As independent insurance agents, we face competition from all sides. The battle for business is tougher than it has ever been. The same old strategies won’t yield the same reliable results. Growth requires a new approach.
With this market landscape in mind, here are my thoughts on the three new realities we face along with some ideas to help us all compete more effectively.
Reality #1: You can’t survive as a one-trick pony.
Solution: Become a true full-service agency to increase differentiation, agility and retention, while controlling E&O vulnerability.
- Differentiation: Your clients want to be able to count on you to provide all the insurance services they need – from home and auto to life and disability and small business insurance. If you’re an agent who can do that, you’re more likely to earn new business.
- Agility: If COVID has taught us anything, it’s the need for agility. Restaurants that thrived during the pandemic were those that could quickly shift their focus to takeout. Likewise, if new competition is threatening your personal lines business, more emphasis on other lines can keep you strong.
- Retention: If your clients aren’t getting all their insurance from you, they’re working with another agent. This opens the door for someone else to provide full service and poach your clients. As a full-service agent, it’s easier to keep the door closed to competitors.
- E&O Defense: What if your clients don’t go elsewhere for the additional services they need? What if they go without the advice and assistance that could help them avoid coverage issues? They may end up in a tight spot where they need coverage they don’t have, and when that happens, they may hold you responsible. That can lead to an errors and omissions lawsuit.
Bottom Line: As a full-service agency, you can get to know your clients and make sure all their needs are met. This helps you build a solid and mutually beneficial relationship. Your clients will appreciate the value they’re receiving. You’ll appreciate the increased sales, improved retention rates and reduced E&O vulnerability.
Reality #2: Playing it safe doesn’t pay.
Solution: Bolster commission income by venturing into unfamiliar territories.
Focusing on a couple of lines you know well might seem like the easiest and safest approach, but that doesn’t mean it’s the best approach.
Not offering life insurance, for example, is a missed opportunity. As Ben Williams Insurance Group explains, “Life insurance offers great commissions. Since I am a start from scratch agency, it’s going to take a couple of years to build the residuals in the P&C market. Life allows me to make huge gains in revenue to offset that. It has also open doors for my P&C by getting me in front of customers that I might not have if they hadn’t requested a quote.”
Commercial insurance is another example. Many of your clients are also running small businesses and need commercial coverage. Some of your clients may have unique needs. If you want your agency to stand out, you need to look for specialty insurance opportunities that your competitors have overlooked.
Bottom Line: Venturing into unfamiliar territory can be unnerving – it’s true that selling commercial lines can require more investment – but the premium potential is far greater.
Reality #3: Connections matter.
Solution: Build your ecosystem by partnering with a knowledgeable, robust network – so you’re confident and ready for anything.
You’ve probably heard the saying that it takes a village to raise a child. The same is true with growing an insurance business. You won’t be as effective as you could be, if you go it alone.
For example, let’s say you insure a family’s home and auto insurance. Then a year later, the breadwinner of the family, who is an electrician, decides to start his own company. He asks you if you can insure his business too. What do you say?
- No, I’m sorry – I don’t have that expertise. (open door to competition)
- Sure, maybe I can get a rider on your homeowners policy. (Yikes – can you spell E&O?!)
- Yes, I have construction insurance experts on my team and I have access to several construction insurance carriers so I can get you three quotes in just a few hours. (Score!)
Option C is the assured, connected response. The confidence of knowing you’re ready for anything, and that you’re able to compete with larger agencies provides an invaluable competitive advantage as Matthew M. Park, President of JEM General Agency Inc. has discovered.
“Working with the Smart Choice Network has allowed me to get direct appointments with carriers that I wouldn't have been able to get on my own or even through referrals,” he says.
A network can also help you enter new markets faster by reducing the learning curve involved. This can allow you to grow your business and increase your revenue much faster than you could on your own. “The impact on our agency has been significant,” says Mayer Gelbman, President of GM Insurance Brokerage, Inc.
Bottom Line: Working with a network means you get exactly the support you need, when you need it, so you don’t have to manage everything alone. As one agent says, “Any time we have questions about where to place business, or best practices on how to work with certain companies, our Smart Choice rep is more than willing to help. He’s knowledgeable and I don’t remember a time when one of my agents has had a question that he hasn’t been able to answer.”
The Future is Bright
Despite the changing realities, I feel the future for independent agencies is bright. We still have an important role to play and those of us who are willing to adapt to the changing landscape will emerge stronger than ever.