Relationship Status? It's Complicated

By Dave Lenckus, contributing writer

What contributes to a good relationship between agents and insurers sometimes is easy to agree upon. But the basis of a strong relationship typically is more complex than just good products, stability and meeting production goals. Each party also has its own specific needs and desires, such as the high-quality service and competitive products that top many producers' must-have lists and the business volume and integrity requirements that many insurers demand. Plus, everyone's priority list is a little different, and all have their own strengths and weaknesses.

AA&B spoke with both sides to examine what is important to each and why. What follows are some real-life stories of relationships that, while complicated, are an unqualified success.

Click here to see the results of AA&B's agent/insurer relationship survey.

The Agencies

Steve Dunlap
agent
Steve R. Dunlap Insurance Agency
Tucson, Ariz.

No longer willing to suffer the arthritic shoulder pain that grocery store coolers were causing to flare, Steve Dunlap left his 20-year career as a meat manager in 1995 and became an insurance agent.

While these careers have been vastly different, Dunlap, 57, observed that they share an important similarity: Customer service is critical for success.

Dunlap's business is 90 percent personal and 10 percent commercial, and he places 99 percent of it with Farmers Insurance. As an added service, he taps other insurers for clients who need health care coverage or special automobile insurance for car trips into Mexico.

Dunlap is all about client service, which includes making clients feel comfortable with him–an “everyman's guy” who understands their needs. That's why at his own agency he takes the title of agent rather than president or principal.

Customer service is the root of his relationship with Farmers as well.

Dunlap recounted a case that typifies the insurer's claims handling. A client's home burned to the ground in the early morning hours on a Saturday, and Farmers delivered a full policy-limits check to the homeowner five days later, only three of them business days.

Sidebar: Wants and needs

“They've always been good in handling claims,” Dunlap said. “I truly believe in the company.”

Farmers helps Dunlap deliver his goal of the best customer service easier to achieve in other ways, too. Information technology updates over the past year or two now allow potential clients to apply for coverage online, permit clients to pay premiums over the phone using a credit card, and enable Dunlap to produce a slick proposal detailing the cost of home, auto and life coverages on a single sheet.

Farmers does not advertise heavily on television, but it advertises at the University of Arizona's various sports arenas. It also provides client leads, and sends out mailings with agents' input. Farmers sometimes also partially subsidizes the cost of ads that agents want to place.

In addition, the insurer supports charitable events in the community, tying in its agents with that community support.

For all the help Farmers provides its agents, the insurer does not get every initiative 100 percent correct from the start, but it anticipates that might happen, Dunlap said. The insurer routinely surveys its agents about how a new or an existing initiative is working and how it might be improved. After receiving agents' feedback and then making adjustments, Farmers surveys agents again.

“They're constantly trying to improve,” he said.

Doug Spencer
independent agent
Doug Spencer Insurance Agency
Morgan Hill, Calif.

To Doug Spencer, who became an independent property-casualty agent 3 years ago after 5 years as a captive life agent, the insurer that writes the largest portion of his business is attractive for some practical and intangible reasons.

Spencer, who produces about $1.1 million in annual gross premiums, places about half of his business with Fidelity National Property & Casualty Insurance Group, a division of Fidelity National Financial Inc. Fidelity is a well-recognized brand name, it has a good claims-payment reputation, and the company is improving its information technology, Spencer said.

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Another significant factor for Spencer is the friendliness of Fidelity's personnel. Some bigger agency companies are not as friendly, he observed. “You're going to work better for people you like,” he added.

Spencer, 58, began his career as a chemist for Dow Chemical Co. in Pittsburgh and later became a manufacturer's representative for a housewares company. He became a life agent for MSI Insurance Cos. in 2002 after he was presented with an opportunity to own an agency and assessed that insurance is a “very secure form of income,” especially if client retention is strong.

Today, he places property-casualty coverage–80 percent personal and 20 percent commercial–with about 20 companies, although a half dozen insurers, led by Fidelity, write most of his accounts.

Although in the past Fidelity has lagged in technology and communication tools, the insurer has made significant strides in recent years, he said.

For example, Fidelity has streamlined its automobile policyholder questionnaires. California law requires insurers to obtain certain information from policyholders, but the previous longer form, combined with a high rate of foreign-born individuals among Spencer's client base, led to only a 50 percent response rate. Spencer couldn't offer the most competitive pricing without responses, which hurt client retention.

Asa Jones
managing member and majority owner,
GIA Group LLC
Glenwood Springs, Colo.

Asa Jones and his family have been in the insurance business for decades, beginning with the agency his father opened and his brother now runs in Buffalo, Wyo. Another brother gave Jones his first job out of college at an insurer.

Eleven years later, in 1982, Jones moved to the agency side of the business. GIA has four locations in Western states, with Jones managing Glenwood Insurance Agency in Glenwood Springs, Colo. GIA generates about $89 million of premium volume, split evenly between commercial and personal lines.

Through the generations, there have been some big changes in running an agency, including real-time automation capabilities. And the insurers that write a significant portion of GIA's business have kept on top of that, making them user-friendly business partners, Jones said.

But some things don't change. To Jones, the best part of his agency's relationship with the insurers it turns to most–Travelers, Colorado Casualty and The Hartford–can be summed up in three words: products, marketing and underwriting.

Jones said the insurers' products are “tremendous,” their marketing personnel “outstanding” and their underwriters “consistent.” It all coalesces into a “good relationship,” he said, adding that without insurers' assistance, “you can't meet goals.”

Jason Krouse
vice president of specialized markets
Univers Workplace Solutions
Hammonton, N.J.

A strong agency/insurer relationship depends on good people, products and systems, according to Jason Krouse. “You can't have one of them without the others” and still make the relationship work, he said.

Voluntary benefits insurer AFLAC is an insurer that understands that dynamic and has been working on strengthening its relationship with agents outside of the insurer's direct sales force, Krouse said.

AFLAC has “top-notch people” who are problem solvers, said Krouse, who joined Univers, a leading benefits enrollment company, 3 years ago. The insurer's underwriting team works closely with Univers and its clients to develop products that are very well received by employees, he said.

In addition, AFLAC, which historically grew its business through direct sales, has made a concerted effort recently to support independent agents, he said. The insurer has done “a tremendous job” over the past 1.5 years preventing conflicts between its direct sales force and independent agents, he said. The insurer has limited where direct sales representatives can market and has developed “do not call lists” to prevent its two distribution forces from “banging heads” over certain potential clients, he said.

“Our agents have seen the difference,” and the impact on the agency/insurer relationship has been positive. Now, there's a feeling of them as a partner,” Krouse said. “It gives you a sense of unity and working for the common good.”

AFLAC also has made significant investments in recent years that have shored up its products and systems. Most notably, the 2009 acquisition of Continental American Insurance Co. beefed up both AFLAC's product mix and systems capabilities, Krouse said.

The Insurers

Chubb Group of Insurance Cos.
Strong insurer/agency relationships are built with bricks of profitable and growing business volume on a foundation of agency competency and integrity, according to Keith Smith, branch manager for Chubb Group's Chicago region.

But Chubb does not leave the brickwork solely to producers, who face a doubly tough time during a down economy and a soft insurance market.

Noting that Chubb is selective in its agency appointments and seeks long-term relationships, Smith said: “That long relationship gives us the capacity to do more planning (with agencies), which leads to better results for both parties.”

Chubb has appointed approximately 300 agents producers in its Chicago region, which extends into Wisconsin and Michigan.

The insurer has developed an agency planning program for its 15 or so major independent producers outside of the largest national brokers.

For each producer, the insurer's underwriting team draws up a plan covering tactics; goals, including retaining particularly valued accounts; and servicing issues. Producers provide their input to create “a living document.”

That meeting is followed up with a mid-year review to examine whether Chubb and the agent have done what each agreed to do during their initial planning session.

For smaller agents and brokers, Chubb produces scaled-back plans.

The insurer also has committed to providing agents with ongoing education and training, including management leadership, producer development, ethics, sales and insurance training for young producers and Lotus Notes training.

Refining its information technology also is helping agents operate more efficiently. For example, Chubb recently expanded its online commercial inland marine system, which allows agents to obtain quotes and bind and issue policies. Chubb broadened its online underwriting parameters so agents and brokers can process more inland marine online.

Chubb's real-time downloading capabilities are also available on a companywide basis to 90 percent of its agents. Chubb agents this year are on pace to exceed the 250,000 inquiries on billing, claims and policies they handled last year through real-time processing.

Colorado Casualty Insurance Co.
During the persistent tough economy, Colorado Casualty Insurance Co. finds “it necessary to get even closer to agents,” said Keith Braxton, president and chief executive officer of the Centennial, Colo.-based insurer.

The insurer writes small and mid-sized commercial business through about 600 independent agents in Colorado, Arizona, Nevada, New Mexico, Utah and Wyoming. Each agent, on average, has two locations.

Colorado Casualty is part of Liberty Mutual Group, but Braxton noted that company decisions are made locally. “Agents like talking to decision makers,” he said.

Although the strength of the insurer/agency relationship depends on the profitability of the agency's book of business, insurers must also understand and support what makes an agency work well, Braxton asserted. Colorado Casualty does that in various ways, he said.

Understanding that agents typically are individuals who “aren't shy to voice their opinion,” the insurer recently created a website “to promote an ongoing dialogue” about the insurer and the marketplace. Although an occasional agent comment can be “inflammatory,” all feedback is positive because it directs the insurer on how to address a concern “before it becomes a bigger problem.”

The insurer also offers its agents real-time and straight-through processing capabilities, electronic funds transfer capability, which policyholders appreciate for its ease in making premium payments; and online agent training.

In addition, the insurer will analyze its agencies' Web sites for ways to redesign them to improve their marketing impact.

Colorado Casualty devotes a lot of its attention to marketing, including helping agents through co-branding and providing leads. Following Liberty Mutual Group's acquisition of Safeco Corp. two years ago, Colorado Casualty and other members of the Liberty Mutual Agency Markets business unit have benefited from the Safeco marketing team's savvy, Braxton said.

In August, the insurer introduced its “Bricks & Clicks” to help agents market online. “We want to help them take the mystery out of online marketing and provide practical steps to grow their business through enhancing their website
presence as well as through the use of social media,” Braxton explained. “Agents can boost leads and drive sales in this channel, and we can assist them in creating an online marketing plan that builds social media presence and improves brand familiarity and loyalty.”

Other ways the insurer attempts to help agents–and itself–is by developing a mutually agreeable business plan for each agency for the year ahead and providing agency managers a toolkit to help them cultivate talent and develop an agency succession plan.

American Family Life Assurance of Columbus–AFLAC
More than a year before Congress passed sweeping health care insurance reform, AFLAC began implementing measures designed to improve its relationship with independent agents and brokers.

And they're working, according to Ron Agypt, vice president of market development and broker sales, U.S.. A December 2009 study conducted by Personified, a CareerBuilder.com company, showed that the changes have significantly boosted agents' and brokers' perception of AFLAC.

In January 2009, AFLAC rolled out an independent broker initiative which:

o Gives agents and brokers a single point of contact. AFLAC now has 100 carrier representatives and 17 VPs throughout the United States

o Adds telephone and Internet enrollment options

o Provides producer “value adds” such as technology upgrades that allow benefit enrollment through one of five systems, which minimize system handshake problems between producers and the insurer

o Standardizes and enhances commissions throughout the U.S.

With its acquisition of Continental American Insurance Co. last October, AFLAC added eight group products to its lineup of 19 individual products.

More modifications could be on the way if agents and brokers press a case for them in a forum AFLAC has created to solicit their input. The insurer has convened its 12- to 16-member national broker advisory council four times during the past 24 months for two days each meeting to seek producer input and review of company developments, Agypt said. AFLAC follows up with them later about how the company is handling the problems they identified.

AFLAC also encourages state advisory councils, Agypt said: “To me, that's the most important feedback you can get. They'll tell you what they need to offer to clients.”

AFLAC representatives also attend various broker forums, shows and conferences across the country, he said.

One other factor that should solidify the relationship between AFLAC and its producers and their clients: “We celebrate paying claims,” which is the insurer's culture, noting that AFLAC works to pay claims within four days of submission.

Click here to see the results of AA&B's agent/insurer relationship survey.

Sidebar: Project to thaw technology chill

Sidebar: Wants and needs