What do your companies want — and how can you give it to them?
In working with your companies, the first question to ask is: “What do your companies value?” Insurance companies use the same decision-making criteria as agents, but in a different order. Insurers refer to profits first and relationships second, while agents base their decisions on relationships first and profits second.
Insurance companies assess risk and use their capital to make a profit for their shareholders. If Agent A helps them make a profit, the company will want to develop this relationship further. If Agent B doesn’t make a profit for them, then they won’t be interested in furthering this partnership. Conversely, agents build long-term relationships with customers to generate profits by offering the right product at the right price and delivering quality service. They also forge relationships with a variety of markets so that they can deliver these service promises to their customers.
If you want to develop relationships with your markets, you need to meet the companies’ No.1 criterion — profitability. Start by evaluating all your markets against a common set of criteria. Here’s a sample “criteria chart.” More and different criteria can be used to suit each agent’s needs.
Evaluate your business relationships with your markets on a scale of 1 to 10. 10 is excellent; 5 is good; 1 is poor.
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Insurance Company Name
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Compatible
Long-range goals
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Capacity
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Products
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Underwriting
Service
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Claims
Service
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TOTAL
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1.
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2.
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3.
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4.
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5.
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Have everyone in the agency rate your markets and compare results. Often, management and the front line have different perspectives. After analyzing the data, pick the markets that you feel are the best fit and share similar long-term goals, and then start working with these markets to develop profitable relationships.
SET STRATEGY
Most agents find the carriers’ planning process to be either simplistic or too “top down” in approach. Conversely, agents often commit to growth numbers without having a plan for achieving them. Agents and carriers need to develop a joint planning process and implementation strategies for achieving shared goals that involve underwriters, account executives, and account managers, so that everyone has input and commits to the goals.
The right markets will want to work with agents who have plans to grow profitability, and they’ll be prepared to develop joint strategies to achieve mutually beneficial results.
FOCUS ON SIZE
In most agencies, high-end customers are highly profitable. These people generate higher revenue per relationship, have lower loss ratios, and require less service. They tend to be busy professionals who are knowledgeable about insurance. They understand claims counseling, move less frequently, pay their bills on time — and when they need service they have their paperwork ready and can make decisions quickly.
The same principles apply to insurance company relations with their agents. From a company’s perspective, larger agents generate more revenue, require less service, and have the expertise to implement new programs. Even if Agent A has a profitable but smaller book (less than $1 million), it will be less valuable to a carrier than Agent B who has a much larger book ($2 million) and the same level of profitability. Like agents, companies want business partners who can generate enough revenue so that they can offer quality service and stay profitable.
The volume that markets have been requesting during the past 10 years has been rising steadily and will continue to rise. If carriers are looking for new ways to stay profitable, it’s reasonable for agencies to do the same, and many agents are ensuring their livelihoods by forming a variety of coalitions.
Mergers, acquisitions, clusters, and associations will continue to grow in popularity as agents look for ways to meet the needs of their customers and their markets. All of these options have pros and cons and require careful study.
STRESS PROFESSIONALISM
At the end of the day, we all prefer to work with people who do their jobs well and have good people skills. Ensuring that your staff are well trained and have the tools to do their job will go a long way to developing good relations with your business partners.
When problems arise, show everyone in your agency how to become problem solvers. Your markets are struggling with their own challenges and will appreciate working with agents who come up with suggestions rather than just dumping problems on their laps.
Finally, everyone needs a favor from time to time. Too often, problem customers put pressure on agents to “help them out,” and the agents, in turn, pass the request on to their markets. Because you can only ask for so many favors from each of your markets, save them for profitable customers that you want to retain.
Everyone in sales or service knows that to succeed, you must learn what your customer wants and then deliver it, together with great service. The same holds true of your business partners. Insurers must make a profit to provide the products that agents and their customer need. Make developing and delivering on plans that focus on profitability and growth your calling card.