THE ART OF
TEAM SELLING
It might be a rarity in the independent agency sales culture, but shifting from a solo to group mindset can really pay off. Here’s why two may be better than one.
By Morgan Smith
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ANDREW PATERSON/GLOW IMAGES
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fter 30 years in the business, agency principal Bob Sturtevant maxed out. When Sturtevant’s book at Gibson Insurance reached $1.5 million, he found himself running in maintenance mode simply trying to stay on top of his current client base—a far cry from having the capacity to pursue new business. As an experiment co-created with his agency’s president & CEO Tim Leman, Sturtevant combined books with a fellow producer, devised and invented a compensation model based on team performance and found synergy by working toward common goals. That was five years ago. “Today, we effectively have five producers on my team, including myself, and we
have the same philosophy,” Sturtevant says. “In the last five years, I’ve written the most new business I ever have in the 30 years I’ve been with the agency. It’s blown up.” Team selling is a still the exception rather than the rule in the independent agency system—only 12% of producers entered team selling environments upon hire, according to Reagan Consulting’s “Producer Recruitment and Development” study. But for the few that use this strategy, the rewards are abundant. “I understand the nature of the business lends itself for agents to be lone wolves,” says Eric Baron, author of “Innovative Team Selling” and founder of sales consultancy The Baron Group. “But not taking advantage of the resources available to you is a missed opportunity.”
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The Truth of Teams Co-production can help agents compete on the basis of interaction rather than product— strengthening the client relationship, cultivating ideas from multiple sources and ultimately presenting 360 degrees of risk management protection. “Any new customer we’re working on is amazed at the resources we’ll use on their business to win their business,” Sturtevant says. “They’re deciding when to bring in the safety professionals and claims consultants and resources the agency has to demonstrate the capabilities of risk management for a client. That is distinctly different than what any other agency will bring to the table.” Mike Schultz, co-president at global sales consulting and training company RAIN GROUP, puts it this way: Imagine meeting with a prospective commercial client’s risk manager, CFO and financial committee. Facilitating an imaginative, efficient meeting may be an individual producer’s strength, but an entire team can tap into a slew of personalities and offer a wider range of expertise to the client’s group. “They all bring certain things to a table that could wow, surprise, delight and differentiate the client, especially in insurance, which is based in a regulatory environment where there’s not that much room for product differentiation,” Schultz says. “It’s all interaction differentiation, imagination differentiation, innovation differentiation.” It’s an ideal approach for agencies with declining close rates or sporadic larger-thannormal prospects—what Schultz calls high pursuit intensity opportunities (HPIO). If there’s potential to generate gains, he says a sales manager should create an opportunity plan. And in most HPIO cases, that should involve perspectives from the technical, support, partnering and sales sides of the agency. “The first thing you need to think before structure is strategy,” Schultz says. “Where can this help? Where is this going to be useful? Where are we missing sales and where we can win sales? That takes win-loss, cross-sell, upsell and penetration analysis.” 50 iamagazine.com • November 2015
And while the consumer-facing side of sales is key, team selling can heighten an agency’s in-house sales process. Baron calls this the “internal” component of team selling: recognizing an opportunity and tapping into the brainpower of others to outperform what an individual could accomplish on their own. “This team structure is a terrific solution to the problem of sales management in an agency management system,” Sturtevant says. “We’re accountable for each other. We have a pipeline meeting every two weeks and a very defined sales discipline in our risk management process.” The process can impact producer development tenfold. Reagan’s study reports that 69% of producer hires succeed in team selling environments, compared to 60% of those who sell individually. Producers specifically hired outside the industry and those in their 20s experience similar positive results: Team selling boosts success rates by 15% and 24%, respectively.
69%
OF PRODUCER HIRES SUCCEED IN TEAM SELLING ENVIRONMENTS
SOURCE: REAGAN CONSULTING’S “PRODUCER RECRUITMENT AND DEVELOPMENT” STUDY
A People Plan Dan Horton, vice president of Horton Risk Advisory Solutions, says his agency “fell into” adopting a team sales culture. Joining the agency in a group of fresh producers at 25 years old, he teamed up with a fellow young producer to tackle a large prospective client. “We basically did it because we were two new producers and figured we needed to support each other early on,” says Horton, for whom team selling “took some of the lumpiness out of the opportunity pipeline.” The process became a two-way street that gave Horton a partner in crime and helped him, a risk-averse millennial, feel more confident about new opportunities [download the free IA magazine iPad app for more about why many millennials prefer a team-based work environment]. And although the pair split up after gaining more experience, Horton says the structure evolved from a fluke into a formalized training and development program throughout the agency.
“We’re now finding that the team has an incentive to hire new producers because the more business we write, the bigger our bonuses.”
WESTEND61/GLOW IMAGES
—Bob Sturtevant, principal at Gibson Insurance
Horton Risk Advisory Services has since developed practice groups, experimenting with four- to six-person teams comprised of support, safety and claims staff to bring more value-added resources to the table for larger clients. To start, the agency aligns new producers’ interests with a team or practice group. “If you find someone interested in construction and throw them into the tech group, they might just not be a good fit because they’re not interested in that business,” Horton points out. “We try to align the producer with their interests. Once we figure that out, we then find a fit between the team and the new candidate as well.” One way Gibson Insurance tackles the process is by informally interviewing a current producer to assess team fit and personality strengths. But the agency also engages team members in the recruiting process, using them to find potential hires and future team members—a practice more common in the most successful teams.
“We’re now finding that the team has an incentive to hire new producers because the more business we write, the bigger our bonuses,” Sturtevant says. “We’ve also learned that we’re all incentivized on the success of other producers that are on a team.” Reagan reports that producers hired into team selling environments succeed 19% more in employee benefits than those selling individually. And because specific markets may lend themselves more effectively to a group sales approach, account size is another important factor to keep in mind. “More complex accounts require a team,” Horton says. “If you have an account that is smaller in size that never has any claims, it doesn’t make a lot of sense to bring out the claims management team. We determine the size and depth of the team by matching up the team to the complexity of the account.” As a niche-oriented agency, Gibson Insurance utilizes industry-focused sales groups. With specialties in November 2015 • iamagazine.com
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Fair Share? While a team mentality may foster creativity and idea generation among sales staff, revenue still reigns supreme for financially driven agencies—making compensation a fragile area that demands a careful approach in a team-based sales environment. Horton Risk Advisory Solutions leadership takes a back seat, leaving compensation in the team’s hands. “The producers have to come to a mutual agreement on who’s going to get what—whether they split it equally, how long they split it, who sourced the opportunity,” Horton says, adding that some of the agency’s pairs split revenue 50/50 for a predetermined amount of time. “For the team to be successful, they have to come up with what’s going to make them both happy. You have to have expectations before you write the deal. After the fact is typically not the way to figure it out.” At press time, Sturtevant’s team at Gibson had raked in about $450,000 in revenue since last December—$200,000 short of their total year goal before the end of this month. Split between four producers, that’s about $160,000 per group member—nearly double an individual p-c producer’s goal at the average agency. “The compensation allows for that deep relationship where they are responsible for your success and we’re responsible for your success,” Sturtevant says. “Salespeople are held to a higher standard to now be responsible for their co-producers.” How much an individual contributes, and what they’re willing to share, is another piece of the puzzle. Sturtevant, who partnered with a 30-year-old book, contributed a substantial volume of business that now results in nearly two-thirds of his group’s revenue—a share that may indirectly correlate to a 50/50 compensa52 iamagazine.com • November 2015
WHAT NOT TO DO Considering implementing team selling can help your agency? Here’s what to avoid: ■ Don’t form a two-person team based on opposite years of experience. Pairing a recent college graduate with a decadeslong seasoned principal doesn’t always result in a positive experience for the young producer. ■ Don’t throw a new team member into the mix. Ensure new team members are well-informed about goals and responsibilities so they understand where they fit into the group’s mentality. ■ Don’t underestimate personality traits and skill strengths. Design a team with a combination of people with gravitas, technical knowledge, effective sales techniques and management skills to create a full panorama for a client. ■ Don’t assume a new producer will learn the ropes by observation. Rather than simply saying “follow and learn,” engage them in the sales process and invite them to contribute in team meetings. ■ Don’t ignore group size. Keep in mind account needs, team dynamic and group structure when forming teams. Weigh the options of a two- versus eight-person team, and consider alternative arrangements to ensure you’re maximizing productivity. —M.S.
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tion split. But “the slices can move year to year depending on how well that individual is doing and how important they are to the team,” he says. “Over time my percentage has gone down, but that’s been by design. So I will continue to take a lower percentage of the pie.” In his consulting experience, Baron has also seen what he calls “the assist”: If Producer A receives an opportunity but hands it off to team-member Producer B to handle, Producer A receives a percentage of the commission from the account’s success for some time. The bottom line? Be fair. “If people are thinking in terms of only themselves, making as much money for them as possible, not thinking in terms of the company, the client, their colleagues—team selling is never going to work,” Baron says. “But if you’re thinking in terms of doing what’s best for the client first, the company second, and realizing that if all that goes well, then I’m going to be just fine—that’s when team selling works most effectively.” Morgan Smith served as IA assistant editor.
WESTEND61/GLOW IMAGES
schools, municipalities, nonprofits and manufacturing, teams “incubate” certain specialty areas and become dedicated to the market. Team selling “keeps your intellectual capital engaged with the agency organization,” Sturtevant says. “It’s a lot more fun because you’re winning new business, which is the thing that drives most natural salespeople. I have a lot of energy, I’m happy, I feel needed and I’m not isolated in my book. Team selling is something that keeps your senior people excited about the business and the industry.”
THE PROMISE OF
PRODUCTIVIT Y WITH ALL THE AVAILABLE TECHNOLOGY TOOLS, WHY AREN’T AGENTS MORE PRODUCTIVE? BECAUSE TECH ISN’T THE MAGIC BULLET. THE KEY IS TO IDENTIFY THE ISSUES YOU WANT TO SOLVE FIRST. HERE’S HOW.
I
ndependent agent Dayton Kilgus is optimistic when he hears that 44% of agencies feel they have made significant advances in productivity by using new technologies. Whether new tech encourages agencies to do things a fresh way, adopt original documentation practices or change business processes, “we see the vision and long-term benefits of implementing technological changes,” says Kilgus, a producer at Metz Stoller with agencies throughout Illinois. “We know that down the road once everything gets in place, we’re going to see what we feel are substantial benefits in our ability to serve customers, answer questions and retain business.” Independent agencies like Kilgus’ are reaping the benefits of fully utilizing technological capabilities that streamline
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agency workflow and reduce redundancies in order to build relationships, bring in new business and create consistency. “How effective an agency operates these days is becoming increasingly intertwined with technology,” says Michael Howe, senior vice president of product management at Applied Systems. “We’re seeing [agents] think much more broadly about technology end to end across the business, in addition to the more classic or traditional sense of just the back-office and servicing via agency management systems. They’re spanning.” If you belong to the 66% of agencies that reported lower levels of satisfaction in terms of finding productivity through technology in the 2014 Future One Agency Universe Study, here’s how your agency can break down tech processes to become more productive.
PHOTO CREDIT
By Morgan Smith
PHOTO CREDIT
October 2015 • iamagazine.com
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PRODUCTIVITY BY ROLE Should you quantify productivity based on numbers or feeling? Michael Howe, senior vice president of product management for Applied, says it varies by role. AGENCY: Understand if the agency is growing, becoming more profitable and better serving customers through the usual operating metrics of any business, including margin, profitability, new sales and retention rates. PRINCIPAL: How readily available and understandable is the information agency leaders need to make decisions? “Productivity is more a function on speed and access to information,” Howe says. PRODUCER: Do they spend more time meeting with customers on the road or filling out reports? Metrics change, but the theme is the same: Responding to current and prospective clients should override performing redundant tasks. CSR: Determine how much time is dedicated to chasing customer issues, not doing administrative work and rekeying data. —M.S.
Mapping Productivity Measuring productivity can be tricky. An individual may look to their gut for a productivity checkup, while a business may need numbers as proof. “Productivity means different things to different people,” says Tommy Dies, CFO of Bryan Insurance in Graham, Texas. “I try not to focus on any particular one number. I try to look at the larger picture when it comes to productivity and technology.” Applied’s e-book, “Working Smarter: Finding Agency Productivity Gains,” breaks down the correlation between technology and productivity by role—each with its own indicators of ideal productivity performance [see sidebar]. Does a CSR spend more time talking to customers or rekeying data? How much time does a producer spend meeting with new clients versus manually sending reports? How quickly can a principal access big-picture information rather than flipping through spreadsheets? Vertafore also thinks about productivity in terms of streamlining workflow for distinct positions, according to Theo Beack, chief technology officer, and Greg Wright, vice president of agency management. “The questions we’re asking of technology differs greatly depending on what role you’re playing within an agency,” Wright says. “We’re able to design those solutions much more tailored to each individual persona.” Technology can significantly reduce— and even eliminate—workflow redundancies, which frees up staff time for the most important tasks. “Whenever you can look at your staff and say they’re focused on new sales and able to manage existing business with less effort, then that’s where productivity is achieved,” says Laird Rixford, president of Insurance Technologies Corporation. “Instead of having to do some of the menial,
Starting Strong Agencies that want to feel more productive should search their current technologies for gaps and opportunities. “People will make investments in technology, but they will not fully utilize those investments,” Rixford says. “Every customer is an opportunity to sell something more, and if you have the right technology and it makes it easy to do so, then that’s where you become productive. I’ve seen a lot of agencies that invest in technology and don’t get a value out of it because they do not invest the time and effort to make that technology fully utilized.” No matter what you’re looking to adopt, transform or implement next, “think long and hard,” Dies says. “Make the decision as if it’s going to pay off in the long run and whether you’re willing to take the sacrifice and decrease productivity in the short run.” You don’t have to start big. “The beautiful thing is that you can kind of piecemeal it,” Dies says, citing inexpensive methods including smart phone apps, social media marketing and moving to the cloud. Those strategies have saved Bryan
“ P EOPLE WILL MAKE INVESTMENTS IN TECHNOLOGY, BUT THEY WILL NOT FULLY UTILIZE THOSE INVESTMENTS.”
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every day boring tasks, they are able to focus on the tasks that matter.” And for independent agents, that means maintaining local, trusted relationships. Using technology to gain rapport isn’t nearly as effective as a face-to-face conversation, but it does enable agents to spend less time on administrative and follow-up tasks and more time on selling, educating and offering the right coverage to each customer. “They have an advantage inherently built into their business,” Rixford says. “If you were able to add technology to enhance and improve that advantage, it’s even more powerful.”
— LAIRD RIXFORD, PRESIDENT OF INSURANCE TECHNOLOGIES CORPORATION
enough,” Howe explains. “It’s an important piece of the puzzle, but it’s only one piece of the puzzle—it has to go hand in hand with a very clear understanding of what you’re trying to do as a business and how technology can help you get there faster.”
FULL POTENTIAL
PHOTOS: DIMITRI OTIS/GETTY IMAGES
You’ve implemented a few new tech tools and you’re seeing results. You’re done, right? “If you think you’ve reached your full productivity potential, it’s time to start worrying,” says Dayton Kilgus, producer at Metz Stoller with agencies throughout Illinois. “That’s when you’re going to die on the vine, and when you’re agency’s going to stop thriving. That’s the beginning of the end. If you don’t have that attitude of constant improvement and never being satisfied and never being there, then you’re going to be adequate at best.” Theo Beack, chief technology officer at Vertafore, says it’s a journey. It’s solving one problem—electronically documenting the paper trail—and then “once they reach one, they realize there’s another goal to achieve”—self-servicing for customers. “It’s a process where they reinvent themselves on so many dimensions,” Beack says of indepedent agents. “It’s really a journey they go on and there’s not a single point where they say ‘I’ve truly done it.’” It’s a harsh reality, but carriers and software providers are constantly releasing new capabilities unprecedented in the technological—let alone insurance—world. “I don’t think you can ever fully get to the point where you don’t need to put in any more technology,” says Tommy Dies, CFO of Bryan Insurance in Graham, Texas. “The world around us is changing. We have to put aside our old ways and be totally open to the new ideas out there.” Laird Rixford, president of Insurance Technologies Corporation, says you’ll never reach your best productivity, but you’ll at least get to a level where you’re operating efficiently. You might see automatic referrals rising or need to hire a new producer to keep up with demand—but there’s always potential for more. “You measure, analyze and implement and you need to do that with tech at all times,” Rixford says. “Technology allows people to jump ship and find new methods to be communicated with and new methods to communicate through. And you need to constantly be reviewing.” —M.S.
Insurance “tens of thousands of dollars both in equipment and labor supporting that equipment,” Dies says. Start simple: “Define the problem that you’re having—the pain point,” Dies suggests. Then, “identify the technology or technologies that are out there and start weighing them against each other.” “An agency should be very thoughtful about which business objectives they are trying to reach,” Howe agrees. Whether it’s
to better service customers, become more competitive or increase profitability, evaluate how technology could make running your agency better, faster and cheaper. Business problem first; technology solution second. As Kilgus puts it: “You don’t go straight to the tool.” “The wrong way to go about it would be to jump in with two feet and say ‘Technology is going to solve all my problems’ and hope that technology in and of itself is
Getting Buy-In While setting agency-wide goals typically starts at the top, Howe says the more successful agencies involve people throughout the ladder when it comes to breaking down technological possibilities to support the company’s overall mission. “The metrics and objectives and how you look at productivity varies down at the individual level, so it’s really important to go from those top-level objectives and translate them down into objectives and measures of productivity for a given role,” he says. To implement new, costly and initially time-consuming systems, “you have to get upper management fully behind it, engaged and supporting it to drive those processes forward,” Dies says. “When you do that, you get more buy-in from staff as you begin to include them in the conversation.” That requires reminding employees how embracing the technology and its capabilities will benefit them. “I’m busy enough that I don’t just adopt new technology for fun,” Kilgus says. “I do it so I can get stuff done, because there’s so much expected from me.” If every CSR, producer and employee understands the role technology should play in their agency, and specifically how it impacts their daily workflow, resistance will diminish and productivity will boom. “Getting them to see and acknowledge the need to change and understanding where we’re going makes the onboarding process so much smoother,” Kilgus says. “If they don’t buy into the ‘why’ and see the vision at the end, it’s going to be tough.” Howe says the agencies that utilize technology best take the time to invest, understand what business problems need solving, apply technology accordingly and help employees understand that that technology. “Once you go through that journey, you see best practices agencies dramatically improving their effectiveness,” he says. Morgan Smith (morgan.smith@iiaba.net) is IA assistant editor. October 2015 • iamagazine.com
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COMING OF AGE By Morgan Smith
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Generational differences affect work and the workplace—and more balance among groups is better for your business. Here’s how to develop a healthier agency workforce.
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RICHCANO/ISTOCK
lmost five years ago, INSURICA Insurance Management Network faced declining organic growth, an average producer age in the 50s and multiple employees on the verge of retirement. INSURICA responded by developing a robust recruiting, hiring and assimilation program to focus more on growth and perpetuating agency talent. Now, the Oklahoma City, Oklahoma-based firm boasts nearly 50 new producers, a vice president of sales development, a technical trainer and an internal recruiter to bring a strategic plan to fruition for the 26-branch organization. “This has been a breath of fresh air,” says Michael Ross, president & CEO. “It’s been challenging—both financially and from a manpower and management standpoint—but I would say that our commitment to dive in and do this is the best decision we’ve made in the last 15-20 years.” ‘Generational Capacity’ According to consulting firm LifeCourse Associates, 84% of independent agents agree real generational differences affect work—and 72% of them believe those differences pose real workplace challenges. “Every generation has its own personality,” says Warren Wright, executive vice president at LifeCourse. “You have to realize what that
personality is if you’re going to have to manage it.” Reagan Consulting’s “Producer Recruiting & Development” study introduces the term “generational capacity,” which defines a healthy agency as one that has an equal spread of producers, business volume and new business contribution within each generational cohort. The more balanced each generation with respect to the others, the healthier the agency. “I think a lot of firms are waking up to the fact that their demographics have gotten away from them,” says Kevin Stipe, president of Reagan. “They haven’t restocked their talents as proactively as they should.” According to Reagan, the ideal spread looks like a “gentle, upside down bell curve”: A composite from the top 25% of firms shows that a healthy production force should consist of producers both below age 35 and over age 55 representing 28% distribution each, with 22% of the workforce represented in the two 26–45 and 46–55 year-old age brackets. Tim Cleary, director of sales in property and casualty at M3 Insurance with locations throughout Wisconsin, says reaching this balanced generational spread is “a chance for the agency to effectively perpetuate its intellectual capital, as well as having a staff of producers that has real capacity for growth.” How can your agency get there? “It helps to put together an integrated strategic plan first that takes into September 2015 • iamagazine.com
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consideration all elements of the HR life cycle: attract, recruit, onboard, engage and retain,” Wright says. To begin developing a healthier workforce, start with an evaluation of where you stand. Jim Caragher, managing partner at career development firm CIB Group Services LLC, suggests you weigh the generational mix of your current producer staff “and then try and look ahead and ask, ‘What do I need this producer staff to look like in a year, three years, five years?’” Hire INSURICA is a diamond in the rough when it comes to new hires. Two-thirds of agencies did not hire a new producer in 2012–2014, according to the 2014 Future One Agency Universe Study. And of the 34% that did, 22% hired just one. But
Ross’s agency has hired 10–15 every year— nearly 85% millennials—since implementing its strategic plan almost five years ago. Stipe says it comes down to a multidimensional hiring strategy. “Many firms have focused on hiring older producers— not because they wanted older people, but because it was easier to hire people with experience,” Stipe says. The CIB Group combats that tactic by recruiting salespeople who are already working in a B2B sales environment and specifically placing them in commercial producer roles. While some positions may require more technical knowledge, Caragher and his firm recognize a successful producer needs inherent selling skills first and foremost. The insurance lingo can come later. “If you’re heavily weighting technical insurance knowledge and experience over
sales acumen and skills, you’re probably going to make a mistake in producer hiring,” Caragher explains. “Most recruiting firms that work with insurance agents and brokers are trying to take producers from one agency and steal them and move them into another agency. But we’re trying to go into the big ocean of sales forces outside of insurance and find great people and bring them into this business.” It’s no easy feat given the public’s perception of the insurance industry as “boring” and “lame”—what Caragher calls a “benign ignorance” about what insurance actually is. According to LifeCourse, only 24% of millennials assigned an average favorable rating to the insurance industry as a place to work, compared to 43% of boomers and 31% of Gen Xers who reported the same positive perception.
HEALTHY BREAKDOWN
UP TO AGE 35
AGES 36–45
AGES 46–55
OVER AGE 55
28%
22%
22%
28%
VALIDATED PRODUCERS: 5 TOTAL AGENCY BOOK CONTROLLED: 10% AGENCY NEW BUSINESS CONTROLLED: 21% AGENCY OWNERSHIP HELD: 12%
VALIDATED PRODUCERS: 4 TOTAL AGENCY BOOK CONTROLLED: 20% AGENCY NEW BUSINESS CONTROLLED: 25% AGENCY OWNERSHIP HELD: 21%
VALIDATED PRODUCERS: 4 TOTAL AGENCY BOOK CONTROLLED: 31% AGENCY NEW BUSINESS CONTROLLED: 35% AGENCY OWNERSHIP HELD: 30%
VALIDATED PRODUCERS: 5 TOTAL AGENCY BOOK CONTROLLED: 39% AGENCY NEW BUSINESS CONTROLLED: 19% OWNERSHIP HELD: 19%
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SOT/GETTY IMAGES
Reagan Consulting constructed an example of an ideal healthy hiring and performance dashboard based on compiling data from the top 25% of firms evaluated in the Reagan Value Index. For a firm with 18 validated producers, a healthy division of book of business and ownership across generations could look like this:
“Sales is something that is viewed differently and not necessarily positively by millennials compared to other generations because it doesn’t necessarily fit their generational personality,” Wright says. “It’s high risk, high reward—and millennials tend to be a risk-averse generation.” To ultimately find equal generational representation among producers, a firm needs a strong recruiting process—a “people strategy.” To start, Caragher suggests investigating your needs by role, then determining where you’re going to find them. INSURICA ensures it hires the best of the best through initiatives like personality testing, a multi-interview process and a sales reluctance test. “We firmly believe in testing. There are great insurance people that make excellent account executives, but not necessarily great producers,” Ross says. “We have to remain very disciplined and patient while going through the process of testing, interviewing and reference checking—all those things that sometimes become formalities—so that we find the right person and are not hiring bodies just to fill seats.” “Most agencies could do a really good job finding new people if they just invest some time and network from the people working there today,” Caragher says. “Find what you need people-wise and then find people networking out from your existing staff.” This strategy also works for M3: Its human resources department is open to all areas of recruitment, but specifically uses its own personnel as “effective recruiters to find people in the marketplace,” Cleary says. “Having multiple sources managing the pipeline through our HR area has been very helpful.” Nurture Achieving healthy generational representation among producers is just the beginning. The work should continue post-hiring to maintain agency health and perpetuation. While offering an in-house professional development team, M3 creates individual development plans for new producers. “It can talk about their technical and sales
expertise, setting realistic prospect goals, setting short- and long-term goals for what their book of business looks like in the next 12, 24, 36 months,” Cleary explains, adding that the goal is to provide salespeople “with a career plan they are involved in. They have to be involved. It has to make sense and it has to motivate them.” M3 has applied mentorship and coaching in the past—arming employees with tools, resources and team comradery. “We feel like if our distribution of sales is across several different generations, then we know that we have the internal expertise for those generations to teach other generations on what steps they took in order for them to succeed,” Cleary says. Caragher has also enjoyed success in this
“I THINK A LOT OF FIRMS ARE WAKING UP TO THE FACT THAT THEIR DEMOGRAPHICS HAVE GOTTEN AWAY FROM THEM.” —KEVIN STIPE, PRESIDENT OF REAGAN CONSULTING
area: “We learned that it’s a huge benefit to have a coaching development program in place,” he says. The CIB Group implements a six-month program for newly placed producers to receive coaching from a retired experienced producer, usually supplementing the agency’s development program. A strong mentoring program is not only virtually necessary for a freshly licensed producer, but also a selling point for recruitment—any ambitious, earlycareer employee wants to learn. In addition to adding a general business etiquette portion to new producer training, INSURICA uses one-, two-, six- and
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12-month milestone markers to measure new producers. “We’re very hands-on and transparent with the numbers and production among all generations,” Ross says. The agency has even carried out a multi-generational training program throughout its 26 branches “because our more seasoned folks—me included—need to keep our minds open and look at the value millennials bring to the organization,” Ross says—which means being “more understanding of the different ways in which they operate.” Consider LifeCourse data that reports millennial preferences for a mentorship program (81%), hands-on guidance (72%) and acquiring new skills (59%) at their organization—all much lower priorities among boomer and Gen Xers. “With millennials, you have to be very directive, specific and hands-on, setting clear goals and expectations, developing strong guidelines and giving regular feedback,” Wright says. “Let’s say you do recruit the best and the brightest, but the second problem is that once they’re there, they walk into an environment that they don’t like very much because it’s a boomer environment. It’s structured, top-down and hierarchal.” Stipe says the result of a multigenerational staff presents healthy challenges. “You have a wide variety of perceptions and life experiences,” he says. “It’s in the category of healthy conflict, where baby boomers don’t see the world the same way millennials do. I don’t think I want an organization with just one or the other. Having the three different perspectives of those three different generations is helpful and youthful.” Morgan Smith (morgan.smith@iiaba.net) is IA assistant editor.
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Independent agents are recapturing territory from direct and captive agents, but there’s still more work to do. Make a play for more of what’s yours.
DEFENSE FORCE A
By Morgan Smith
ccording to the 2015 Big “I” Market Share Report, independent agents captured 54% of all property-casualty insurance premium lines in 2013, grew faster than the overall market and expanded market share in 23 states and Washington, D.C. But the threat from other channels remains: Direct writers continue to increase yearly written premiums and captive agents have sustained their 35% of the pie. “You can’t cave in to try and compete with them the way they want to compete,” says Jamie Deapo, vice president of membership at the Independent Insurance Agents & Brokers of New York. “The general landscape has gotten more aggressive and [agents] have to admit to themselves, ‘we’re probably not doing things the way we should.’” Deapo was one of four presenters during a threehour Big “I” Virtual University (VU) webinar, How to Compete with Direct Sales & Captive Agency Insurers, earlier this year that highlighted the challenges the IA channel faces in this area—and strategies to combat them. “If we don’t fight back, there will be fewer of us,” says co-presenter Ed Higgins, vice president of Thousand Islands Agency in Clayton, New York. “Fewer of us, ultimately, will be to the detriment of the American consumer who benefit from our consultative services that help explain coverage in plain language terms.”
STATE OF THE MARKET The good news? The independent agent channel continues to dominate commercial lines—writing nearly 80% of the $35 billion market and improving premium growth by 11.7% between 2012 and 2013. But personal lines remains a constant battlefield. Although regional independent agents wrote $5.5 billion more in 2013 than 2012—resulting in an 8.4% growth rate and 1% increase in market share—exclusive and direct agents maintain a 65.6% control over the personal lines market. While Accenture’s 2014 Independent Agent Survey revealed that 39% of independent agents view carriers’ direct solutions as their greatest source of competition, direct response writers wrote less than $5 billion, or 6%, of the $80 billion homeowners market and less than 1% of commercial auto premiums last year. And with independent agents and brokers generating more than 57% of all market growth and 8% year-over-year rate increases, it’s a good sign that infiltration from competitors hasn’t occurred quite yet. “That’s something that hasn’t really changed for years,” says Mark Fine, president and owner of MBF Training and Consulting, who has nearly 30 years of industry experience. “Homeowners and auto markets are homogenous products—it’s very competitive price-wise. There’s so much more flexibility in the commercial market when it comes to price. In personal lines, there’s not as much.” Bill Wilson, director of the VU, agrees—adding that consumers have been misled into believing that personal lines is a commodity. “Companies are reducing their coverages to lower the price,” he says. “As long as consumers are led to believe that all coverages are the same, they won’t know.”
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“ THE MORE YOU EDUCATE BOTH YOUR CUSTOMERS AND POTENTIAL CUSTOMERS, THE EASIER IT WILL BE TO GET AND RETAIN A PART OF THE MARKET.” —MARK FINE, PRESIDENT AND OWNER OF MBF TRAINING AND CONSULTING
DISTRIBUTION DISPERSAL
35%
EXCLUSIVE AGENCY DIRECT WRITERS (CAPTIVE): 35% overall share of total 2013 p-c production, $187.4 BILLION in direct written premium
REGIONAL AGENCY WRITERS (REGIONAL IAs): 31% overall share of total 2013 p-c production, $164.6 BILLION in direct written premium
26%
31%
NATIONAL AGENCY WRITERS (NATIONAL IAs): 26% overall share of total 2013 p-c production, $138.1 BILLION in direct written premium
DIRECT RESPONSE WRITERS: 8% overall share of total 2013 p-c production, $42.2 BILLION in direct written premium
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8%
EDUCATION MATTERS A captive agent’s advantages are clear: national advertising, customer-recognized branding, customized training and updated technology. But they don’t have that local, trusted voice that consumers truly want. “Consumers are confused about distribution channel differences,” Higgins says. “I’m absolutely amazed at the average consumer’s lack of understanding about the difference between a captive agent, a direct writer and an independent agent.” Consumers aren’t to blame—it’s the information they’re digesting. Wilson says both expert and non-expert sources, as well as the media, send a message that insurance is a commodity, advise to compare “apples to apples” between coverages and claim unneeded policies and ways to cut costs abound—which means it’s up to independent agents to educate them. “The more you educate both your customers and potential customers, the easier it will be to get and retain a part of the market,” Fine says. By recognizing customer behaviors, needs and desires—and ultimately shifting work around them—agents can expand their value proposition and the channel’s general perception. According to Ernst & Young’s “2014 Americas Consumer Insurance Survey: Reimaging customer relationships,” independent agents already have a leg up against the competition. During “moments of truth”—defined as an interaction or experience that positively or negatively changed the customer’s perception of the insurer or broker—consumers who buy through independent agents report a higher level of cross- and up-selling behavior (27%) than those buying from a direct or captive agent (20%)—and 38% of independent agencies reported that leveraging moments of truth generated sales or increased coverage for a client. Accenture’s 2014 survey found that agents believe their advantage lies in access to competitive products (averaging a 6.6 in a top 10 ranking) and better, more consistent overall customer experience (6.6) rather than superior advisory services (3.6). But consumers don’t agree: 39% of U.S. respondents claimed they would be willing to pay more to get personalized advice or assistance when buying insurance and 76% said they would consider switching to a different producer in order to get it, according to Accenture’s 2013 Consumer-Driven Innovation Survey. “Even if you’re looking at the same, identical product, there are differences in the service that stands behind that product—and that’s something we have to make consumers aware of,” Wilson says.
HOW TO WIN What does it really mean to be competitive? “It certainly means price in some ways,” Higgins says. “But it’s about having a value-added model that is clearly distinguishable by the client as being a value premise. So don’t be afraid of the price conversation—just change it to the more important one.” “If an agent wants to be successful in the long term, they need to focus on everything local and promoting their strengths,” Fine adds. “The agent has to focus on local, trust, well-trained and knowledgeable staff and value after the sale.” Considering 66% of respondents to a 2013 Accenture U.S. Personal Lines Consumer Survey cited independent agents as a top-three choice for who consumers trust most to provide advice about the best insurance policy, those are all controllable factors. “If you want a greater piece of the market, at least in the area you want to be successful and thrive, you have to be willing to work smarter,” Fine says. “Use resources, keep up with changing trends and understand that you have to reach out to customers.” Higgins says to reverse the IA channel’s market share corrosion, agencies need a value-added response. That begins with implementing a risk management process to identify all potential exposures and show clients various ways to deal with threats outside of insurance. As a result, the client will understand how they’re spending their money. Since 47% of EY survey respondents say “value for money” is the most important characteristic during an ongoing relationship with an insurer, it’s a process that will pay dividends. Plus, you’ll display the benefit of accountability that comes with coverage placed through your agency. “This is the unrealized weapon of the strength of the independent agency distribution system,” Higgins says. “Our consultative approach is what makes us different. But you may need to make acknowledgment of changes too.” A great place to start? Spend some time asking questions to figure out why things are the way they are and take a look at yourself from the outside: as a consumer who knows nothing about insurance. “Too often we spend time talking in our vernacular and need to bring things back to how our consumers see it,” Higgins notes, adding that implementing a value-added model [see sidebar] can lead to increased customer loyalty and retention, profitability, E&O protection and a boost in staff morale—not to mention higher value when it comes to perpetuation. “If you commit a positive proactive approach to regaining market share that belongs to you, you will get it,” Higgins says.
THE VALUE-ADDED MODEL Compete smarter by incorporating these elements in your agency: ■■
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CLEARLY DEFINED GOALS. Create an agency mission statement and engage the staff in its development. STAR EMPLOYEES. Train staff to maximize their personal potential. OPERATIONAL EFFICIENCY. Leverage technology to maximize service both in-person and across mobile platforms. CUSTOMER SELECTION. Eliminate costly customers that have difficult personalities, a price-focused mindset and low-premium or unsupported lines. DEVELOP UNIQUE SERVICES. Provide free photo inventories, counsel new young drivers or offer 24/7 local claim service. COMMUNICATE VALUE REGULARLY. Send frequent newsletters and actively answer the question, “Why should you do business with us?” —M.S.
Morgan Smith (morgan.smith@iiaba.net) is IA assistant editor.
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A DELICATE BALANCE BAL RETENTION VS. NEW BUSINESS— THEY’RE BOTH CRITICAL TO YOUR AGENCY. HOW DO YOU DETERMINE THE RIGHT FORMULA FOR ACHIEVING MAXIMUM ORGANIC GROWTH? By Jacquelyn Connelly & Morgan Smith
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t’s an age-old problem that all independent agencies face, regardless of size or location: finding a formula that focuses on both client retention and new business production. “Balance—that word doesn’t fit into my own thinking of the two,” says Tim Starr, CEO of Wisconsin-based Best Practices agency The Starr Group. “It’s not a balance in that you have to compete for time or resources for one or the other. They’re both critical parts of what we do. Then how do we do it and what does it all look like?” It’s a simple question—with a complicated bottom-line impact. April 2015 • iamagazine.com
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ence. Starr then sits down with each producer to discuss his or her “real goal”—an individually based number that is above a minimum all agents must hit so their renewal percentages stay the same, rejecting a one-size-fits-all approach. Forming the stretch goal is straightforward— just add 20%. “Goals are clearly established and measured every week,” Starr says. For Ramon Montalvo, president of Montalvo Insurance Agency, a Best Practices agency in Texas, it begins by looking at the past. “At the end of the year, we look at our figures—our retention and our growth,” he explains, noting the goal is usually 15% growth and 85–90% retention. “Then we meet with producers at our annual producer meeting in early January and give them their goals based on our agency projection.” Bolton & Company, a Best Practices agency in California led by COO Michael Morey, doesn’t use the same top-down approach. “We build it from the individual producer, roll it to the team and then to Bolton as a whole,” Morey says. The process starts by analyzing an individual’s book, acknowledging lost accounts and establishing a base retention—taking off another 2–3% based on pure foresight. “From there, they start to build in their new business opportunities and determine what that net growth looks like,” Morey says—and because some producers overestimate and others underestimate, it turns out to be a fairly stable projection of future revenue. Regardless of the model used, the onus falls on the agency to create a culture of accountability. “I hear a lot of people say drive, energy, excitement and yeah, that’s all part of it. But accountability is what has to defi ne the sales culture,” Kormos says. Whether that means management, tracking, coaching or some combination thereof, “putting the right infrastructure in place” is vital in terms of compensation models and minimum targets. “At the end of the day, there are only two ways you can motivate a producer: more money and less money,” Kormos says. “We need to have a better sense of being able to provide bonuses and additional incentives for achieving goals and exceeding them, as well as having negative consequences for not meeting goals.”
What It Looks Like To address the challenge, The Starr Group establishes three goals for producers: minimum, regular and stretch. The fi rst is based on research—what’s happening at the local, state and national levels, using MarshBerry for refer-
The Art of Delegation Addressing the typical producer’s desire for control is another important piece of the puzzle—and requires clearly defining and communicating roles. “Salespeople often want ownership of every issue that ever happens within their accounts
preVioUS SpreAd: B.AA.SÆtreNeS/GettY iMAGeS; thiS pAGe: tiMothY hUGheS
TIM STARR, CEO of Wisconsin-based Best Practices agency The Starr Group
The Balance Challenge According to a recent Accenture survey of 1,100 independent agents, “Evolving to Compete and Win in the Long-Term,” most independent agents’ top priority is retaining existing customers. Attracting new customers comes in at No. 5, following providing a more consistent overall customer experience, servicing existing customers and providing access to competitive products. Why? Retaining an existing customer is not only less costly than acquiring a new one—many producers also find it easier to work on retention than to hunt down new business. “Everyone takes the path of least resistance,” says Nick Kormos, vice president of sales management at MarshBerry. “Part of the issue is just the producer being complacent. There’s no law that a producer has to wake up every morning trying to figure out how to grow their income by 20%. Some of them are just going to get to a certain level and be happy.” But client retention is still important. According to data from MarshBerry, retention levels of average agencies and high-growth agencies are almost identical—in fact, the top 25% of performers in the firm’s database achieved slightly higher retention levels in this past year than the average agency, Kormos says. Meanwhile, MarshBerry’s high-growth agencies also write about 20% new business as a percent of prior year commissions and fees, compared to an average of just 12.6%—suggesting that high-growth agencies must focus on both client retention and new business production in order to succeed. A Reagan Consulting study, “Producer Recruiting & Development: Getting the Attention It Deserves—and Achieving the Results You Need,” reports similar findings: The bottom 25% of firms in the Reagan Value Index achieve new business growth of only 7.3%, while the top 25% of firms achieve 25%.
SALES VELOCITY
LiSA KArLoo photoGrAphY/GettY iMAGeS
According to a Reagan Consulting study, “Producer Recruiting & Development: Getting the Attention It Deserves—and Achieving the Results You Need,” an agency can measure new business production with a metric called “sales velocity.” Expressed as a percentage, sales velocity is calculated by dividing this year’s total new business by the prior year’s total commissions and fees. The bottom 25% of firms in the Reagan Value Index achieve a sales velocity of only 7.3% and the average firm achieves 12.7%, while the top 25% achieve 25%. Tom Doran, principal at Reagan Consulting, says the sales velocity metric answers the question: What is the agency’s new business contribution toward organic growth? “If you want to focus on your sales engine, sales velocity is an excellent metric to eliminate the
retention variable from the organic growth equation,” he explains. “Account retention is a service metric. Sales velocity enables you to really focus on just the new business piece and understand how you compare relative to other agencies.” Doran explains that many agencies will say, “We want to grow 10% a year”—and that’s the end of the discussion. “What you haven’t done is ask, ‘How much new business would we need to do to accomplish that?’” he notes. “That’s where sales velocity helps.” Consider the following example: an agency with a retention rate of 95% wants to grow 10% this year. That agency needs a sales velocity of 15% in order to achieve its goal. If a 15% sales velocity requires the agency to grow by $150,000, but the agency only has three producers
instead of allowing some of their support people to handle that while they’re looking for new business,” Kormos says. “But should the salesperson make 10 phone calls to the underwriter trying to get a lower price, or can they delegate that?” Teamwork is fundamental in determining how producers and CSRs divide time between retaining existing accounts and seeking new business: If a producer is in the office doing the routine work, it means they aren’t out playing the field. “Agents sell—we don’t want them ideally doing anything else, so we have significant training and education that takes place at our account management level,” Starr says. “The deeper knowledge an agent has, the more time they have to be selling as opposed to touching an account.”
who bring in about $30,000 of new business each year, “you have to figure out how you’re going to bridge that gap,” Doran says. “Where’s that other $60,000 going to come from?” In that way, sales velocity becomes a planning tool for how many producers an agency should hire on an ongoing basis, identifying not only what the numbers should be but also gaps in an existing producer base. “You might say, let’s turn up the heat on our producers and get them to sell $40,000 this year instead of $30,000,” Doran says. “You’ve closed a little bit of that $60,000 gap, but it helps you understand it in a way that tells you whether or not you’ve really got enough producers to accomplish your goals.” —J.C.
The same principle applies to the administrative support at the agency’s home base. “Our service staff is empowered to make decisions,” says Maureen Arndt, vice president of operations at The Starr Group. “They don’t get a producer involved in personal lines—they handle the customer from beginning to end while they have them on the phone.” Montalvo agrees. “We don’t bother the producer if the CSR can come in and handle the more routine items—additions, deletions, minor items,” he says. “But with renewal, if it’s going to be over a certain premium amount, we ask the producer to contact the client versus the CSR.” The cohesive producer/CSR unit is a consistent model among these thriving agencies. “Brokers have a desire to win,” Morey says. “But to have the April 2015 • iamagazine.com
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THE PERFECT MODEL? In 2013, Michael Morey, COO of Bolton & Company, ran a few numbers based on a perfect model revenue of 20% new business and 90% retention—producing a “net 10%.” If Bolton reached that net goal over the past four years, they would have grown 15%. Last year, Morey shared the data with his employees. Whatever it took to get there— whether 15% new business and 95% retention or 25% new business and 85% retention—net 10% became the agency’s new sweet spot. “I said, ‘Here’s our focus for 2014,’” Morey says. “It’s my responsibility to watch our margins so that we’re hitting acceptable levels. If we see something lean out of whack, we can address that team by team, but let’s get the agency and all the employees to focus on net new.” The agency even revamped its bonus program to pay producers based not only on individual performance but also net new business for the agency as a whole. And it worked: “We grew organically 19% last year,” Morey says. “We had our best new business year and probably retention loss business was minimal.” —M.S.
the MeASUreMeNt iS iN the reSULtS, Not iN the tiMe SpeNt to AccoMpLiSh the oBJectiVe.
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confidence to go out and develop those new opportunities and bring those into the door, they need to have confidence that the team behind them is there to help them win.” So how does employee time management feed into the bigger picture? “The measurement is in the results, not in the time spent to accomplish the objective,” Starr says. “It doesn’t matter how much time it takes to really talk about or implement retention or new business. They are the two single most important variables that exist under an agency’s roof and if you’re not getting the results you want, you have to rethink and reformat your process to get there.” Is It Working? The biggest problem for many agencies is failing to properly and effectively measure their results, Starr says. For his agency, tracking retention by premium is misleading. Instead, the quantified, benchmarked and disciplined retention tracking system is based on policy count. “It’s helpful to know what the premium retention is, but the true measure of how happy your customers are is customer number retention,” Starr says. Montalvo not only tracks producer time daily but evaluates it individually—easier for the small staff at an agency with a revenue under $1.25 million. “At the end of every day, we require that every producer gives a report of their activity,” he says, noting this helps keep track of renewals and which accounts require the most attention. “That’s something I look at, review and then discuss with them.” Taking a similar approach by tracking new business based on appointments, Bolton & Company also factors broker tenure into its measurement protocol: an experienced
producer may have two to four face-to-face meetings month, where a new producer might have 12 while “building the pipeline.” When The Starr Group writes new business, the account enters the agency’s four-yearold “drip marketing” program, which consists of emails, regularly scheduled phone calls and quarterly newsletters resulting in 13 overall touch points within the first year—most of which are automated. “We talk about being a marketing organization that happens to be in the insurance risk management business,” Starr says. An unusual amount of The Starr Group’s retention and new business outreach is preprogrammed—“each producer is responsible for developing their multi-touch, program-specific marketing track over the course of the year for their assigned prospects,” Starr says. The agency has also built and customized a stewardship behavior report integrated with its agency management system that helps measure activity— “a complete retention tool,” Starr says. Morey stopped producing stewardship reports for every client after it didn’t land across the board—a contractor has different servicing needs than a private school, for example—but the agency still produces the data if it happens to come up. “We’re trying to really find out what the client’s needs are and then following their lead,” he says. “We do try to let our brokers have as much freedom to manage their book as they feel. We just haven’t felt trying to make the same constraints on each makes sense.” Jacquelyn Connelly (jacquelyn.connelly@iiaba.net) is IA senior editor. Morgan Smith (morgan.smith@iiaba. net) is IA assistant editor.
CAPITAL GAINS IN APRIL, BIG ‘I’ MEMBERS TRAVELED TO WASHINGTON, D.C. TO MAKE SURE CONGRESS UNDERSTANDS THE NEEDS OF SMALL BUSINESSES THAT OPERATE IN ONE OF THE MOST HEAVILY REGULATED INDUSTRIES IN THE U.S.
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By Jacquelyn Connelly & Morgan Smith
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rior to attending his first Big “I” Legislative Conference in April, Jeremy Norby, winner of this year’s Maurice Herndon Scholarship, said the annual event presents “an opportunity to hear from people who are more dialed in than I am.” “I’m very interested in knowing how much legislation affects our industry and to see how it works from the other side of the coin,” said Norby, a young agent at Seitz Insurance in Sidney, Montana, who was one of approximately 1,000 independent agents and brokers to attend this year’s Legislative Conference. In insurance, young agents like Norby are often the catalysts for positive change. The same holds true in Congress. Why Relationships Matter During her address at the Young Agents & InsurPac State Chairpersons Legislative Luncheon at the Big “I” Legislative Conference, Rep. Kyrsten Sinema (D-Arizona) discussed the importance of a fresh perspective when it comes to finding common political ground. “We’re younger, we’re less ideological, we don’t care about whether you’re a Republican or a Democrat,” said Rep. Sinema, 38, who is serving her second term in the U.S. House of Representatives. “We just want to solve problems and get things done for the communities we serve.” After facing serious poverty growing up in Tuscon, Arizona, where she lived in an abandoned gas station with her family for several years, Rep. Sinema was motivated to find concrete ways to help other struggling Arizona families. In her mid20s, Rep. Sinema’s efforts as a social worker, attorney and college faculty member led her to run for a seat in the Arizona state legislature. “That’s where I learned what I think is the most important skill in politics: to build meaningful relationships with people who are different from yourself,” said Rep. Sinema, who serves on the House Committee on Financial Services including the Subcommittee on Financial Institutions and Consumer Credit and the Subcommittee on Monetary Policy and Trade. It’s the same bipartisan spirit that now drives Rep. Sinema’s Congressional efforts in Washington, D.C. “What allows me to be successful is my ability to form relationships and make friends with all my colleagues—even those with whom I have very little in common,” she said. “We all have more in common than we know.”
Congress Needs ‘Principled Compromise’ Sen. Heidi Heitkamp (D-North Dakota), who addressed Big “I” members during the Legislative Conference breakfast, agrees a commitment to finding common ground is missing in a capital awash with bickering over issues that are symbolic rather than concretely useful to the American public. Growing up in a small North Dakota town of just 90 people, Sen. Heitkamp learned early that getting along requires overcoming animosities and divisive pressures to achieve community goals. “My argument is either quit talking about it or do it,” she said. “Not making decisions because it’s hard to make them is costing America opportunity, it is costing America jobs and it is causing Americans a level of frustration and alienation from their government.” A commitment to common sense and what she calls “principled compromise” drives Sen. Heitkamp’s efforts on the Senate Committee on Agriculture, Nutrition & Forestry; Committee on Small Business and Entrepreneurship; Committee on Indian Affairs; Committee on Homeland Security & Governmental Affairs; and Committee on Banking, Housing & Urban Affairs—the entity that has jurisdiction over insurance issues in the Senate. “There’s a whole lot of us who understand the importance to our constituents of a vibrant and affordable insurance market,” said Sen. Heitkamp, who previously served as North Dakota’s Attorney General and as the state’s tax commissioner. “You are important to the American economy and you are important to the American family. We have got to figure out ways to continue to make insurance vibrant and affordable.” Flood and Health Care: Legislative Hurdles That’s especially true considering some insurance issues have remained on the docket for decades. According to Frank Mancini, president & CEO of the Massachusetts Association of Insurance Agents, national health insurance and federal regulation of insurance are two issues that have remained in the spotlight since the first Big “I” Legislative Conference in 1977. House Majority Whip Steve Scalise (R-Louisiana) touched on one of those issues during his address at the Legislative Conference breakfast, emphasizing the importance of legislation to remedy some of the problems associated with the Affordable Care Act—a law with provisions he said have prompted a large shift in full-time to parttime employees.
CONGRATULATIONS! 2014 Gerald Solomon-IIABA Legislator of the Year: U.S. Sen. Mike Crapo (R-Idaho) 2015 Woodworth Memorial Award: Jim Armitage of California 2015 Jeff Yates Lifetime Achievement Award: Dick Poppa of New York 2015 Dan Fulwider Award for Community Involvement: Paul Schoonover of Ohio 2014 InsurPac Young Agent Award: Brian Scarborough of Florida 2014 Sidney O. Smith Award: Mike Larges of Michigan 2014 Barney Burns Award: Scott Evans of North Carolina 2014 Herndon Award: Massachusetts Association of Insurance Agents 2014 InsurPac National Championship Award: Texas 2014 Young Agent InsurPac National Championship Award: Florida 2014 InsurPac Eagle Awards: Louisiana, Montana, New Hampshire, North Dakota, South Carolina and Wyoming
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“The Cadillac tax is something that’s going to ultimately make it harder for people to provide the good health care they provide for their employees,” Rep. Scalise said. “If the Supreme Court does what I think they should do, in saying the federal government can’t subsidize a federal exchange in the health care marketplace, it will provide a great opportunity for Congress to come back and replace what is broken with a real free market reform.” In addition to health care, Rep. Scalise discussed the legislative battles his home state faced after Hurricane Katrina and the flood insurance reform issues the country continues to face today. “There were a lot of proposals that sounded real populist that would have depleted our insurance market in our state,” Rep. Scalise said. “We were able to hold back on those and bring more insurance companies to help write policies. It was critical to the rebuilding and recovery from that terrible disaster.” Now holding the No. 3 leadership position in the U.S. House of Representatives, Rep. Scalise is using his experience to help reform the National Flood Insurance Program. “We were able to change [Biggert-Waters] and put real stability in place with those reforms,” Rep. Scalise said of the congressional coalition that came together more than a year ago. “We’re already starting to meet with Republicans and Democrats to work on the next iteration of the renewal of the flood insurance program.”
The bigger issue, according to Long, is what do with all the excess capital. “The other side of our business is investments, and with interest rates so low and so much capital in the industry, what to do with that is almost the question of the day,” he said. Equally important is the future of marketplace disrupters like Google, overstock.com and Wal-Mart. “People will continue to use the Internet to do research and get smarter and access knowledge, but insurance is still fairly complex compared to other consumer products,” Swift said. “I think the trick in any model is how you allow a seamless experience for consumers to go from Internet to voice to face.”
➊ Bob Rusbuldt, Big “I” president & CEO, moderates a panel discussion featuring (left to right): David Long, chairman & CEO of Liberty Mutual Insurance Group; Christopher Swift, chairman & CEO of The Hartford; Tom Motamed, chairman & CEO of CNA; and Dave Kaufman, president & CEO of The Motorists Insurance Group. ➋ House Majority Whip Steve Scalise (R-Louisiana) discusses flood insurance reform and ACA challenges. ➌ Sen. Heidi Heitkamp (D-North Dakota) stresses the importance of fact-based decision-making. ➍ Rep. Kyrsten Sinema (D-Arizona) emphasizes bipartisan relationships in Congress. ➎ Charles Symington, Big “I” senior vice president for external and government affairs, leads an issues briefing with fellow Big “I” lobbyists (left to right): Wyatt Stewart, Big “I” director of federal government affairs; Jen McPhillips, Big “I” senior director of federal government affairs; John Prible, Big “I” vice president of federal government affairs; and Nathan Riedel, Big “I” vice president of political affairs. ➏ Big “I” Chairman David Walker shares his optimism about the future of independent agents in his State of the Association address.
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HANNAH BENNETT
Top Carrier CEOs Sound Off What else is next for the insurance industry? During the general session breakfast, Bob Rusbuldt, Big “I” president & CEO, sought answers during a panel discussion featuring Dave Kaufman, president & CEO of The Motorists Insurance Group; David Long, chairman & CEO of Liberty Mutual Insurance Group; Tom Motamed, chairman & CEO of CNA; and Christopher Swift, chairman & CEO of The Hartford. Addressing the likelihood of a change in monetary policy in the near future, Rusbuldt asked panelists how it will affect the national economy and insurance companies. “I don’t see any dramatic change with a slight spike in interest rates,” Motamed responded. “The reality is it’s not going to take us to cash flow underwriting like many years ago.” Kaufman said he anticipates an increase in short-term rates—but “it takes a much more robust economy to affect long-term yields,” he said. “The rating agencies are really putting a focus on the quality of earnings and consistent underwriting results.” Strong, consistent underwriting could very well drive significant changes for the p-c insurance marketplace in the future. “I tend to agree that there is the opportunity to have shallower cycles going forward,” Swift said. “Data, analytics and the amount of information we all share together is going to smooth out some of our historical cycles.”
REVITALIZING AMERICA Ohio Gov. John Kasich’s (R) story is that of the American dream. Growing up in a small town in Pennsylvania, Gov. Kasich’s grandfather was a coal miner, his father a mail carrier and his mother had no college education. On the night he was elected to the Ohio State Senate at 26 years old, his parents “couldn’t believe that this had all happened—because nothing like that ever happened in my family,” he said. In his address to the Big “I” Board of Directors, Gov. Kasich shared his political journey from being the only Republican Congressman to defeat an incumbent Democrat in 1982 to becoming Chairman of the Health Committee, Chairman of the Budget Ohio Gov. John Kasich (R) shares his political Committee and eventually Governor of Ohio. journey with the Big “I” As governor, Gov. Kasich has rotated the state’s Board of Directors. economy, unemployment rate and credit rate a full 180 degrees. “I was there to do something,” Gov. Kasich said. “We looked at everything that operated in the state of Ohio and in a short four years, we have grown employment by almost 340,000 in the positive. We went from an $8 billion hole to running a $2 billion surplus. We’ve cut taxes by $3 billion.” Not too shabby for a politician who ended his first year in office with a 28% approval rating—now up to about 55% after his fourth year in office. “What’s the message?” Gov. Kasich asked. “Grow your economy. Strip out the politics. Give everybody a sense that everybody has a stake and that everybody can rise.” —M.S.
KASICH: MARTY LAVOR
And consumers certainly expect “seamless” based on their experiences in other industries. “It’s no longer a 9-5 service model,” Long said. “You no longer get compared to other insurance companies—you get compared to amazon.com.” The key, then, is educating consumers about the value an independent agent can bring to an insurance transaction. “We love the independent agent model because there’s advice, there’s counsel, and that usually brings the best clients to us,” Motamed said. “The disruptors will figure out how to use some of their technology to improve the touch points to our customers, but I think the independent agent’s going to continue to dominate commercial lines and the full personal lines portfolio,” Kaufman agreed. ‘Dare for Mighty Things’ During his State of the Association address, Big “I” Chairman David Walker touched on similar challenges facing the independent agency system. “In the future, your competition is going to be Google, Amazon and entities like
that,” he said. “And if we’re unrealistic about that expectation, I think we’re being incredibly naïve.” According to Walker, 70% of consumers rely on the Internet to look for solutions to their personal lines insurance issues. “That doesn’t mean that we have to give up that ground, and that doesn’t mean we don’t have solutions,” Walker said. “It simply means that we have to build a better mouse trap.” In a call to action, Walker advised agents to form deeper relationships with associations, carriers and vendors, arguing it takes a conscious effort to become meaningfully involved in diversity efforts and grassroots campaigns and to use the Trusted Choice® brand, noting “all of these are the tools we need to move forward.” And Walker is confident that the Big “I” will continue to develop new tools to help agents meet their everyday challenges. “Knowing the leadership of the [association’s] board, we will continue to dare for mighty things,” Walker said. “I’ve never been more positive, encouraged and upbeat about the independent agency system than I am today.” Jacquelyn Connelly (jacquelyn.connelly@iiaba.net) is IA senior editor. Morgan Smith (morgan.smith@iiaba.net) is IA assistant editor. June 2015 • iamagazine.com
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