NU Online News Service, April 14, 3:45 p.m. EDT
NEW YORK–Insurance agencies need to abandon the idea that providing value-added service will be enough of a differentiator for them to survive and thrive, the managing principal from Hales & Company said.
Robert J. Lieblein, speaking yesterday during the Hales seminar here titled "Chart a New Course, Creating and Enhancing Shareholder Value," shared this view along with others who offered advice on what agents and brokers must do to differentiate themselves.
The event, sponsored by Summit Business Media publications National Underwriter and American Agent & Broker Magazine, was the first of four seminars to be held across the country, aimed at educating agents and brokers about acquisition strategy and how to establish their uniqueness in the marketplace.
When it comes to the concept of value-added service, Mr. Lieblein said that this has become something that all customers expect.
He compared the idea to the hotel industry, where no matter what chain you go to, the concept of good service is unchanged from place to place and is expected. He said he stays in a lot of hotels in his business travel, and after awhile, they all appear the same because there is nothing to differentiate them.
The same is true for agencies, and to stand out they need to "take out 'value add' and offer a 'unique experience,'" said Mr. Lieblein.
Agents and brokers need to elevate themselves to becoming trusted advisors, he explained. Doing this, they become "strategically important to the client to advance their goals and objectives" and "become hard to replace," he said.
One important key to this is changing an agency's culture, he continued. He suggested altering compensation levels in such a way that it drives producers to concentrate on sales and makes the support staff an intrinsic partner in the account through the use of commission.
"Compensation can control behavior," he noted, adding that monetary rewards will help firms grow their books of business.
The point about compensation is especially important for Employee Benefit books of business, Mr. Lieblein said.
The old school of thought of passing increases along to employers and employees will not be viable in years to come as health care costs escalate, he said.
Brokers who do not change will see their books deteriorate and commissions cut over the years, and eventually they "will become irrelevant," said Mr. Lieblein.
Those that survive will take on a new model of delivering benefits, concentrating on analytics and getting people to take more responsibility for their health, he explained.
Mr. Lieblein acknowledged how difficult this will be for some; however, with changes mandated by the federal government, he said he expects to "see some winners out of all this."
Differentiation was a theme throughout the conference, which Mr. Lieblein observed, can add substantially to the worth of an agency if it decides to be acquired.
One major differentiator is for an agency to have a unique brand, as discussed by two executives from Aartrijk: Maureen Wall Bentley, executive vice president, and Laurie Donohue, vice president agency and broker marketing.
"What is a brand?" asked Ms. Wall Bentley. "Think reputation; it is what people think of you."
A brand can help gain market share and also assist in recruiting and "can turn your customers into raving fans," she said.
In establishing a brand, agencies need to consider things such as location, phone etiquette, dress and the type of promotional materials they use for their agency. It is also essential that they consider updating that periodically, changing tag lines and reviewing logos, for example, Ms. Wall Bentley advised.
Another differentiator, suggested David Paul, principal with ALIRT Insurance Research, LLC, is establishing the agency's firm as a valued advisor by providing customers with unique analytics about the carriers they are with.
The conventional way has been to use A.M. Best ratings. What Mr. Paul proposed agencies should be doing is going beyond ratings and begin their own research on companies, collecting publicly available information concerning loss ratios and reserve deterioration to get clients away from failing insurers.
"There are ways for you guys to get this information and predict what will happen," he said. "This will make you look like geniuses."
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