Let’s face it, independent agency owners are easy targets. Ask most vendors that serve the IA channel about their clients and you’ll get an eye roll, a chuckle and a few good stories. We golf way too much, most of us don’t know how to run a business, and the carriers put up with us as a source of distribution because of their “commitment” to the IA channel.
It’s been a while since I’ve written anything and last week I wrote an article for AgencyNation. The response was overwhelming and the comments, emails and calls I received we’re extremely positive. It got me thinking though, everyone is more than happy to pile on agents, but why do the carriers get a free pass? Carriers have been trying to figure out how to live without us for years.Most carriers are great to work with and I have great relationships with many of them as an agency owner and consultant. However, the attitude towards agents has changed for the worst and while I can understand it changing towards the agents that golf too much or don’t care about their business, but what about the others?
For me, the strangest part of owning an agency in 2017 is competing with the carriers you’re representing. You’re not competing with the agent down the street that sells the same product, but the carrier you’re appointed with is competing with you directly. They tell you to underwrite a certain way, yet they write it the way they told you not to. It’s a mess! The battle scars from the good and bad times you’ve endured together over the years are irrelevant. Carriers answer to shareholders and executives that have probably never signed the front of a paycheck, but they need profits and if it’s at the expense of Local Independent Agents, so be it.
Are agents so bad at Sales and Marketing, that carriers had to build out consumer portals, sales teams and agencies to sell enough business? The short answer is unfortunately, YES. Too many agents sat on big books of business, earned a great living from their revenue stream and growth was associated with a headache. Agents thought the internet was a passing fad like a rate increase, so the likes of Flo and the Lizard commoditized auto insurance and now it’s bleeding into Renters/Condo/Home. Carriers built tools for consumers, but agents were left to conduct business as if it was 1980.
But what about the agents that want to grow? The ones that are in the office “bell to bell”, Sunday to Sunday trying to write new business and build a respectable company? Could carriers have contributed more to this portion of their agency base rather than treating them as if they’re doing something wrong? Probably.
Anyone that owns an agency knows the drill. A carrier comes in and wants more new business production so you give it to them. Then they return explaining that it’s not profitable enough and you need to underwrite more effectively. You underwrite more effectively, but the production drops, so you obtain another carrier to make up for the lost business. This vicious cycle continues until you end up like the agent mentioned earlier because you finally decide that growth is indeed – a headache!
So, what’s the solution here? For starters, most of us (me included) must understand that focusing on Auto Insurance is tough to sustain. There are so many insurance products we can sell, but we tend to focus on what’s comfortable. Auto is an easy sale; immediate gratification, plus most states enforce laws mandating that you carry it to register a car. If your agency has terrible customer service, you’ll retain 70% of your clients, if you’re a super star you can retain in the 90% range, so why not write the heck out of it?
One thing I’ve learned over the past 10 years of consulting over 700 agencies is that there aren’t many multi-million dollar agencies focused solely on auto insurance. Sure, there are a few super agencies that acquire 100’s of agencies per year that are in the 10’s or 100’s of millions in revenue, but that’s the exception, not the norm. The typical small agency needs to try something different.
The best insurance agencies, with the best people tend to lean towards Commercial Lines, Benefits and/or high value personal lines. Perhaps those of us addicted to the quick reward of auto insurance commissions should learn about General Liability, Group Health, Life Insurance and other coverages. When prospecting or marketing for Life, you’ll find the ideal Auto/Home client since that client is more likely going to want Auto and Home Insurance for protection, not price, and not because the DMV or a Lienholder requires it.
By diversifying your book, you’re not so dependent on any single carrier or line of business. Granted, you don’t want to become a jack of all trades and master of none. But by specializing in one or two commercial niches you can stability and flexibility your client portfolio.
You can round out Life Insurance for every client you quote and most importantly, you’ll be an Independent Agent that can weather any storm from a specific carriers’ rate change, loss ratios or god forbid, economic conditions. Most of us that focus on Personal Lines (Auto) have a healthy portion of our business with one carrier and at that point, you’re captive and that’s no way to live.
In our training courses, we teach agencies to be a sales and marketing organization that happens to sell insurance products. Whatever you focus on in your business will determine if you succeed or fail. If you’re focused on how difficult it is to grow, it’ll be difficult to grow. If you focus on what a struggle it is owning a business, it’ll be a struggle.
If you focus on diversifying by expanding your product offering, helping your clients find the best price and coverage, loving your customers like no other agent or carrier can, marketing and earning a great living, you’ll win every day. And most importantly, you won’t be dependent on any single carrier when making future decisions, which is the biggest benefit of being independent.
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