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Agency-Insurer Productivity
Over the past few months I have posed the following question to my audiences: “What market are we in—hard, soft, spotty, or disciplined?”
As you might imagine, the answer varies depending on who is being asked, the line of business, and the agency’s geographic location. Those with heavy workers comp and GL books believe that we are giving away the store—especially in the Midwest. Those with a property and habitational focus find pricing to be firmer, most notably in the urban and coastal regions. Everyone with a heavy contractor book is having difficulty finding a competitive market for artisans, especially the beleaguered roofers.
So … what market are we in? The answer depends on who you are and, most often, what others tell you it is. Your answer might also be a reflection of your most recent experience—the account you lost on price because a competitor undercut you by 30% while agreeing to baby-sit the client’s kids every other weekend.
The fact of the matter is … there is no fact in the matter. The market cycles—up and down, round and round, as it always has been and always will be—are driven by the best and worst thinking of actuaries, economists, state regulators, and weather pundits. Combine their often contradictory assertions with the heavy hand of a cocky CEO who sees and hears only that which is agreeable while shunning or shooting any bearer of contrarian data or point of view; and you get what we have—a confusing and convulsing market lacking both rhyme and reason.
The uncontrollable, ever-changing pricing landscape … does it really matter? Does your success depend on it? Thankfully, the answer I get when I ask these follow-up questions is “no.” And the response is unanimous. Agents around the country recognize that, although bothersome, market cycles and carrier appetite shifts are not obstacles to success and growth—merely challenges. They also know that betting the farm on any pricing advantage they may currently enjoy—or, conversely, abandoning a line of business or market segment because of current pricing adversity— is a reckless gamble with no payoff.
What, then, does success depend on? Before you answer, let me define what success means in terms of growing your book of business. True success equals sustainable growth in new business production, client retention, sales and service efficiency, and agency profitability. This definition is not intended to diminish the importance of other, non-monetary success factors like charity work, community service, healthy employment practices, honor, integrity, self-actualization, and so on. These P.R.E.P (Production, Retention, Efficiency, and Profitability) objectives are the four financial cornerstones of success that hold together the foundation of any agency or producer’s book of business.
If this is true, then the actions we take to achieve these objectives, equally and “sustainably,” will be our success drivers. So what are these actions? You can probably make your own list in the time it will take you to finish this article; however, here are some traits that I find to be most common among our industry’s most successful agents:
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