Outsourcing and Delegating in an Insurance Agency

Why aren’t you outsourcing and delegating?

Outsourcing always seems to put a bad taste in people’s mouths.  They tend to think of shipping jobs overseas, workers then not being paid fair wages and the product being of sub-par quality.  The concerns of insurance agency owners are no different, however there are ways to outsource that enable the agency to maintain operational and quality control.

I’ve always been a proponent of focusing on what you are passionate about and it wasn’t until recently when I sat down with a friend’s business partner – both of whom are agency owners as well – where the necessity to delegate was explained to me in a manner where I was able to mentally digest the full gravity of the concept.


The First Steps To Outsourcing and Delegating

The gentleman stated that I should sit down that very evening and make a list of ALL the tasks that I don’t find joy in doing and then at the first opportunity delegate those tasks as quickly as possible.  His logic was that if I am not focusing my energy on what is most beneficial to accomplishing the goals of my organization then I would be wasting time, energy and most importantly my enthusiasm to drive the agency forward. Take these first steps to outsourcing and delegating at your office.

Admittedly I did not take his advice and run with it immediately like I should have, but have since begun implementing the idea and have delegated nearly 40% of my time wasting activities to others.  The best part is that my personal production in the agency is up nearly 50% and I feel I’m actually putting forth less effort.  At the same time we’re looking to outsource a few specialized projects to consulting companies to not drain our team’s energy on mundane and what are perceived to be menial tasks.

I share the personal story as it is a great example of what we can also do in our agencies as a whole.  Most agencies were started and are currently being run by the lead producer(s) in the organization.  If that’s the case then what are they best at doing?  I bet it’s not managing finances or people, and even though they’re good at marketing themselves they are probably not very effective at marketing the agency as a whole.  So why aren’t they delegating some of this work to subject matter experts. 


Is Your Agency Better At Sales or Service?

Let’s look one step further at our agencies as a whole.  Are we better at sales or service?  If we’re better at sales then why don’t we focus 90%+ of our effort on new sales and then outsource some or all of the service and retention?  There are many concerns over outsourcing that nearly everyone has, but what if you didn’t outsource to a completely separate company or country, but to a different department or division?  Nearly everyone feels they need to control the servicing of their clients to keep from competition taking them, but if everyone was really “good” at servicing their clients then it would be nearly impossible to get a client, right?  So if you’re not hovering at 94-96% retention then I hate to burst your bubble, but you’re NOT great at service.  There are organizations that will provide the service as a separate company or that you can join as a partner with and then have closer control over the process.

One mistake nearly every agency owner makes is to hire more bodies to “fix” the service problem when in fact it’s the owners own failure to manage his/her staff or processes that has caused the problem.

Rather than hire additional service staff at an expense of an average of 30% or more of revenues, why not partner with a firm that does it for you for less cost?  At the same time what if the firm reconciled your commission statements, handled your incoming phone calls, fax and snail mail, and then even shared in the cost of your management, rating and other software systems?  These options DO exist and it’s in many agency owners best interest to look in to them.

How to investigate Partnerships / Outsourcing?

The first stop is to look at your agency, yourself as the principal and your goals for growth, income and lifestyle.  Once you’ve given that a sincere thought then look at the offerings out there.  Many offerings are good for the average and below average performers, but not good for the best.  Others require you to spend a lot of time creating workflows and procedures and then you’re responsible for fixing any issues they create.  And still others have more turn-key solutions but require excessive startup costs.  Then there are those that can be utilized to enable you to be simply a sales office.

Insurance agencies are basically the outsourced Sale and front-line Service departments for the insurance companies they represent.  In some cases you can split this to you just handling the sales and then a partner handling the service – which can enable you to sell quite a bit if you only had to present a renewal or two here and there and then focus 90%+ of your time on sales.  I must admit that if I were to start my agency over from scratch I would outsource service and focus on sales as it’s the fun part of the job in my opinion.

Outsourcing is a great option for many, but must be done in a calculated way to keep from falling victim to the pitfalls of the he said / she said when processes breakdown.

Matthew Davis, MBA, CPCU, AAI


GDI Insurance Agency, Inc.