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An Interview With Ed Chin By Leila Morris of California Broker Magazine, November 2001
How Small Firms Can Compete: An Interview With Ed Chin
By Leila Morris --
Quoted: CalBrokerMag.com
Ed Chin is the owner of AIS Corporation, which provides benefits to more than 15,000 individuals, employees, executives, and owners of small to mid-sized companies. He has been recognized as Asian Entrepreneur of the Year, Businessman of the Year, and was profiled in Money Magazine. He can be reached at (510) 893-5331 or visit www.ais-insurance.com.
How do small firms compete when they don't have the personnel that the large firms have? We really don't see that kind of competition evolving just yet. If you go to the Chamber of Commerce meetings, you don't see any of the big firms hustling business. The small guys need to stay with small businesses. The leads clubs are great for start-up guys.
How do you find the right group to sell to? We used to go to strip malls and business parks by the airport and literally walk to each office, drop of a brochure and card, and ask for human resources person. Most of them were five to 15 lives. We came back with a follow-up call. The big boys don't go down there to talk to them. Offices like red carpet suites are classic - these are the ones with a common receptionist. Successful brokers go to a lot of small local business fairs. We have gone to meetings of the California Association of Neighborhood Stores.
What can a small firm offer these businesses? The 7-11 owners don't have time to discuss the attributes of a plan in-person during the business day. A lot of that business is done by phone. Agents should learn better phone skills and take advantage of the Web to get rates.
How do you maintain a sufficient block of business? If small agents don't get together to get larger blocks of business, they will be at the mercy of larger carriers. The little guys are fading fast. They are joining forces with general agencies. We just signed up two big producers who had been spending $10,000 a month to advertise in the Chinese Yellow Pages. Many carriers won't offer more renewals unless the broker has a minimum number of accounts. If an agent is picking up $200 a year per on a case, it would be worth it to pay a general agency $25 when the alternative is to lose the case entirely. Ten years ago, you only had to show the carriers that you had the ability to produce $50,000 in premium. Today, if you can't show them $500,000, they won't contract with you and you can forget the cooperative advertising deals. Most agents will find 35 cases in a year for four to five lives. With life and disability, you always have to write new business.
How do you retain your clients? Having your own Web site with e-mail capacity helps you stay in touch. So many agents have lost guys to someone else who took them golfing. It's out of site, out of mind.
How effective are cold calls? The kind of guy who walks into an office cold is an agent on a salary or a brand new agent hustling for business. When I started out in the 1960s, I would walk in and look for the president. In one case, I wrote 28 employees and picked up their supplier as well. I had that account for 30 years until the business was sold. I don't know if that approach will work as well today. In this high-tech world, if you don't have an appointment, you've got no hope. Also, with today's traffic, it's easier to work by phone and e-mail. Can you afford to drive across town to sign up three people for dental insurance? One strategy would be to visit the little market or the restaurant with two to four employees.
How important is the Internet? You should have a Web site and your Web-site address should be printed on your business card. The next generation of clients will be doing business on the Internet. You have to prepare for that or you will not be in the business.
What kind of advertising works? The California Grocers organization lets us write articles on health and dental in their grocery magazine. We also run an ad. I put the ad in mainly to be able to get into their trade show.
How important are referrals? Personal relationships and referrals work best. I donated money to the Oakland Asian Cultural Center, which named its auditorium after me. My wife is involved in Girl Scouts and the fathers call me for insurance. I haven't prospected for business in 10-15 years. They call me. You earn your stripes. Don't be embarrassed to say, "I'm in the insurance business." Don't say, "I sell financial products." If you say like it like you're proud to be in it, the clients go with it. If you sound embarrassed, they won't respond. Large and mid-sized accounts are very difficult and fickle, but the hairdresser at the local salon becomes a personal relationship. As long as you are in the game, serve them that personal touch.
Individual life and health agents are losing clients to firms that also do property and casualty. How can they respond to this trend? When the client is buying protection, you have to sell them on your ability and skill level. You have to be bold today to get the cases. I would make myself at least semi versed in P&C. Tell them they can go directly to carriers and get good rates and service for P&C. Larger P&C houses are hiring life agents, but the guy who goes to the P&C house is one who can't cut it in the field.
How will the trend toward defined contribution affect agents? If a patient's rights law is enacted, employers will go to defined contribution. We are gearing up for that. We picked up accounts by doing defined contribution. It will be a new opportunity for agents. Even Blue Cross is saying you can now stabilize your costs by letting the employee choose from a menu of Blue Cross products. They are doing it for proprietary products. All the insurance companies will look at doing this, but it won't work unless they develop cooperative working relationships with other carriers. We have the ability to use the Web site to show them Web-site billing. That's going to be more of a selling point than anything.