AGENCIES AND BROKERAGES OF THE FUTURE
How will the agency/brokerage of the future be managed, and what will be its profile? A preview of the future should help insurance companies determine what value-added services will be important to their agencies. Astute agency/brokerage owners can use this information to prepare today to make their firms viable and competitive in the future.
The following five key characteristics will be necessary:
1. FIRMS WILL BE LARGER.
Mergers and acquisitions have increased for a variety of reasons. The agency/brokerage of the future will probably be much larger than the firm of today, primarily as a means of survival. Carriers demand more volume; they want to consolidate their distribution systems to focus their resources on firms that show good loss ratios and growth in premium volume.
Firms will also need to be larger to provide a broader spectrum of services to clients. The clients of tomorrow will be more knowledgeable about insurance in general and about the specific coverages they need. They'll want their agents to provide the equivalent of one-stop shopping. Lines will include Personal, Commercial, Life, and Group insurance, and services such as claims administration and loss control.
2. FIRMS WILL BE FULLY AUTOMATED.
The agency/brokerage of the future will need to be fully automated-beyond accounting, word processing, and rating. Complete automation of all policy information with interface to the firm's key carriers will speed up client servicing and help to answer client inquiries more effectively. In the next few years, many firms will be operating in paperless environments for Personal Lines and possibly for at least small Commercial accounts. Most will also have a majority of information on their medium-size to large Commercial accounts on the computer to produce ACORD forms, proposals, and correspondence efficiently. Most firms will decide that they can afford to do business only with carriers that they can talk to directly through computer interface.
3. TARGET MARKETING AND FINDING NICHES WILL INCREASE.
Tomorrow's agency or brokerage will be much more specialized than that of today because most agents will realize the inefficiencies in trying to be all things to all people. Producers will have determined what their companies are good at writing so they can place business more easily. They will develop their expertise by targeting more prospects in those areas. Sales centers and telemarketing will also be much more prevalent, helping producers streamline their sales efforts.
4. PRODUCERS WILL SELL AND CSRs WILL SERVICE.
In the agency/brokerage of the future, producers will be more fully supported, which will allow them to sell more new business. The sales and service functions will need to be segregated to free up producers' time for sales. CSRs will be technicians, able to handle the day-to-day servicing of the firm's accounts without involving producers much.
5. FIRMS WILL BE MORE BUSINESS ORIENTED.
The future's agency or brokerage will be run more as a business. Most likely, there will be less rather than more commission paid to firms from carriers, so there will have to be better expense controls and improved budgeting and profit center accounting for all the firm's departments. If management knows where their efforts need to be directed by type and size of account, the firm's overall profitability will improve.
In the future, more of the firm's profit will be invested back into the firm in the form of investments in new producers and capital expenditures, rather than bonused out to owners.
Productivity will be monitored to improve the performance of producers and service staff. Decisions will be based on their impact upon the firm's value.
SUMMARY
Agencies and brokerages must be better managed and more efficient tomorrow to survive the demands of the insurance companies, the desires of the consumer, and the increased competition.