Small independent agencies might find dealing with soft market pressures even more challenging than do larger firms, since their already lower revenue base is always vulnerable, but there are some strategies a few successful firms have employed to keep their heads above water in tough times.
Successful smaller agencies have two traits in common, according to those queried for this article: they believe customer contact is vital, and they continually find ways to keep their agency visible.
Tri-County Agency of Brick Inc., located in Brick, N.J., is an agency of 10 battling a couple of market realities, according to its president, Jacki Frank.
The 20-year-old family-owned agency is 55 percent commercial lines, with the rest personal lines (including a fraction of life and health business). The agency faces a soft market in commercial lines and intense competition on the auto side from aggressive marketing by direct writers after legislative reforms brought in new competition.
Retentions are key to continued growth–especially in a soft market, she advised. "Our retention rate is so high that what new customers we obtain translate into pure growth," Ms. Frank said.
The key to retention is customer service. "We take care of the customer that day," she explained. "There is no waiting. We offer such superior service that our clients enjoy staying with us."
Another strategy is account-rounding in securing all of a client's insurance needs, said Ms. Frank. Going beyond single-policy sales deepens accounts, bolsters customer loyalty and ensures that clients realize the agency's full range of products, she noted.
Seconding the value of strong customer service is Brian Skinner, president of Crawford Skinner Agency in Springville, Ala., a family business founded in 1944. He said there is no mistaking customer preference for dealing locally over a call center. "We give a real personal touch to our accounts," he said.
Mr. Skinner noted that his agency contacts smaller commercial accounts–those with $5,000 in premiums or less–at least 30-to-45 days before renewal. Higher-premium accounts get a visit at least once a year to review coverage and to update the client's needs.
Mr. Skinner's primary focus has been small, niche commercial accounts that have proven less susceptible to the soft market. It also helps being in St. Clair County, which is experiencing tremendous growth, he noted. "It's been very good for us," he said.
Trent Richmond, president of Bridges Group in Norton, Kan., said building relationships in a small community is essential to the agency's mid-90-percentile retention rate. "I don't give my clients a reason to shop," he said.
Often in the office by 7 a.m., he fields four-to-five calls during those early hours. "I sit and talk with them," he said. "Relationship-building with the customer is a huge thing."
The agency of 12, which he took over in 1999, is 85 percent commercial accounts–primarily agriculture or agriculture-related. Emphasizing empathy in his relationships, he hired producers knowledgeable in agriculture and trucking so they could speak with their clientele with authority.
Providing proper coverage is also important, he said, noting how hard he worked to secure the company appointments needed to provide the depth of coverage his clients require.
Branching out to achieve growth is also a good idea, according to Mr. Richmond, who has begun offering life and health products for farmers, which helps deepen the agency's relationships with accounts.
Mark Sodden, commercial lines manager, principal and owner of All Colorado Insurance in Denver, said this past year was the softest of the last four. Besides seeing property and liability prices plummet, the agency has had to cope with the impact of sharp declines in workers' compensation rates.
The 30-year-old agency of six sees about 80 percent of its book in commercial accounts–primarily Main Street businesses such as contractors, restaurants and homeowners associations.
To make a difference to its customers, the agency pays attention to small accounts with periodic phone calls and account reviews, noted Mr. Sodden. "We take a look at their business, so we are not blindsided [by a risk]," he said.
Physical visibility of an agency also plays a role, according to Ms. Frank, who recently moved Tri-County Agency from an office building to its own headquarters office on a busy major highway.
Mr. Skinner took the same route recently, moving Crawford Skinner from a high-rise office building to a storefront four year ago.
Both said they believe the moves resulted in increased volume in their personal lines business. "We began seeing people we had never seen before," said Mr. Skinner. "Selling personal lines in a high-rise building, no one came to see us."
Ms. Frank also credits her agency's visibility with advertising on radio and television. As a member of the Trusted Choice branding program offered by the Independent Insurance Agents and Brokers of America, she uses the Big I's advertising promos to get the agency's message out.
"Radio and television repetitiveness gets the job done," she said.
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