Independent insurance agencies can increase revenue in two ways: Selling more insurance policies and selling policies with larger premiums. The foundation for both is strong relationships with the carriers they represent. In fact, the importance of these relationships may be increasing.
In a recent article for Insurance Journal, industry consultant Chris Burand decried the trend of agents and carriers growing further apart than at any other time in his experience. Indeed, a 2019 report from J.D. Power and the Independent Insurance Agents & Brokers of America showed a wide gap between what independent agents expect from their carriers and what they actually receive. “The result of this schism,” Burand wrote, “is a model that generates too little growth at too high a price.”
Al Diamond of Agency Consulting Group says changing attitudes in both groups have left commitment and loyalty behind. In his view, “(A)gencies have given carriers as many reasons to distrust their commitments as carriers have given agents.” This lack of trust comes with a big price tag. The J.D. Power report found that failure of carriers to reduce the number of agents giving them poor marks on five key performance indicators is costing them $1 million in revenue for every 1,000 agents.
Agents cannot control what carriers do, but they can control what they do. What are the kinds of things agencies should be doing to bridge the gap and form strong personal relationships with carriers?
Thoroughly complete submissions. A blog post by AmTrust Financial states it plainly:
“The more information the agent provides about the risk, the better the outcome of the quote will be. Lengthy applications can be a time-eater, we know. But truly, the more thoroughly they’re completed the more accurately we can assess the risk and the quicker we can turn around the quote.”
An agent who makes an underwriter’s job easier with complete information is likely to get better consideration for her accounts.
Form personal connections. Ken Wohl, head of marketing at insurtech firm Indio Technologies (now part of Applied Systems,) writes, “An underwriter is more likely to work with your agency and negotiate better quotes if they truly believe that you care about their success.” He recommends connecting on multiple channels, setting up regular meeting times, using technology to free up time for working with underwriters, and being respectful when you have disagreements.
Diamond adds, “(B)egin by building a feeling of mutual trust that each partner highly desires to help the other partner achieve his goals. Once this trust is built and proven, both sides will find that their relationship is easier and smoother on a daily basis.” Identifying the right person within the carrier with whom to form that relationship is also vital. “The relationship with underwriting and marketing is important to the flow of business,” he wrote, “but the agent must establish a relationship with the person in the company who has the authority to determine the company’s commitment to the agent.”
Know your carriers’ underwriting appetites. Sending a steady flow of the classes a carrier wants or that fit a new program tells them that you understand their needs. Conversely, sending restaurants to a carrier that doesn’t write restaurants will hurt the agency’s reputation.
Wohl recommends that agents:
- Focus on the appetites of their two core carriers, using technology such as IVANS Markets to monitor appetites
- Avoid submitting risks that the carrier does not want
- Keep a log of submissions for each carrier and look for above-average levels of rejection and acceptance. Chat with the underwriters who are rejecting accounts to find out where the disconnect is, or prioritize the carrier who is accepting most risks.
Maintain a profitable loss ratio. Carriers cannot afford to work with agents who consistently lose money for them. Any agent or account can have the occasional shock loss, but too much bad luck will eventually convince the underwriter that the agent is not pre-qualifying accounts.
Carriers want to work with agents whom they can trust, who send them profitable risks that they want, and who are easy to work with. Agents who take that message to heart will find their submissions at the top of an underwriter’s pile.