careful about checking the business’s legitimacy, structure, and compliance, like TCPA/GDPR/CCPA Basics.
2. Risk and Industry Classification
Commercial insurance prospects are classified using a standardized system, such as NAICS (North American Industry Classification System) or SIC (Standard Industrial Classification). Those systems are used to assess risks, determine appropriate coverage, and set premiums.
Industry classification:
- NAICS (North American Industry Classification System): In the USA, Canada, and Mexico, a hierarchical classification of business and government agencies is standardized.
- SIC (Standard Industrial Classification): This standard categorizes businesses by primary activity. Some insurance companies use this, but in most cases, almost everything is replaced with NAICS.
Risk classification:
There are different types of risk, like property risks, liability risks, operational risks, financial risks, and strategic risks. When you think about picking someone to offer commercial insurance and counting on a warm lead, you need to see that business or company’s history and how much risk you are taking for them. To qualify a prospect, you should collect extensive data.
Including:
- Loss history: Go through the past to predict the future.
- Industry and occupation: Each and every industry has its own risks, so you can determine risk according to the nature of the business or activities.
- Safety protocols: Evaluate the current safety of the company or business by running a setup, employee turnover, etc.
- Financial stability: A previous big fall or a prospect that has more than average risk on financial stability should also be a major concern.
Risk Classifications for Pricing:
Based on the core risk assessment, prospects are generally grouped into specific rating classes to determine appropriate premiums:
- Preferred Risk
- Standard Risk
- Substandard/Rated Risk
3. Insurance Buying Intent
Insurance buying intent means understanding whether the prospect is seriously looking for commercial insurance or not. If the prospect is seriously looking and researching several commercial insurance providers, exploring different options, then you can convert this kind of prospect easily.
You can identify the prospects’ buying intent by focusing on:
- Identifying explicit intent signals
- Understanding their specific pain points
- Understanding the decision-making timeline and authority
You can ask some questions to find out the prospect’s actual buying intent. Let’s break them down below:
- What specifically motivated you to look for new commercial insurance coverage at this time?
- What is your budget for this coverage, or are you looking for the most comprehensive policy regardless of price?
- What specific types of coverage are you looking for, and what are the primary risks you want to protect your business from?
- Are you currently getting quotes from other agencies or carriers?
- What are your biggest concerns or problems with your current insurance situation/provider?
- Who else is involved in the decision-making process, and are you the final decision-maker?
- What is your ideal timeframe for having a new policy in place?
Commercial insurance lead scoring or applying a framework can easily overcome this qualification of insurance buying intent and may also meet more criteria.
4. Decision-making Authority
The prospect you are talking to converts as your customer must be the decision maker or must have the ability to influence the decision to take the commercial insurance for their business or company.
You need to identify key decision makers first. You do this by applying the following strategies.
- RACI/DACI Models: Use frameworks like RACI (Responsible, Accountable, Consulted, Informed) or DACI (Driver, Approver, Contributor, Informed) to identify who brings, approaches, and contributes to the decision.
- Role-based Authority: Roles or designations like CFO, CTO, CEO, Manager, Director are usually key decision makers for almost every business.
5. Financial Readiness
Check carefully that the prospect or the business has the ability or financial stability to pay the premiums without risk. Let’s take a look at the step-by-step guide on how you can measure the financial readiness of a prospect to provide commercial insurance service.
1. Collect necessary financial statements, such as:
- Income statements
- Balance sheets
- Cash flow statements
- Audited financial statements
- Income proof
2. Ensure financial health and stability, such as:
- Profitability
- Liquidity
- Manageable debt levels
3. Go through clear documentation
4. Ask risk management
5. Demand transparency and clear communication
Those five-step financial readiness checks are enough for most cases to provide financial insurance service to a prospect.
Additionally, you can qualify your leads or prospects through lead scoring or apply different lead qualifying frameworks as well. Pick the one that fits your business type, needs, and pain points.
3 Types of Key Questions to Qualify Commercial Insurance Leads
Qualifying a commercial insurance prospect or lead can be implemented in several ways, such as applying frameworks, lead scoring, prescreening with questioning, etc. Let’s see which questions can filter out an ideal customer profile for commercial insurance.
1. Questions About Coverage Needs
- What specific coverage do you currently have?
- What are your biggest operational risks or concerns?
- How many employees, vehicles, assets, and locations do you have?
- Did you make any claims in the past 3 years? If so, what was that?
- Are you in a specific industry or need?
2. Questions About Timing and Urgency
- Is there any timeline for when you are seeking a new solution?
- What is driving you? Does that issue have a critical deadline that could impact your decision?
- How soon would you like to see results from your new solutions?
- What are you planning to make regarding this insurance coverage?
- Have you discussed with any other companies about your insurance coverage?
3. Questions About Risk Exposure
- Have you had any recent claims or losses within the past years?
- What risk management technique or safety protocol do you have to prevent future incidents?
- Who typically makes the decision about insurance?
- What are the key things you or your company look for in an insurance provider?
- When is your current policy renewal date?
Conclusion
Qualifying a commercial insurance prospect is easy if you have some core qualification criteria. In this discussion, you have covered pretty much everything, like how to qualify prospects with core criteria and what the key questions to ask a lead are for its qualification. Those qualifications are like a matter of practice; once you start doing and seeing results, you will never miss them or avoid them. They drive quality on your prospect list.
