The hard insurance markets in personal lines and some commercial lines of the past few years have strained relationships between carriers and independent agencies. A recent J.D. Power study showed that slightly more than half of agencies believe they are receiving the support they need from carriers. More than 20% of them believe their carriers do not value them as partners.
Repairing the damage to agency-carrier relationships will require hard work from both sides. For their part, here are things within agencies’ control that will help.
Communicate often and effectively. David Dawson of agency network Renaissance Alliance recommends quarterly or monthly half-hour meetings with carriers. These agenda-driven discussions, he says, should educate agents on carriers’ agendas and underwriting appetites.
Submit business that fits the appetite. During the hard market, it has felt to many agents like carriers’ appetites constantly shift. That makes regular effective communication so important. There is no point in submitting apartment buildings to a carrier that does not want habitational business. Where the agency’s book and the carrier’s appetite coincide, the relationship works for both parties.
Make submissions as complete and informative as possible. Well-prepared submissions make underwriters’ work easier and increase their faith and trust in the agency. Effective submissions contain fully-completed applications, current loss runs, pertinent information that supplements the applications, and an idea of the target premium the underwriter needs to hit. Partially-completed applications that force the underwriter to chase missing information will turn her off, as will going through the work of preparing a quote only to find out the carrier never had a hope of being price-competitive.
Stay within the agency’s authority. An agency’s underwriting authority levels will vary from one carrier to another. That authority should be spelled out in the contract with the carrier. The agency should take care to stay between the guardrails. Underwriters quickly grow wary of rogue agencies who frequently request exceptions because they exceed their authority.
Certificates of insurance, in addition to being a processing headache and source of errors and omissions liability claims for agencies, can also harm carrier relationships if not handled properly. Certificates should never imply that a policy provides more coverage than it actually does. A carrier that winds up having to pay a claim that would have been uninsured but for an inaccurate certificate will sour on the agency that issued it.
Learn and use carriers’ technology platforms. This can present a challenge to agencies because they are forced to deal with as many platforms as they have carriers. However, turnaround time for quoting and issuing policies decreases when the carrier and agency effectively use shared technology platforms. Agencies may find carriers with inadequate technology to be a poor fit.
Monitor the agency’s results with each carrier. Track metrics such as mix of business, loss ratios, hit ratios, and renewal retention. Take credit for and tout good results. When one or more results are sub-par, address the problem proactively. Use the periodic discussions to tackle uncompetitive pricing or service issues. Identifying problem areas and taking steps to improve them before the carrier brings them up will demonstrate the agency’s value as a partner to the carrier.
Be empathetic. You know the pressures your agency is under from carriers and clients. When an underwriter’s decisions are making you pull your hair out, stop to consider the pressures she is under. Finding the right balance between production and profitability is no easy task. Expect professionalism from underwriters and marketing representatives, but try to understand their stressors.
Every agency could write an article longer than this one about the things they wish their carriers would do. However, an agency can control its own actions, not those of its carriers. An agency doing everything the right way will not always have profitable carrier relationships, but it is more likely to have them than not.
