This doesn't come as a big surprise to those agencies that have known for years personal lines can be very profitable if managed correctly. Indeed, many “Best Practices” agencies have profit margins of 35 percent or higher in personal lines.

They are able to achieve these margins because they are:

o Partnering with a limited number of carriers that are easy to do business with.

o Focusing on total-account development (upgrading, account-rounding and cross-selling).

o Shifting business that can't be developed into customer service centers, or “firing” the client.

o Moving away from paying renewal commissions on personal lines policies.

These agencies are actively soliciting new business. A major focus is seeking referrals by building strategic alliances with realtors, mortgage companies, title companies, etc.

However, an equally strong emphasis is put on internal referrals among the agency's commercial, employee benefits and personal lines departments. They know the more product lines sold per account, the better the retention and the more profitable the account.

In addition, since they are able to meet all of an account's insurance needs, cross-selling limits the access another agency might have to an important account. As one agent put it: “We want to build a wall around our accounts. Why leave any openings for another agency to get in?”

Creating this type of sales culture takes time, however. After several attempts to establish a cross-department referral system, one “Best Practices” agency told me he first had to “get the attention” of his commercial producers. There just wasn't a big incentive for them to provide referrals.

His solution? He doesn't offer a split of the personal lines commissions but makes providing a certain number of referrals a key factor in the producer's year-end bonus.

His next step was to assure that the commercial producers had confidence the personal lines department would respond adequately to the referrals.

He then created a dedicated personal lines producer position, with all referrals given to this individual so nothing falls through the cracks. This person is regularly invited on new-account calls with the commercial producers to explain how the agency can be of service in personal lines. (It helps that the personal lines producer has provided several referrals to their commercial counterparts!)

Another agency focuses on cross-selling personal lines and employee benefits. The principal prints a list of new accounts each month and shares the list with the personal lines manager. The manager contacts each producer to discuss which new accounts should receive follow-up communications regarding the agency's personal lines products and services.

To reinforce the effort, someone from the personal lines department accompanies the employee benefits team to open-enrollment meetings for new clients and is available to discuss personal lines.

In addition to working referrals, “Best Practices” agencies work aggressively to provide great customer service and to build strong relationships with existing clients.

Automation has allowed most agencies to achieve both of these goals in a more profitable way. It has also provided more time to add personal touches, and it is in these areas that independent agents can outshine the direct writers.

Recently a “Best Practices” agency personal lines manager told me that when they lose an account to a direct writer due to pricing, the client usually comes back after a year or two because they miss the “personal touches.”

For example, customer service representatives are encouraged to take a few minutes every day to “touch” clients outside of the annual review by sending handwritten notes congratulating them on a new house or car, or taking an extra minute at the end of a phone call to ask the client to suggest one step the agency could take to make doing business easier.

Another personal touch has resulted in new business. At the beginning of the summer, before clients start to take vacations, the CSRs send key rings on which the agency's contact info is printed. The accompanying letter suggests that if a friend or neighbor is asked to watch the client's house, provide the house key on that key ring. That way the person will know how to reach the agency should an emergency involving the house occur on their watch.

Regardless of how the agencies manage and develop their personal lines efforts, one point is consistent–the agencies' top management wants to be in personal lines. They understand the line can contribute significantly to the agency's overall value.

Even if the book is growing at only a slow pace, if properly managed, it can provide a steady stream of income that the agency can rely on in slow times.