MOVING A BOOK OF BUSINESS
by Paige Proctor
As insurance companies restructure, reposition, and reevaluate their effectiveness in the marketplace, change is inevitable. Your agency will be affected, especially if you happen to represent a company going through one of these changes.
Most commonly, you will need to move all or a part of a book of business. This has certainly been a part of agency life in the past, and I believe we'll be seeing much more of it in the future.
Here's a concrete example of how an agency can be affected by dramatic change. I am currently working with an agency that has been forced to move more than $2 million of business involving trucks, restaurants, and taverns. This agency is a target industry marketer, and the regional carrier with which this sizable book of business was placed was recently acquired by a national insurance carrier. Within three months of the ownership change, the national carrier decided to eliminate truck, tavern, and restaurant insurance. Worse, most of the accounts were not large, so a rather sizeable number of policies must be moved to other insurance carriers.
There are many such stories currently going on. You can probably think of one or two examples in which changes in company ownership or in books of business between companies has adversely affected agencies.
If rolling over a book of business is a fact of life, it makes a lot of sense to learn how to approach it positively, so that the effect on the agency is beneficial rather than negative. It requires real thinking and planning to turn a negative into a positive. Think about the following:
1. Rolling over a book of business provides you with an opportunity to re-underwrite the book of business and place marginal accounts in other markets. Profitable books of business equal bigger contingency checks.
2. Look at this as an opportunity to contact your customers and provide them with some value-added service as you move their account from one company to another.
- Most important of all, regard this as a unique time to develop accounts. If you must contact the customer anyway, why not get into multi-policy discounts on Personal Lines and sell Life/Health business to your Commercial Lines accounts?
The main complaint I hear concerns the amount of time required to roll over a book of business from one company to another. But finding time is not as difficult as you think. Every agency has some form of new business sales going on at all times, so think about transferring some of the time usually spent in new sales efforts to development of your current customers' accounts as the book of business is rolled over. Many industry studies show that it's a lot easier and cheaper to sell a current customer an additional policy than to go out and find a new prospect, convince him or her to break with the current carrier, and write a new policy with you.
If you're still not convinced, one more advantage to rolling over a book of business will very likely earn you more money: using the time to reevaluate the commitments you've made to some of your insurance carriers. Give serious thought to the agency contracts that could be enhanced by offering your carriers additional premium volume. Every agency owner knows that increases in premium volume provide opportunities to ask for higher commissions and better contingency agreements. All you must do is negotiate. The book of business you must move is an excellent bargaining chip. It has been my experience that agency owners end up with better deals when they are not afraid to negotiate.
What is usually viewed as a very boring, time-consuming process can be a positive experience for your agency. Rolling over a book of business gives you the opportunity to re-underwrite your book of business, develop accounts, and use the premium volume to enhance commission and contingency opportunities. Let change lead to growth.