How To Strengthen Agency-Company Relationships

HOW TO STRENGTHEN AGENCY-COMPANY RELATIONSHIPS

by Emily Huling

Use this five-step approach to get — and keep — company relationships strong.

Your eyes open with the ring of the alarm clock. As you quickly reach over to silence the noise, you feel a pang in your heart. You’ve felt it for some time now. The relationship just isn’t what it once was. A few years ago, you rejoiced together for mutual achievements, consoled each other over disappointments, and supported each other when the going got rough. Recently, however, you’ve felt alone, left out in the cold. Communication has become strained, taking a toll on the people you care about.

Is this a marriage gone bad? Yes and no. The relationship described is more commercial than matrimonial: It’s the marriage between your agency and one of your key companies. You ask yourself, “What happened during the past year or more to erode the strong, profitable relationship we once had together?”

Although a list of the problems could fill a page or two, reasons for a strained agency-company relationship can be separated into three areas: Unfulfilled expectations, thwarted intentions, and blocked communications.

Unfulfilled expectations result when one partner in the relationship expects the other to produce or deliver a product or service and it doesn’t happen. For example, a company might expect to receive a specific number of high-quality submissions from an agency, or an agency might expect to receive competitive, timely quotations from the company on business submitted. When the expectant partner is repeatedly disappointed without sufficient explanation, the relationship begins to fray.

Thwarted intentions occur when the agency-company partners genuinely intend to carry out their agreement, but something beyond their control obstructs the plan. For example, a company that has been competitively writing a particular class of business in a geographic territory might have to change its policy because of weather or loss experience, or an agency’s key producer quits, making the agency’s volume commitment undeliverable.

Blocked communications include failing to inform each other about organizational changes or setbacks, status and resolution of accounts, and other issues. An interruption of the steady flow of information weakens the partnership bond.

When these three factors manifest themselves simultaneously, the relationship deteriorates until the two parties are each forced to redefine and recommit to the partnership’s expectations, intentions, and communication standards.

Before outlining ways to strengthen the agency-company relationship, it’s important to understand what agencies expect from their companies and companies expect from their agents.

What companies expect from their agents:

• Front-line agency risk underwriting
• Professional, complete, honest submissions
• Adequate volume to cover routine losses
• Adherence to company payment procedures

Here’s what agents expect from their companies:

• Financial stability
• Consistent underwriting standards
• Appropriate coverages and services for premiums paid
• Professional and competent staff
• Clear, timely communication

Can your firm fulfill these minimum standards? If it can, you have the basics of a strategy to realign yourself with your partner. What follows is a five-step process to get the relationship back on track so that both agency and company can grow and prosper. Companies and agencies can use these same planning steps to establish their respective teams. The process culminates with a review meeting during which the partners create an action plan to reaffirm their relationship and create a long-term, mutually profitable game plan.

Step 1 — Beginning the Process. If you’re an agency, decide how many and which companies should participate. If you’re the company, determine how many and which agencies should be part of the project. Determine the segments of business to be included: Personal Lines, Commercial Lines, Small Commercial, Life and Health, or Surety and Bonds. Then decide who in your organization will make up your team for the agency/company reviews. Let the team choose a leader. The teams should include the agency owners and managers. Another individual can be the team leader, charged with approaching the other partner and communicating the purpose and process of this review. Set a date for the review meeting. The leaders might choose additional checkpoint meetings during the fact-gathering process. More information might need to be gathered, and each leader should be sure that their review team is on track.

Step 2 — The Situation Analysis. Getting the facts together and examining what has transpired during the past year between the agency and company is critical. The categories of your situational analysis should include:

• New business written (and why).
• New business not written (and why).
• Existing business lost (and why).
• Significant new and renewal accounts.
• Risk selection and underwriting changes.
• New programs released.
• Review of customer support services such as audit, accounting, claim, loss control, staffing; staff and management relationships.
• Marketing and sales strategies.
• Use of company resources such as co-op advertising, promotional materials, and leads.
• Differentiation from the competition.
• Ease of doing business issues such as technology, communication, and people.

Step 3 — New Business Development Plan. Each company and agency team should develop its own new business development plan, to be shared with the agency/company partner. The issues to address include:

• Revenue commitment to each other (is there a threshold to qualify for increased commissions or profit sharing?).
• Target classes, geographic areas, and lines of business to be solicited.
• Marketing and sales strategies needed to achieve these goals (a central marketing person, increased visibility and attention of company field support underwriters, joint educational seminars for prospects and clients, and leads provided or costs shared by the partner).
• Necessary product education.
• Educating of the underwriter on individual risk exposures and controls.
• Service standards, such as time frame for new business and renewal submissions.
• Loss control and audit standards.

Step 4 — Account Retention Plan. Consider what the parties can do jointly to retain business. Some suggestions to retain business are:

• Joint company/agency visits to clients midterm.
• Risk management and other educational seminars to add value to the client relationship.
• Midterm claim- or exposure-base review to keep communication lines open and avoid year-end surprises.

Step 5 — Review Meeting. Before the meeting, the review team leaders should create a written agenda together, outlining the goals of the meeting and how they will be accomplished. This might look like the process outlined above, with some individual modifications. Most meetings last for several hours and should include a casual lunch. When both parties are well prepared and the ideas are flowing, this group-think meeting will generate even more ideas to build on and strengthen the agency-company relationship.

Here are some logistics that will enhance the flow of ideas and achieve your goals:

• Designate a facilitator (one of the team leaders) to keep the meeting moving forward.
• Use an easel and flip chart to post ideas and keep them visible; have a supply of masking tape, markers, and color dots to highlight important issues.
• Take breaks every hour to stretch, mingle, and keep alert. After each break, the facilitator should review what was accomplished during the last hour.
• To keep the momentum flowing, have lunch brought in.
• Be sure to allow enough time to wrap up.
• Create an action plan using a calendar to confirm dates.

Involve all team members. Leaders might want to schedule some additional dates for their respective teams as check points to ensure follow-through.

Better agency-company relationships require commitment, hard work, and open communication. The five-step process outlined will help get that relationship on track and, with interim checks and annual updates, will keep the partnership strong and profitable.

You can contact Emily Huling at Selling Strategies, Inc., P.O. Box 200, Terrell, NC 28682, (888) 309-8802 (toll free), fax (888) 309-7355, e-mail [email protected], or Web site www.sellingstrategies.com.