Insurers Help Agents Thrive in Modern Times
It`s no secret that independent agents specializing in personal lines have taken a beating. It`s not as bad as, say, travel agents, and actually, it`s getting better. A recent study by the International Insurance Brokers of America saw that 69 percent of independent agents experienced growth in personal lines, 16 percent stayed the same and just 15 percent saw a decline.
Make no mistake, there are fewer local independent agencies than there were 20 years ago: 44,000 compared to 38,500 today. However, there has been some growth in recent years (up from 37,000 just five years ago), and in total, this still represents more than 270,000 insurance agents. To paraphrasee Mark Twain, “Rumors of their demise were premature.”
As a backdrop to all this, however, captive agents (those who represent just one company) seem to be thriving. The biggest reason is the support they receive from their carrier. I`ve been to more than 25 conferences for local captive agents in the past three years and have heard numbers ranging from 50-150 new agents opening offices every month. That`s enormous growth and proof that agents are not morphing into Blockbuster, travel agents or the neighborhood pharmacy of 30 years ago.
How do they do it? Local captive agents could have a support team of four or five; consultants, trainers, recruiters, district managers, and other support for every 30 to 40 locations. Conversely, the only outsider that visits independent agents are the company marketing reps and vendors. Although marketing reps are asking you to sell more of their products, only a handful of them take a consultative approach to help the agency as a whole. Even for the handful that take this approach, it`s tough to move the needle since it`s a visit every six-to-eight weeks.
As times are changing, agents are faced with three choices:
- Sell the Agency: Always an option, as there`s a lot of demand and it`s a seller`s market.
- Stay the Same: Declining a couple of percentage of points per year until you`re ready to sell isn`t the end of the world. Make money by cost cutting, and stay busy by improving the golf swing.
- Change: Embrace the online world. Allocate most of your marketing budget to finding the online consumer, retrain or replace your people, develop processes that cater to the connected consumer and start working on adapting your business.
Agencies could use the help of carriers to get to option three. The time is now to help this critical channel—the independent agents—thrive in the new, connected world. So how can carriers help the IA`s thrive in this market and invest in this method of distribution?
This is always a sensitive topic, but it`s an important one. The agency`s staff needs to be able to sell to today`s consumer. They may have been great in the 1970s, but no one wants to buy insurance like we did in 1980 or even 1990. Can they work with the connected consumer? Are they effective at converting and retaining the connected consumer? This is one of the biggest challenges for most agencies and leadership needs to ask the toughest question of all: “Knowing what I know about these employee, would I hire them today?” If the answer is no, then the hard decision needs to be made. Leaders fear changing personnel because they don`t have a pipeline of qualified applicants to take their place.
Carriers can provide training programs, boot camps, certifications, and other resources for agency owners to hire inexperienced people into the business. This training should primarily focus on how to serve the connected consumer, with less emphasis on product knowledge.
Implement Modern B2C Sales Principles
Too many agents are trying to sell insurance the way they want to sell it, not the way the consumer wants to buy it, as they are bombarded with “15 minutes can save you…,” or “7.5 minutes will save you…” Most marketing and advertising has commoditized auto insurance, but if agents don`t offer something unique, price is all the consumer will focus on.
Let`s go back to the local captive agent for a minute. They sell one carrier, so they can`t sell on price. They`re talking to consumers about quality, claims, the brand, value propositions, and differentiators to win new business.
Find ways to develop “best practices” for the agents who sell your products and above all, stress that speed and accuracy count. Teach them how you use data and technology to make business decisions. Most importantly, make it easy to sell your products with a point of sale system they`ll embrace.
Running a full page in the local yellow pages and hanging a shingle on Main Street is no longer the best marketing strategy for local independent agents. Many agents know this, but have a hard time executing and maintaining digital campaigns. Agents that dominate local presence, have a world-class social media presence and take a data-driven approach to online marketing are growing exponentially. A strategy that includes email marketing, cross-sell campaigns, referral rewards programs, social, buying online leads, blogging, and partnering with local businesses will help agents grow their book of business and give the carriers that help them quality new business.
Unfortunately, when independent agents try these initiatives but don`t see immediate results, they stop. Or, because their people don`t understand how to serve the connected consumer, they believe lead quality is poor. And lastly, they don`t have Modern B2C Sales Principles since they`re treating consumers like it`s 1980. They struggle.
There`s no question a referral is the best source of new business with the highest conversion ratio, but it`s difficult to generate enough referrals to grow. When referrals are 50 percent of a local agents` new business, they`re simply not writing enough new business.
Carriers can help agents establish an online marketing presence by partnering with vendors that understand the local agency distribution channel. Co-op dollars and training to drive new business to their inbox, phone or website will create opportunities for agents to write new business. This is a recipe for success when coupled with training and recruiting for the owner and employees of the agency.
This is not a blanket indictment of carriers by any stretch. There are many carriers doing a great deal for their independent agents and we`re grateful for everything you do. Unlike captives, independent agents don`t have carriers holding them accountable for how to run their business.
If carriers can help mentor young producers and agency owners alike, the critical independent agent channel will continue the growth it`s experienced since 2012 and thrive for decades to come. The time is now.
Stuart Ganis is the senior vice president of business development and marketing at EverQuote.