Independent agents and brokers, responding to a years-long soft market, already have been doing more with less and are implementing fewer of the layoffs and other cost-cutting methods that so many U.S. businesses have adopted in the past year in response to the recession.
In a recent online survey of almost 500 AA&B readers, nearly 36 percent reported taking no cost-cutting measures over the past year. When implemented, the most common methods were salary freezes (33 percent) followed by layoffs (18 percent) and benefits reduction or elimination (17 percent).
Respondents also cited economizing methods such as hiring freezes, reducing work hours, expense review and reduction, “pressuring vendors to reduce rates,” and moving to less expensive office space.
Fifty-four percent of respondents said their agency staff levels had remained the same over the past year, while 12 percent actually reported increases. Slightly more than 10 percent reported staff reductions of less than 3 percent.
This appears to be in line with the 2008 IIABA Agency Universe study, which indicates that on average, agencies are employing fewer full-time-equivalent (FTE) employees in 2008 than in 2006–9 in 2008 versus 11.2 in 2006.
To keep up with increased workloads, the vast majority–73 percent–reported various examples that they were simply working harder, while 16 percent were making part-time positions into full-time jobs, and 9 percent were outsourcing some business functions.
Other methods cited to keep up with work included streamlining workflows, reallocating job responsibilities and improving technology.
When staff reductions were implemented, they were primarily in CSR functions, at 67 percent, followed by 12.5 percent in administrative and 7 percent in producers.
For agencies that did report cost cutting, 46 percent trimmed their marketing budgets, followed by reductions in new business efforts (30.5 percent) and business retention (29 percent).
Other areas where agencies cut back included personal lines marketing, travel budgets and business retention–in many cases, because those customers were going out of business.
More efficient use of agency automation systems is picking up the slack for increased workloads, with 28 percent of respondents saying they upgraded their current systems, 27 percent adding new technology such as scanning, and 27 percent reprioritizing current workloads.
Finally, respondents reported a number of agency changes made in response to the economy, including:
o Making producers more responsible for customer service
o Adding dual monitors
o Increasing efforts to go paperless
o Using e-mail and direct billing for more accounts
o More phone contact with clients instead of face-to-face meetings
o “Doing our own janitorial work.”
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