Filed Under:Agent Broker, Agency Management

Solid Agency-Carrier Relationships Are Critical in Today's Soft Market

A prolonged soft market combined with a declining economy has led to unprecedented negative premium growth throughout the U.S. property and casualty industry for two consecutive years. Many independent agencies and carriers are facing numerous obstacles to retain existing accounts and write new business.

These marketplace factors have turned up the pressure on agencies and carriers to find new ways to work together to generate profitable growth, building upon the value of solid, long-standing agency-carrier relationships.

Happily, both agents and carriers have positive news to report.

"It's been huge that many of our carriers have been in the trenches with us during the economic downturn and have found ways to help us generate more production," said Mike Sihle, vice president and chief operating officer of Altamonte Springs-based Sihle Insurance Group.

"Some of our companies are offering us higher commissions if we hit certain sales targets this year, as well as providing us with new products to help us target different types of markets," said Ted Ostrander Jr., president and chief executive officer of Lassiter Ware Insurance in Leesburg.

Keeping What You Have While Winning New Business

On the carrier side, Westfield Group has increased its efforts on teaming with its distribution force of 1,100-plus independent agents to retain existing business and win new accounts in its 19 states, including Florida.

"We are hustling a little more on the front line and helping our agents retain the business they already have," said Phil Swettenham, distribution leader of the Westfield, Ohio-based super regional carrier. "We are making sure we are servicing the existing accounts right so we are not giving the insured a reason to go somewhere else.

"We don't want them to go to a different agency and we don't want the current agency to shop them to another one of their carriers because that is creating more work for them to keep an existing account when they are trying to grow their business with us," he reported.

Swettenham also said Westfield is teaming with some of its agents to win new business, especially in the middle market segment. "If an agency is trying to land a particularly good account, our locally based team consisting of a mid-market field underwriter, risk control person and a claims person will partner with them on the sales call and during that meeting inform the prospective insured that this is his new account team," he said.

Enhancing Relationships Brings Mutual Rewards

Doug Eden, senior vice president of field operations at Jacksonville-based The Main Street America Group, said the super regional carrier's focus over the past 18 months has been enhancing its customer relationships via more communications with its distribution force of 1,500-plus independent agents. This effort coincides with its rollout of several new commercial and personal lines products and policy processing platforms, as well as geographic expansion.

"In this market, when agencies are struggling to hold on to business and maintain their revenue stream, there is no more important time to communicate more regularly with our agency plant and provide the local knowledge and expertise that a regional carrier like ours can offer," Eden said.

He added that in addition to a corporate newsletter (which includes regional inserts focused on local market issues) that is distributed to all of its agent-customers three times per year, Main Street America is the only company in the industry to communicate to its distribution force via quarterly CEO messages posted on its YouTube channel. The brief videos focus on company results, product and technology updates and market issues.

Additionally, the company has pioneered Listening Tours, a series of town hall meetings conducted with its customers throughout many of its 24 states.

"At these listening tours, several members of our senior management team and regional operations meet with small groups of our customers (between 25 and 40 agents per meeting)," Eden said. "These interactive sessions are completely unscripted and are all about our customers in the room and what is happening in their local marketplaces. Any topic is fair game -- underwriting, products, technology, claims, compensation, customer service, premium audits, communications or branding."

Agents concur that strong relationships with their carriers are critical to their success.

"We must have a personality fit and share the same focus as the carriers we represent. We have to be on the same page as far as being committed to our customers," said Theresa Hazel, president of Jacksonville-based Greene Hazel & Associates. "I have been doing this for over 40 years and still have go-to people at regional carriers such as Old Dominion, FCCI and Westfield that I know will step up to the plate because of the valued relationships we have with them."

Regional Carriers Report Long-Term Success

Surveys conducted by the Independent Insurance Agents & Brokers of America repeatedly indicate that regional carriers have been more successful at maintaining agency-carrier relationships because they tend to have a more consistent approach to keeping long-term tenured people in the local marketplace.

"Most of the time when we have quick turnaround issues, we turn to our regional carriers because they can move faster," Hazel said. "However, we are starting to see some of the national carriers, like Travelers, act like the regionals and step up to the plate when we need them."

Sihle added, "A market is a true partner with us. We strive to become the top agency with every company we are with, whether it is a regional or a national carrier. We want to make sure that when they develop a list of their top agents, we are considered an 'A' agency. We do everything we can to make sure our relationships with our markets are as good as they can be."

Ostrander called franchise value an essential ingredient of the strong relationships his agency has with its carriers. "Franchise value is very critical," he said. "If the company is planted with every agency in the state, they really won't have much impact in our markets. Another critical success factor is that the company needs to listen to its agents. They need to understand what the agency is dealing with in its marketplace and the agency needs to gain an understanding of what issues the company faces in terms of underwriting."

Sihle said it is beneficial for local marketing people to regularly visit his agency's offices.

"The more times a carrier visits us, the stronger our relationship becomes," he said. "It's also nice when their local reps visit our branch offices throughout Florida to learn what the producers are doing in their respective markets."

Ostrander also feels it is beneficial to have carriers visit with his agency's CSRs and producers, but it has to be more than just a social call.

"We ask carriers to come to our office and meet with our account managers and producers, but if they don't have anything specific to provide us when visiting, there isn't much benefit for either party. I don't want marketing reps stopping by our office just because we are on their 'must visit' list this week," Ostrander said.

Automation Can Be Both a Blessing and a Curse

While carriers continue to provide their agents with state-of-the art technology tools to help them write more business, new processing systems have their benefits and liabilities.

"It is important that carriers provide agents with user-friendly automation solutions because you need to make sure everyone is operating efficiently," Sihle said. "The more their systems can help our employees with rating, claims and finding other information, the more it enables us to have a better flow of business."

Hazel and Ostrander have mixed feelings about the value of carriers' processing systems.

"Automation is both a blessing and a curse," Hazel said. "Because every carrier is coming out with proprietary policy processing systems, it has made it extremely difficult on the independent agent. The mindset is that agents can't afford to shop around average accounts because they have to input the same data so many times. Most agencies don't have the manpower to do this.

"It's our job to price shop for our customers," Hazel said. "That's one of the reasons why they select an independent agent. In this economy, if we don't deliver all of the pricing options to our customer, somebody else will. The problem is when we shop renewals with six different carriers via their proprietary systems, it takes away from our abilities to generate new business."

Ostrander added, "There is a disconnect between the benefits of ease of doing business for the agency and ease of doing business for the carrier. Using carriers' proprietary systems creates tremendous workflows for us. In contrast, we can use our agency management system and process just one application and simultaneously e-mail that same application to four different carriers. That is certainly a much more efficient process.

"We are not underwriting people or processing people. We are sales people. If carriers want us to do all of the processing, they should not expect us to generate the same level of sales. It just doesn't work that way. If we have to process policies, we are not out selling them," Ostrander concluded.

Mark Friedlander is the director of corporate communications at The Main Street America Group, parent company of Florida-domiciled Old Dominion Insurance Co. He may be reached at friedlam@msagroup.com.

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