Movers & Shakers

Where do I see the independent agency system going in the short term, as well as five years from now? What is the one major piece of advice I would give independent agencies that might help them prosper? Those were the questions posed to me and 19 other “Movers & Shakers” by George Nordhaus, the founder and chairman of Insurance Marketing & Management Services, and a long-time opinion leader himself in the agent community.

A series of 10-minute webinars featuring all top-20 “Movers & Shakers” will be presented over the course of this month. (Go to the IMMS site by clicking here.) A list of the Top-20 people interviewed is included at the end of this posting.

My webinar runs on Dec. 17, but I'll give you the inside dope here and now.

When asked to list where I see independent agencies heading in the short-term, I predicted the following:

–The best agencies will continue to mature into true risk managers for their clients.

–To compete, agents will need to avoid commoditizing their products and services by competing on price alone, and become more of a consultant and service team quarterback.

–Agents will do business with fewer and fewer carriers as demands for volume targets keep rising. More will merge with or sell to competitors, or join networks or clusters to aggregate buying power.

–More agents will do business on a fee basis, rather than straight commission, especially as the demand for loss control and other non-insurance services rise.

–More agencies will outsource non-core functions to focus their internal resources on the critical areas of marketing, sales and service coordination.

As for the long-term outlook, five years and beyond, not only for agencies in particular, but for the industry in general, I predict that:

–A growing amount of business will continue to bleed into the alternative marketscaptives, risk retention groups, derivative instruments such as cat bonds and other alternative risk-transfer mechanisms–never to return, no matter whether the commercial insurance market is hard or soft.

–Agents who are not full-service risk managers for their clients will disappear. More middle-market clients are demanding not just policy peddlers and price shoppers for insurance, but loss control and safety services as well as alternative risk-transfer and self-insurance options.

–The distinction between property-casualty and employee benefit producers will be erased, with the most successful independent p-c agencies going big-time into benefits. This will not only help producers retain accounts and attract prospects, but will allow agencies to provide an invaluable service to commercial clientsmany of which see benefits, especially health insurance, as their biggest pain point, especially in a soft commercial market.

–The insurance industry will become increasingly high-tech, with those lagging when it comes to electronic data interchange doomed to extinction. Paper-based transactions and multiple data entry are too costly to survive, taking those who cling to traditional transaction methods with them.

–Globalization will continue to accelerate, with artificial barriers broken down in terms of regulationespecially in the U.S., where doing business is still far too costly to many foreign carriers, without any appreciable benefit for the domestic market.

As for the ONE major piece of advice I would give independent agencies that might help them prosper in the future, long- or short-term:

–Stop trying to attract new prospects or retain current clients by only offering the best premium for a particular coverage. Thats a losers game. Focus instead on the cost of risk, and put together a team of service providers so valuable that for a buyer to move to another agency just because they happen to come in with a quote a few points below yours on a particular coverage would be impossible to imagine.

What do you folks think???

As for the other “Movers & Shakers” interviewed by IMMS (click here for the site), the schedule is as follows, followed by a snippet of their outlook for the independent agency system. (I believe the interviews will be available for the whole month after they first run, if not longer.)

Week of Dec. 3:

–Mike Manes (Square One Consulting), Consultant, author and speaker:
Agents will need to provide resource management services and a positive delivery experience.

–Walt Gdowski, Publisher, Rough Notes:
Prepare for total account selling, 24/7 service, and the expansion of risk management.

–Mike Schroeder President, Roundstone (a captive management service):
Creative agents will thrive by providing total enterprise risk services.

–Ken Crerar, President, Council of Insurance Agents and Brokers:
Brokers will consolidate, focusing on professionalism and providing value added.

–Alex Soto, Immediate Past President, IIABA:
Look for a continuing soft market and the growth of online distribution.

Week of Dec. 10:

–Doug Robinson Chairman and CEO, Utica National:
Expect deteriorating earnings and a shakeout in distribution systems.

–Robert Page President, National PIA:
Look for a stable and profitable industry, with a strong role for independent agencies.

–Catherine Oak, Bill Schoeffler, Oak & Associates (consultant and author):
More agents will be providing niche marketing and value-added services.

–Steve Anderson, Editor, The Agency Automation Report, and agency automation consultant:
Technology will transform the way you do business.

–Sam Friedman, Editor-In-Chief, National Underwriter:
Look for the growth of enterprise risk management, alternative markets, fee-based compensation, and the continuing globalization of markets.

Week of Dec. 17:

–Al Diamond, Agency Consulting Group (consultant and benchmarking guru):
Be prepared for a technological explosion, revamped commission structure, and innovative products.

–Neal Montgomery, Director, Field Management, The Travelers:
Be prepared for a sales culture that focuses on account rounding and retention.

–Dennis Garrett, EVP, Professional Independent Insurance Agents of Illinois:
Expect massive demographic shifts, higher producer compensation, and consolidation of carriers.

–Greg Maciag, CEO, ACORD:
Enterprise standards and e-forms from ACORD will be baked into agency workflows.

–Bobby Reagan, President, Reagan Consulting (Best Practices guru):
Prepare for more specialization, consolidation, and a continuing war for talent.

Week of Dec. 24:

–Jeff Yates, Executive Director, Agents Council for Technology:
High-tech will drive high-touch, 24-7 sales and service, offering agents unprecedented opportunities.

–Jack Fries, Fries & Fries (consultant, author and speaker):
(Not taped yet, so key advice to be announced!)

–Cory Young, agency principal, Rhodes & Williams (Canadian Group 500/IMMS Member):
Expect more competition from direct writers and a blurring of traditional bricks-and-mortar brokerages.

–Chuck Brown, agency principal, Brown, Seligman & Thomas (Group 500/IMMS Member):
Look for a wider variety of distribution methods, and more niche markets.

–Bill Hold, President, The National Alliance (CIC, etc.):
(Not taped yet, key advice to be announced!)