Referal Program

[amsterp]

I'm a newly licensed in P&C and am in the works of purchasing a independent agency. I'm working on getting new business by advertising and doing door hangers and getting a website up and running. The person I am purchasing from does no advertising what-so-ever, just strumming along with his clients he's had for the past 40 years. But I specifically remember from the pre-licensing class the whole section on rebating and twisting. But I also noticed on here that some people do a referral program and even stumbled upon a website of an agency that will be raffling off an iPad in December as part of their referral program. Is this a state to state thing or am I misunderstanding something? Would love to offer a referral program to the base clientele!! And of course any new clients as well.

 

[Dglossoplend]

From experience when I ran a small Insurance Brokerage. Our entire business was based on referrals I used to write 10-15 policies for auto, home, commercial weekly. Along with 2 other agents. We took all the non preferred clients with state farms, allstates etc as referrals. There rates were to high and we had carriers with much better rates. I would always make sure to return the favor along with surprise them with lunches or other items as a thanks. It worked great for everyone!

 

[johnsharp]

What I’ve found is that typically you can give a reward as long as it is not tied to the condition of a sale. So you can’t say “I’ll only give you a reward if the person you refer purchases a policy.”
That could be considered rebating so be aware of it.

Now, you need to decide what you want to give. I’ve seen tons of different ideas for referrals. Some of my favorites are:

-$5 Starbucks gift cards with a note that says “Thanks A Latte”
-A few scratch off lottery tickets with a note that says “We Hope You Win Big!”
-Just a nice thank you card! That can go a long way.
-And as always "What Would Forrest Gump Do" Send a box of chocolates. But really you can send some type food or candy.

There doesn't have to be a raffle but for every referral they get something.

 

[NCAgent]

Many states have different limits on what you can do for referrals. Some states might be 25 bucks and some might be more or less. So if you aren't sure, ask your state DOI.

 

[M Gen]

Nothing wrong with the occasional gift or Christmas gift for good referral sources.

 

[rousemark]

What I’ve found is that typically you can give a reward as long as it is not tied to the condition of a sale. So you can’t say “I’ll only give you a reward if the person you refer purchases a policy.”
That could be considered rebating so be aware of it.

You need to learn the definition of rebating. Rebating is returning a portion of the premium to the insured or to someone designated by the insured. There is no way the action you describe constitutes rebating.

 

[johnsharp]

Rebating can be return of commission to the insured or any incentive to place business. I'm not going to claim to know the definition by every state's individual law but I've known agents who have had to shut down their referral program because they got a call from the dept of ins.

If you only give a reward based on a sale, then you're going to be more at risk of having a problem than if you give a reward for any referral. Why risk it?

 

[NCAgent]

Check to see how the referral is done per state. For example, it could be a referral per application submitted. If it gets declined, you pay the fee. However, before you submit the application you know if the client is going to get the policy or not.

As I mentioned before, check with your state DOI. They have more information on how to handle it than all of us do.

 

[DHK]

Run a quarterly contest amongst the people you're meeting to discuss referrals.

During your referral brainstorming session, after you've received a decent amount of referrals... then you say that "I'm running a contest this quarter for whomever gives me the most referrals. The winner gets a gift certificate for two to a very nice restaurant. Right now, the top number is 38. You've given me 24 so far. (And I really like you better than the other person)... so if we can think of another 15, you'll be in the lead!"

Of course, to make this work, you need to have a properly structured referred lead brainstorming strategy. If you're just asking for names, it probably won't work.

 

[amsterp]

Thanks everyone now to brainstorm and come up with something attractive to offer!