Maintaining Your Insurance Company Relationships
We in the retail insurance agency/brokerage segment of our industry are required to enter in to contractual relationships with many parties – insurance companies, wholesalers, employees, vendors, and with our clients. Many times we as agency principals do not appreciate or give adequate consideration to the expectations in our insurance company relationships.
Very few agents will say that they do not pay attention to their clients and companies, but in practice they either partially or completely neglect them on a regular basis.
Like in Any Relationship, Both Parties Must Be Fed and Nurtured
Take a romantic relationship for example, successful relationships are where both parties are “giving” in their interactions with the other and are concerned about the other. Everyone has been in a “bad” romantic relationship or one that was not great and a common denominator in many such cases is a lack of attention given to or fulfilling of the needs of the other.
The Give and Take of Insurance Company Relationships
When we enter into insurance company relationships we take upon ourselves commitments that we agree to deliver to insurance company. Many times these are commitments of Premium and Policy volume, Policy and Premium Retention, Adequate servicing of an assigned book of business, thorough field underwriting, etc.
If asked whether or not they are meeting their insurance company commitments, nearly all agency principals would answer yes, but in fact are not. Are we providing exceptional service to our clients and relaying MEANINGFUL feedback to the insurance company that can then be utilized by the carrier to improve?
I’ve been in many meetings with other insurance agency owners where the meeting becomes a whining session where each is complaining that “XYZ” insurance company is not providing them with what they need, to which I like to respond with the following question… “What have YOU provided the carrier that makes you better than the next agent in their files?”
Production, profitably, and retention are always cited in response, but that is the same response that everyone else has as well. You cannot stand out from the crowd by being the same as everyone in the crowd.
I happen to be blessed with mutually beneficial insurance company relationships with most of my agency’s insurance company partners (and yes, we think of them as partners and NOT adversaries). Each carrier and its personnel have a wide breadth of knowledge and opinions that I’ve found to be very valuable. I recently discussed workers compensation strategy with a carrier representative from an insurance company that does not write workers compensation. The advice was spot on and ended up being extremely valuable as the marketing rep had been a retail agent/broker specializing in middle-market construction for nearly 10 years prior to making the transition to the corporate side. If I had treated him/her as a typical agency owner treats their insurance company representative I would have never had discovered his/her background and been able to benefit from it.
Don’t Over Promise…
Business relationships in general work best when the parties do NOT fail to meet their commitments – surprise, surprise. I like the saying, “under promise and over deliver” because if you follow it and do err you err on the side of beating your objective and not missing it.
In the age of consolidations and automation in the insurance industry if we as agency owners cannot maintain growth and profitability for our insurance company partners we will not be partners much longer.
I know of an insurance company with a strong household name that is currently terminating longstanding agency contracts left and right for agents with profitable books of over $1M in premium due to their failure to maintain acceptable growth. I feel for those agency owners on one hand but on the other they did sign on to growth commitments and they failed to perform. My advice here is to never sign an annual production commitment agreement with a carrier without first knowing the terms of recourse the carrier will follow at the end of the period.
One thing to note is that insurance agencies are the outsourced sales and frontline customer service organizations for our insurance company partners so growth year-over-year will be expected.
Ask For Advice…
I make a habit of not ending ANY meetings or phone calls with our insurance company partners without asking for what they think we are doing well, what they see we are struggling with, and where they think we should put focus more of our effort and attention. I know that in a “sales” mindset one does not want to shine a light on their weaknesses, but in an honest relationship one MUST; so I make it a habit of asking for criticism as often as possible.
Relationships Usually Come to an End…
Ultimately when you enter in to insurance company relationships with a carrier, vendor, etc. it is similar to entering in to a romantic relationship. Your way of interacting changes at the onset of the relationship and once it terminates it is always a little awkward and rarely is does it end without resentment from at least one of the parties if not all.
Unfortunately many relationships have a limited lifespan and do come to an end (in business, romance, and friendship). The best way to keep from having any hard feelings is to have open and honest communication as much as possible. It is always fair to respectfully share your pleasure and displeasure with any party in a relationship – the key word here is RESPECTFULLY! I know many agency owners that chose to yell and/or swear at their insurance company representatives and think that is how business is done. It ends up being a shame for them and a blessing for those of us that value relationships as we then don’t.
Matthew Davis, MBA, CPCU, AAI
GDI Insurance Agency, Inc. 209-634-2929