Through the years, personal lines have been the backbone of thesmaller agency. Larger, commercially dominant agencies, however,have had little respect for the line. If written, it was providedas an accommodation to key clients, and the personal linesdepartment was viewed as a “red-headed stepchild.”

Resources were allocated to maintaining the book of business,but few were allocated to grow or improve its productivity andprofitability.

That seems to be changing, according to the most recent “AgencyUniverse Study,” conducted by the Independent Insurance Agent andBrokers of America.

The study noted that “some large and jumbo agencies are placingnew emphasis on personal lines business.” In fact, a few of thesejumbo agencies (such as those with more than $10 million inrevenues) are buying enough personal lines business to be personallines-dominant. Suddenly, personal lines are desirable.

This doesn't come as a big surprise to those agencies that haveknown for years personal lines can be very profitable if managedcorrectly. Indeed, many “Best Practices” agencies have profitmargins 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 todo business with.

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

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

o Moving away from paying renewal commissions on personal linespolicies.

These agencies are actively soliciting new business. A majorfocus is seeking referrals by building strategic alliances withrealtors, mortgage companies, title companies, etc.

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

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

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

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

His next step was to assure that the commercial producers hadconfidence the personal lines department would respond adequatelyto the referrals.

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

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

To reinforce the effort, someone from the personal linesdepartment accompanies the employee benefits team toopen-enrollment meetings for new clients and is available todiscuss personal lines.

In addition to working referrals, “Best Practices” agencies workaggressively to provide great customer service and to build strongrelationships with existing clients.

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

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

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

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

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

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