Trust between you and your carriers must be a two-way street.
Agencies have given carriers as many reasons to distrust their commitments as carriers have given agents. Time and again, both groups have changed attitudes, leaving loyalty and commitment in the dust. Perhaps the reason is that our definitions of loyalty and commitment are flawed.
Although loyalty is a trait that human beings (and many animals) display for each other, it requires the existence of a personal, not business, bond. A parent will often remain loyal to a child or to another adult even if the other has done despicable things. However, if an employee commits fraud or a felonious crime, the corporation employing them has no personal bond that will maintain its loyalty to that person. Loyalty often continues for extended periods until and unless something happens to the bond between the two people.
Business relationships, in themselves, don’t create loyalty. Your employees can deal with underwriters without creating a bond with them. You can work with company managers without ever bonding with them. Business relationships can go on for years without the issue of loyalty arising, until something goes wrong. Then one of the parties bemoans the lack of loyalty from the other party. But in reality, we can’t complain about severing a relationship that never existed. It’s like buying groceries from a supermarket: You can shop there for years, but if the store raises prices you’ll take your business elsewhere. Likewise, if the store finds it can make more money by moving out of your neighborhood, it will do so.
However, some retailers do develop personal relationships with their customers. They’ll stay in a neighborhood, working with customers to make enough money to remain in business. Similarly, when loyalty exists, customers will absorb price increases to keep dealing with the business.
How is loyalty built in business relationships between agencies and carriers?
Friendship and mutual respect form the basis of loyal relationships. If the parties don’t trust each other, mutual respect is impossible. Business friendships, unlike social friendships, are built on trust and a high degree of concern about helping the other party achieve their goals. So both agencies and carriers need to build a feeling of mutual trust that each partner wants to help the other achieve their goals. Once this trust is proven, both sides will find their relationship runs more smoothly.
Commitments are tangible objectives in which each partner agrees to support the other. An agent can “commit” to a level of growth to a carrier. A carrier can “commit” to speed and to a percentage of submissions that will be accepted. Commitment cannot be one sided (as are most agency/carrier “commitments”). If it’s unilateral, it’s a commandment, not a commitment. Commitment, unlike loyalty, is not unconditional. Conditions can arise that change the commitment of one person or entity to another.
So let’s assume that the agency/carrier partnership is based on a mutual commitment, as long as the conditions of the relationship are unchanged. When conditions do change, one partner should notify the other and alter the commitment.
Although a commitment without personal loyalty is possible, it’s necessarily weaker than a relationship strengthened by a feeling of loyalty between concurrent levels in each entity. The term “concurrent levels” is extremely important. Many agents have found themselves restricted or terminated even though they have excellent relationships with their underwriters or marketing representatives. These relationships are essential to the flow of business, but the agent must establish a relationship with the person in the company who has authority to determine the company’s commitment to the agent. Although every one below this person might be loyal, they can’t affect any change in the commitment to the agency.
The national or international dimension of decision-making means that no company commitment can be guaranteed. However, barring major changes in carrier behavior, a commitment between agency and company negotiated in good faith and backed by the loyalty built on personal relationships between the agency staff and the carrier staff should withstand most volatility in the marketplace.
Agency/carrier partnerships provide the most efficient and effective way for both parties to achieve their goals and objectives. If such partnerships continue to elude our industry, we should be prepared for the decline of Independent Agency System carriers as they seek better ways to manage their growth. I urge every agency to include its companies in the planning process, and to establish both personal relationships and commitments with its principal carriers.