You and your companies can work smarter together, regardless of market conditions.

During a hard market, some companies impose new business limitations on agencies, while asking them to re-underwrite their renewal books — a not-so-subtle way of limiting their exposures. Agent commission reductions are also in vogue. Whenever or wherever there’s a question of profit or rate inadequacy in a given area or state, carriers resort to one of three choices: Temporarily stop writing in that particular area, restrict writing new business, or close these markets entirely.

When agents can, they roll the business to another company. This is a questionable, time-honored tradition that is not in any way cost effective. It’s debilitating to the agency and not always the best choice for the customers. Of course, customers have no say in the process at this point. But somewhere down the line, buyers will react, and, it might be with choices that carriers have a hard time accepting or living with.

Agency-company relationships fare no better in soft markets. Many insurers seek alternative distribution methods to grow in the absence of rate hikes. As carriers latch onto these new distribution partners, agents will find their most formidable competition might come from the same partners that they have represented for years. The driving force for many stock insurers during soft markets is their stock value: How the investment community and shareholders view them is the overriding concern in the executive suite. This focus on favorable financial returns allows agency-company partnerships to take a back seat to profit goals, as carriers seek low-cost distribution alternatives to produce target returns.

These tactics play havoc with agents who have staff in place and are out there trying to grow in a soft market with increasing agency costs. Many agents begin to resist growing and just plan to hunker down, cut costs, grow as best they can, and operate with the limited personnel they have. Agencies can’t grow in spite of the insurers they represent.

In soft and hard markets alike, if agencies find that they and their companies are going in different directions, they must figure out a way to work together. Agents who wish to survive and grow need to partner with carriers that are willing to work with them. Despite all the upheaval and uncertainty, some agents can operate in any market environment. I’ve found these agencies make up approximately 15% of the total agency mix.

Of the remaining 85% of agencies, about 25% are in the caretaker or no-growth mode due to having reached their “comfort level,” the age or proximity to retirement of principals, or the lack of desire or ability to keep up with the changing environment. Agencies in this group will have a hard time making it past the next 10 or so years. Increasing costs, growing complexity, company pressures, changing customer buying preferences, and shifting market forces will see to that.

The remaining 60% of agencies enjoy great opportunities — provided their owners are willing to pay attention to the eight basic rules discussed below.

The insurance industry that emerges five years from now will bear little or no resemblance to the market and conditions of today. Times of turbulence and uncertainty can often bring exceptional opportunities to those who have the ability, the financial stamina, and the willpower to persevere.

EIGHT TIPS FOR GROWTH IN ANY MARKET

These eight concepts need careful consideration, thought, and a great deal of brainstorming on the part of agency owners who plan to grow their agencies and to prosper.

Rule #1: Make your agency available when customers want to buy. Recognize the changing market and be on the lookout for new opportunities. You’d be amazed at how many agencies routinely close their doors and phones for the all-important lunch hour. This is not sterling customer service.

Rule #2: Be aware of a changing regulatory environment that allows new sellers into the market. Recognize and deal with the fact that banks and financial institutions are marketing insurance. Others are now selling the products to which you’ve had exclusive rights. This situation offers opportunities that you can and should be pursuing.

Rule #3: Determine how you measure up to the new emerging distribution systems, such as banks. Can you compete, or should you consider joining forces and help them work their customer lists?

Rule #4: Provide professional, knowledgeable staff to your customers. Your staff must provide perceived value to buyers. In addition, you must learn to be both a manager and a market strategist; it’s imperative to develop your talent in these areas.

Rule #5: Be willing to pay for training and improving the agency working environment. Make your agency a profitable, exciting place for you and your employees. This will do wonders for your turnover and your outlook on life.

Rule #6: Educate yourself; attend seminars, read, and network with other successful agents. Don’t wait for help from carriers; it might be a long time in coming. This is your agency. You’re the owner and it’s your responsibility.

Rule #7: Treat each client as a total financial entity. Know or learn about your clients’ specific needs, wants and desires, and be in a position to meet them. Every agent and agency owner must recognize their book of business as a customer database and work it accordingly.

Rule #8: Understand and sell your clients the financial instruments they need as today’s hedge or gateway to their futures. This is a must that breeds customer satisfaction, together with higher renewal ratios, and higher earnings for you and your employees. It also makes it far more difficult for your competitors to get their phones in your customers’ ears.