Independent agents are failing to do the things that have allowed past generations of agents to be successful, and that has led to many issues that impede their growth, an insurance executive told an agent's group recently.
"Direct writers tend to do what they do extremely well," said Daniel W. King, director of agency development, personal lines for Travelers Insurance. "Independent agents have dropped the ball over the years, getting away from what they do well–educating and counseling their client."
Excerpts of his comments during a recent meeting of the Professional Insurance Agents of New York State Inc.'s Long Island Regional Awareness Program, held last week, were reported by PIANY.
According to the PIANY, Mr. King said agents are looking for several things to promote their bottom line: organic growth; movement from a service to sales culture; new customers; more policies per customer; improved staff compensation plans; greater accountability among employees; and an overall increase in agency efficiency.
He noted, however, that though these aspirations are understandable, they do not happen without an agency strategy.
"Let me dispel a rumor that is rampant among agents…Hope is not a plan that will work to get you out of a bad situation. Hope is positive and a good thing to have, but it is no substitute for a growth plan."
Mr. King outlined the recent trends independent agents are witnessing, saying, "Agents are realizing that this is no longer their father's business. They are seeing changes and need to be prepared."
He cited some of the challenges confronting agents: level or declining revenue; a customer who shops around more; and ever-increasing competition from direct writers.
Mr. King encouraged independent agents to think about their agency philosophy and develop unique options to their business in different ways.
He said philosophy permeates all aspects of agency culture, affecting management style and thus job design, ultimately impacting the flow of work and specific procedures of the business.
The key to increased revenue, said Mr. King, is matching practices to the overall agency philosophy. For example, in order to move from a service to a sales culture, agents need to offer a compensation plan that encourages this practice.
"Pay more for accounts that are better and provide more profit for the agency. We tend to get more of what we compensate greater for," he said.
Mr. King emphasized the importance of developing a philosophy and strategy for growing the business, telling agents they need a plan and that "there is no silver bullet to save you, no simple solution in this market, so stop looking for one. Having a plan is the only way to better position the agency for success."
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