Agents Position For Competitive Market
Brooklyn, N.Y.
Following past insurance market cycles, the current hard market is about ready to turn, and if a brokerage wants to thrive in the changing marketplace, it needs to make sure it is positioned to optimize growth and opportunities in this softening market, said Kevin Stipe, senior vice president of Reagan Consulting, based in Atlanta.
His comments came during the 25th anniversary annual convention of the Professional Insurance Wholesalers Association of New York State Inc., held earlier this month.
Basing his comments on benchmark studies his firm has done over the past six years, he said there are two types of insurance brokerage firms: practices and value builders.
Practices, he said, stress the high-priced professionalism of individuals who offer their services to clients.
The successful value builders look beyond the individual professional, instead creating an environment within their firms thats conducive to generating sales.
As Mr. Stipe put it, the practice looks to provide service, while the value builder turns to a sales culture to "get on the field and win the game."
Often one can tell what type of firm they are dealing with by looking at the producers. A practice lacks new blood, except for younger family successors. The value builders, because of their concentration on building sales, look to offer opportunities to younger peopleit aims to reinvigorate the firm by bringing in new talent.
Because of its emphasis on sales growth, the value builder looks to reinvest into the firm and does not look to optimize profits. They see their firms as "living organisms" that they reinvest in.
"The top performers spend on people and technology," said Mr. Stipe. "They dont sacrifice growth investment."
This sales culture mentality, he observed, also helps to reduce high risk volume through diversification of the portfolio. A firm that has a high profile account it cannot do without enhances its risk standing by building around that account with good risks. Through this diversification, it reduces its risk exposure.
Finally, to be successful, the value builder must have a leader who can show producers direction and inspire them to do better. It is also characteristic of such an organization to be able and willing to remove people from the firm for the good of the agency.
"Insurance professionals have a tremendous amount of loyalty to their people," observed Mr. Stripe. "But too much loyalty, keeping those underperformers, can take away rewards from the true performers. The best in the business dont tolerate that."
"If they have someone who is willing and unable, they are redeployed. If they are unwilling and able, they need to get their mentality changed. If they are unwilling and unable, they need to be gone," Mr. Stipe said.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, November 21, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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