This two-part article (Part One HERE) focuses on how to get the companies and markets your agency needs.
THE PROPOSAL
Most companies today have limited the number of agents to whom they’re willing to offer a contract. That means that there are only two ways that a company will be interested in making an appointment: First, to replace an agency/company relationship that’s been terminated; and, second, to grow in a geographic area.
The problem is that there aren’t enough appointments available for the number of agents who want them. For you to be one of those fortunate to get that contract you must “sell” the company on appointing you.
How you prepare the proposal package has a significant impact on the image that you present to the company. Although the difference between ordinary and extraordinary is only a little “extra,” it can make the difference between getting the contract and being one of the also-rans.
The proposal package should include:
Agency History. This should include when and how the agency was founded; length of time at the current and prior locations; reasons for moves; past and present principals; how long the principals and their families have been in the community; and the agency’s longest company relationships.
The history should also list any special awards or recognition received over the years. However, this would not be appropriate if the last award or recognition happened 10 years ago. Be sure to include non-insurance awards.
Financial History. The financial history should show the strength and growth of the agency. Explain any variation or problems in detail. The financial history should include:
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Agency owners — percentage, age of each, active?
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Agency accounting system
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Written accounts receivable and collection procedures
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Banks and account numbers
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Premiums per account for Personal Lines, Commercial Lines, Life, Employee Benefits, and any Specialty Lines
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Number of accounts in each area (Personal lines, Commercial Lines, etc.)
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Whether you prefer to deal on an account current or company statement basis
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Current and two previous financial statements
Human Resources. The primary asset of any business is its people. Since most companies recognize the need for front-line underwriting, they’ll base much of their decision on how they feel about your agency’s personnel. It’s essential to portray your business in the best possible light in these areas:
Principals and employees. Give a capsule biography of each individual in the agency, including length of insurance experience; any designations obtained (CIC, CPCU, etc,); designations currently being pursued; prior offices held in associations (include participation in both insurance and other business and professional organizations).
Job descriptions. Companies have a highly structured work environment with very specific job descriptions, job standards, etc. They expect to find the same in an insurance agency.
Written workflow procedures. This will both project a professional image and provide you with a more proficient and profitable agency. Although you don’t need to give the company a complete copy, you should include a procedural example and show it to the company executive when they visit your agency.
Training schedules and new employee training matrix. State the agency’s position on education and what the agency does to foster this position. Companies favor advanced education for their own people and appreciate the same effort on the part of their agents. The description of training should include:
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Technical training
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Sales training
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Automation training
Company Relationships. Although it’s important for the prospective company to know what your plans hold, they’re extremely interested in what you’ve done in the past. That’s the nature of a business that emphasizes past performance in providing its products.
Present this information in the best possible light by preparing detailed, written explanations about problems, bad loss ratios, contract terminations, etc. It’s better to have the answers before you get the questions.
Prospective companies will want to see copies of your production and loss figures from your current companies. It won’t hurt to include your own printed computer reports, especially if you have disagreements on production. Do anything you can to enhance these reports by using graphs, desktop publishing, etc. The company relationship section should include:
Analysis of top five companies (at least three). Even though you’ll have to produce the insurance company forms outlining production and losses, it’s wise to present your own. Construct your form to emphasize your strengths and minimize your deficiencies.
Show premiums and losses for a minimum of three years (if possible, provide current plus three years). The final form for each company should show:
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Production — emphasize growth and explain any drop
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Loss ratios — explain thoroughly all high loss ratios
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Contracts from existing companies (if favorable to the agency)
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Profit-sharing checks, including copies
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Special recognition paid the agency by existing companies
Strengths and weaknesses of existing carriers. Show the prospective company process that went into your attempt to secure a contract with them. Address these weaknesses in the next topic.
Reason for securing an appointment with this company. Include either excerpts from or the entire document, “Analyzing the Agency’s Needs.”
Agency Planning. Whether securing an appointment with a company, trying to establish a banking relationship or borrowing money, everyone wants to see your business plan. Successful businesses plan for their success. The others don’t plan to fail — they just fail to plan.
The proposal package should contain a plan that includes:
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One-year business plan
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Five-year business plan
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Detailed marketing plans (both to companies and to the insurance buying public)
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Automation plans (growth, utilization, and future usage)
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The monitoring process
Preparing the agency’s plan is one of the most important functions of a growth-oriented business. Even just holding your ground takes detailed planning. If your agency has never attempted this in the past, take this opportunity.
Matrix of agency’s book of business. Another area of concern of your prospective company is the mix and location of your book of business. You should be able to produce this information:
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Location of accounts (by ZIP code)
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Type of business written, including numbers of accounts and premiums (by SIC codes if possible);
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Agency target markets or controlled association business
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Account development activities (both in place and projected)
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Amount of business written by line, including percentage of overall premium volume
When preparing these reports, remember that companies are interested in premiums — not commissions!
Agency Image. One of the most overlooked areas in securing a company contract is the projecting a professional business image. Remember, you never get a second chance to make a first impression. A professional image includes:
The structure of meetings with company personnel. Agency staff missing or parading in and out of meetings doesn’t give the impression of control or professionalism.
Office appearance. Too many agencies look like they’re a sloppy supply room instead of a business office that provides a professional service. The sight of piles of paper on desks or falling out of file cabinets and covering the principal’s desk doesn’t create a positive impression.
Timely submission of information. Many an agency has lost an appointment because it failed to meet deadlines in obtaining and reporting information requested by the company.
To help project a professional image, focus on these areas:
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House cleaning (if possible, standardize workstations; eliminate clutter; conceal phone lines and printer cables, etc, and clean equipment periodically)
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Structure of meetings in the agency, including:
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Attendees (Make sure all agency personnel are on time)
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Handout material
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Necessary documents on hand
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Written agenda
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Use of graphics, colored slides or overheads, laser-printed agendas, flip charts — anything that enhances your image
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Agency brochures, and if possible, some brochures of your larger and more professional customers (an agency is known by the customers it keeps)
FINALIZE THE CONTRACT
After the information gathering and presentation is complete, hopefully the company will offer the agency a contract. Be sure that you understand all features of the contract completely. Remember that most “bust-ups” happen when one party has a higher expectation than the other party can meet. Discuss every aspect of the contract in detail until all parties have a full understanding.
The second important cause of problems between companies and agencies involves priorities. To maintain a successful agency/company relationship, you must recognize and buy into the company’s priorities. Getting to understand each other’s expectations and priorities forms the essence of a true agency/company partnership.
After the contract is signed and the appointment is made, be sure to create a written business plan with the company. Set regular dates to monitor progress and to eliminate potential problems.
Neither the agency nor the company can afford to just “let things go.” Planned face-to-face discussions on a regular basis are crucial to maintain a long-lasting relationship.
SUMMARY
It’s far too costly to secure and then lose company appointments. Your concerns should focus on sales, rather than not worrying about a contract termination. An effective partnership between the company and the agency should satisfy these concerns. Using the preceding step-by-step approach will give both the agency and company the best possible chance to build a mutually beneficial, long, and profitable relationship.