Filed Under:Agent Broker, Agency Management

How Insurance Agencies Are Outsmarting the Economy

Florida’s double-digit unemployment rate, failing property market, bank closings, and generally anemic economy have put significant strains on the business community and, ultimately, the insurance industry. This is the “trickle-down” theory at its most egregious. As one of the interviewees for this article noted, “The issue is not new business. It is the existing commercial book that is shrinking because of fewer employees, fewer gross receipts, smaller inventories and fewer vehicles. We are a reflection of our customers.”

These hard economic realities have pushed insurance agencies to improve operational efficiencies and search for new avenues to generate revenue. To gain a real-world perspective of how Florida’s agencies are faring, we asked four local insurance executives to share their successes and challenges. Providing insight into how they manage their offices’ income, outgo, and upkeep are: Tina Blackwell Romaine, chief operating officer of Blackwell Insurance Agency, Panama City; John Hosey, president of Caton-Hosey Insurance, Port Orange; Ted Ostrander Jr., president and chief executive officer of Lassiter Ware Insurance, Leesburg; and Joe Perry, president of J.P. Perry Insurance, Jacksonville.

What are the biggest challenges facing your agency today?
Blackwell Romaine: The economic downturn. It has caused many of our customers to close their businesses, slowed new construction, and drastically reduced new business ventures. Business itself is a cycle. You have highs and you have lows and you have hard markets and you have soft markets. My father (who started the agency in 1972) always stressed that when times are good you work hard and when times are tough you work hard. You need to keep it even. You cannot have high highs and you cannot have low lows. You just need to keep moving forward.

Hosey: One of our biggest challenges is insureds moving back and forth. Consumers are shopping. We are finding —especially in some of the mid-market business—that people are making decisions based on premium and not necessarily coverages. We need to get insureds to look at the products they are buying and to assess the stability of the carriers involved. We want to make sure people understand what they are buying and what coverages they have. If a catastrophic event occurs, we don’t want our clients to find out they don’t have certain coverages, or that they have incurred huge out-of-pocket expenses because they selected a large wind deductible to get the lowest premium.

Ostrander: We have done the things we needed to internally—such as adjusting our staffing level and our producer requirements—in response to the marketplace, but the external forces are still driving a lot of the issues our agency faces. Although I think the market has pretty much leveled out, we need to see some growth in Florida’s economy.

Perry: Oddly enough, in the last several years we have had a couple of the best new-business years we have ever had. The issue is not new business. It is the existing commercial book that is shrinking because of fewer employees, fewer gross receipts, smaller inventories and fewer vehicles. We are a reflection of our customers.

How are you managing customer retention and service?
Hosey: We are trying to touch our small-to-mid market clients, as well as our personal lines clients, more that we did in the past. Automation is allowing us do that. We have ongoing communications with customers through newsletters and email blasts. We consider this a soft-sell approach.

Blackwell Romaine: Customer retention and customer service is our No. 1 goal. We want to continue to keep customers happy and create a strong referral stream. We review customer programs every year and market insurance placements to ensure that our customers continue to get the best value. We also are proactive with our customers when they have claims. If you take care of your customers during the claims process, they don’t forget it.

Perry: We have kept our customer service staff at the same level since 2007, and we think that has helped us remain successful. We consider customer service the “face of the agency.” Earlier this year, we hosted our first-ever customer appreciation lunch at our office. It was a huge success, and we plan to hold these quarterly going forward. Following the event, I received emails from insureds telling me how much it meant to them to be invited. This isn’t structured as a lunch-and-learn program. It is just our way of saying, “Thank you and we appreciate you being our customer.”

Ostrander: We focus on providing services outside the normal routine for an insurance agency. For example, we have a full-time HR professional who will conduct a human resource audit for a client, review policies and procedures, and do just about anything related to HR processes. Additionally, we have a communications person who is dedicated to sending out information to our clients on important issues in the insurance world, such as the impact of the new health care legislation. We also have a claims person who will literally go to mediations with our clients. He is an advocate for our clients with the insurance companies. Sometimes, insurance companies and our clients aren’t on the same page because they don’t talk the same language. Our claims expert can intervene and be the middle man. He spends a lot of time with the adjustors, working with them to make sure the process is flowing well. This helps the client from the standpoint of producing a satisfactory payout, and also helps to keep good relationships strong.

What have been your most effective strategies for increasing revenue?
Perry: We recently bought all of our producers iPads so they could integrate those into their day-to-day business functions. They also use them to better serve customers when they are out in the field. From a marketing standpoint, we are making even larger investments in advertising now than we were before. We are advertising on the No. 1 news/talk radio station in Jacksonville and we also do zoned cable TV buys where we can focus on areas where we want to target business. This generates new business and helps with retention by reinforcing to insureds that they made a good decision by placing their business with us. I also think that a continuous, steady stream of marketing from a name recognition standpoint is really important. It helps us in both personal lines and commercial lines.

Ostrander: We are doing a lot more cross-selling. For every piece of business we lose, we send out a card to the client letting him or her know we are sorry that we lost the business and asking if there something we can do differently. We also use Zoomerang to conduct client surveys to find out what our clients feel about us and our products and what they are looking for from our agents. Our main goal is to refocus our producers on bringing value to the client. We want the client to understand the value that we add. The market in Florida was on an upswing for so long that you didn’t have to be the sharpest agent in the world and you could still write quite a lot of business. That’s changed. So now it is back to basics—a lot of blocking and tackling.

Hosey: The modern consumers live on their iPhones and iPads or whatever mobile devices they might use. We are trying to reach people through these vehicles. Our agency is very active in social media.  We have been pretty successful in generating referrals and leads through these mediums.

Blackwell Romaine: Our strategy to increase agency revenue is just to increase policy count. Our number one source of business is referral. We do a good job for our customers and they tell their friends. We support our efforts with a branding campaign using various advertising mediums.

What initiatives have you introduced to improve internal operations?
Ostrander: We use one location address for all five of our offices throughout North Central Florida. We scan every piece of mail that arrives and it gets sent to the account managers at our various offices. Our phone system is also connected to all locations so we can have one receptionist handle multiple offices. Our agency’s intranet contains a lot of valuable data for our employees. We also have what we call the green screen. It flashes up anytime somebody writes a nice account.

Blackwell Romaine: The most effective procedure we have implemented is a 30-minute monthly office meeting before the office opens. We have a standing agenda that includes market updates, changes in carrier appetite, changes in carrier coverage forms, any lessons learned from anyone in the office from that month and success stories—where we are having success and with whom. We read every customer compliment we received during the month out loud. We discuss any open items. And we give everybody an update on how the agency is doing compared to that month the year before and that month two years prior. I believe continuous communication within the agency creates an environment that is effective for collaboration. I think that any kind of lesson learned should be shared and implemented in a positive way for the future.

Hosey: We are using automation to measure our results and to improve them on a daily and weekly basis. We measure everything we do from where and when the sale begins all the way through the processing on the back end. Going paperless has been huge for us. Automation has allowed us to do all of this measuring because we now have access to all the necessary data. Our measurement process eliminates the mystery of where people are on their workloads and backlogs and how much commission, premium and accounts they have. We have this information at our fingertips and are able to manage the agency more efficiently.

Have you made any upgrades to your agency management system?
Perry: We upgraded all of our servers and moved to the latest version of our agency system software, AMS 360, last fall. We plan to go to front-end scanning soon, which will make us even more paperless.

Blackwell Romaine: With agency management systems, this is truly an independent business. We all have a constant development opportunity to maintain and upkeep our systems. I don’t think there is any dead-on key solution there. We have an agency management system that we use to communicate within the office and to keep track of where we are with our customers as far as anything going on with the policies, but we keep paper files as well.

Hosey: We just completed a bridge between AMS and Astonish Results (the agency’s website host that also provides back side measuring tools) where we can transfer data back and forth instead of having two separate systems. We can now integrate our sales tracking system and our agency management system, where all of our insurance data is housed. We can move data back and forth, which is going to be huge for us. That’s probably the biggest thing that has happened at our agency in terms of automation, besides going paperless a few years ago. We also have three monitors on everyone’s desk to help our people operate as efficiently as possible.

Ostrander: We are in the process of moving to AMS 360. We were doing scanning on the back-end; now we do it on the front-end. That has been very beneficial, as the information now goes directly into the account managers’ file cabinet. We can also monitor everybody’s file cabinet to determine what their current workload is. It gives us some real flexibility in managing workflow.

How are you controlling expenses? 
Blackwell Romaine: We review every single expense for the month, every single dollar. Business is pretty simple when you look at it from a high-level perspective. What do you have coming in and what do you have going out? It is so important to stay on top of it every month and track it year-over-year.

Ostrander: From 2005 through 2007, we were growing at 15-20 percent a year. We were staffing to that model. We were staffing ahead of what we needed because we were growing into it. When the market changed, we had to step back and say, “Do we need all of these people?” Compensation expense is the largest expense in the agency. We were able to reduce staff somewhat in reaction to the market. We have looked at every expense and gone through every line item, asking ourselves, “Does this make sense? Do we still need to do this? What is the cost against the benefit?” By answering these questions we have reduced expenses fairly dramatically, and done so without jeopardizing any of the services we offer our clients.

Have you implemented any new employee training programs?
Perry: We recently implemented a producer apprentice program by hiring someone with no producer experience, even though he did have two years of claims experience at a carrier. We are going to send him to a three-week school Travelers is conducting for commercial insurance. When he completes that, we have a program established where he will work with our other producers and be mentored with the goal of being able to venture out on his own by the end of this year.

Ostrander: We recently hired a business development person to strictly focus on targeting larger accounts. We use one of our producers to close and manage these accounts. The last two producers we hired strictly for their sales ability, not for their insurance skills. Neither one of them had ever been in the insurance business. We are training them on insurance and are using an experienced producer to mentor them. We are pretty pleased with the results of this strategy.

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