Where to Find Inexperienced Agency Producers

By | September 5, 2005

Is it wiser to grow by hiring a veteran agent or is it better to hire someone without any insurance sales experience? Agency executives constantly debate this important issue. Big dollars are at risk. So which opinion is right?

The quick and cheesey answer is that both opinions are valid. Sales success depends upon the individual characteristics of the new hire, along with a few zillion other factors. Therefore, this column suggests practical ways to help you find your next producer. Let’s start the search by exploring the downside of employing a veteran agent. Here are three key reasons, other than affordability.

Most experienced salespeople are already working. This simple fact requires you to hire the producer away from his or her current employer. This aggressive act can result in substantial attorney’s fees, especially if there is a valid covenant-not-to-compete or a non-piracy agreement in place. Furthermore, you may have to pay out cash damages to the agent’s former employer. If you decide to go this route, be certain to include all of these numbers in your pro forma hiring projections.

Another downside is that veterans know enough to be dangerous, particularly when it comes to prospecting, underwriting and collections. If the potential agent’s established habits, business philosophy, and ethical standards vary greatly from yours, then future friction is all but assured.

Overly optimistic sales projections also cause problems. Some veterans who want to change employers tend to exaggerate the level of business that they can bring to the new agency. They do it to make themselves appear to be more valuable than they actually are. Even discounting for this, their anticipated volume is often difficult to project, especially if a restrictive employment contract is firmly in place. Tip: Always ask veterans about their prospect database. Sometimes these leads can be freely solicited.

Of course, the upside is that many veteran producers make terrific hires. These individuals can bring new skills, markets and a positive attitude to an agency that’s focused on growth. Still, these talented men and women are hard to find and expensive to attract. That’s why many principals explore other producer possibilities. Here are three places to start.

Your own office. Sales-oriented CSRs are eager for the opportunity to prove themselves as full-time agents. Many have successfully moved out from behind their service desks into the field. Agency placers and underwriters can also make good producers. Tip: Don’t change the jobs of any of these individuals without first testing their sales aptitude. And remember, they require extensive and continuous sales training.

Insurance companies. Select from the marketing representatives, underwriters and claims adjusters with whom you work with after gaining permission to talk to these pros from carrier management. Many of the agents reading this began their careers as company employees. Adjusters make an interesting choice. They are familiar with coverages, experienced at working with people under trying circumstances, and their rate of pay is often lower than that of underwriters and field reps.

Insurance-specific employment agencies.These firms trade in people. They may already know of qualified local individuals who are interested in producing for your agency. Furthermore, they help to filter out weaker prospects who might otherwise take up your valuable time. Employment agents charge a fixed or negotiable fee based on your producer’s anticipated first-year compensation. While the employer usually pays this amount, it can sometimes be split with an employee. Also look at insurance job Web sites as a lower-priced alternative.

Looking beyond the industry
The largest pool of producer prospects lies outside of the property/casualty world. Once you take the mental step of looking beyond our industry, the possibilities are endless.

Outsiders can bring with them a fresh perspective and attitude, rekindling your enthusiasm in our often-frustrating business. Also note that people are most comfortable buying from others who are within 10 years (plus or minus) of their own age. Therefore, when you successfully hire a young producer, you have not only brought in another person to attract new business, you have increased the value of your agency by adding more long-term clients. Next are eight outside sources to consider.

Personal life agents. These financial service pros are veteran sellers and make excellent job candidates. Many already have their P/C license. And their lack of familiarity of with our side of the business is usually a plus. After all, sales success is 85 percent selling skills and only 15 percent product knowledge. Furthermore, they come complete with an established personal lines client base, depending on any employment contract restrictions.

Business life/group agents. Like their counterparts above, agents who sell individual and group contracts to businesses are already familiar with sales techniques involving asset protection. But unlike them, these veterans already have a potential base of commercial clients from which to work. They can quickly bring in some big numbers. Tip: If you decide to hire a life/health agent, either personal or business, make certain that they continue to sell financial service products.

Real estate brokers. Like insurance, real estate is an extremely competitive business where service and sales skills rule. It’s also a calling that’s highly susceptible to the local economic environment. And when these conditions become depressed for too long, some excellent salespeople may become disenchanted with the field. Brokers make strong producer candidates because of their familiarity with your area’s residents and businesses. Plus, realtors are veteran sellers with a strong knowledge of property and an entrenched client base.

Recent service veterans. Often, newly discharged, long-term vets are looking for a fresh career. They are experienced at working closely with others under difficult conditions, have well disciplined work habits, and may have the financial freedom to start from the bottom.

Relatives.The benefits of working with family members can include trust and a parent’s pride. There’s much satisfaction in a son or daughter continuing and succeeding in the family business. However, hiring relatives can be a two-edged sword. A variety of internal and other problems can easily develop when the relative does not perform up to reasonable standards.

Friends of your adult children. You are already familiar with these individuals on a social level, and one or more may have the characteristics that you seek in an agent. Also, if you are considering employing one of your kids as a producer, there is an advantage to simultaneously hiring one of their friends. This way, both can learn the business together. They may also evolve into friendly competitors, which is great for the agency as long as the competition remains healthy.

College campuses. Believe it or not, every four-year graduate doesn’t want to jump from academics into insurance sales. Usually the student has to be sold on our industry. The best way of accomplishing this is to hire an intern who will work in your office for college credit and minimum wage (or for free). This allows the student to observe and participate in what actually happens in an insurance office. Those who thrive in this environment are worth considering. Additionally, community college business graduates who want to enter the employment market, instead of going on to a four-year school make strong job candidates. Contact the placement or intern office at your local colleges.

Employees of firms you do business with. Consider every person who tries to sell to you as a potential producer. Watch the retail clerks at the national chain stores you frequent. Many are well-trained, pleasant sales people. And since they’re often young and paid a low wage, they may be interested in a new career. Invite the most promising in for an interview and aptitude testing.

Tip: Also, whenever you have a few moments, talk to the sales reps who visit your agency, regardless of whether you know them or if they have an appointment. Pose a few insurance-like objections, such as, “I don’t need another Yellow Pages ad,” or “Why should I buy my service contract from you when I’m happy with my present computer maintenance company.” Measure their responses to your concerns. If they deftly handle your queries, you may have found a potential producer. At the very least, the exercise will help you to brush up on your own sales skills. You may even learn something from a salesperson who is better trained than yourself.

Conclusion
To achieve growth and survive, an insurance agency must take a number of risks. Looking beyond the perceived security of hiring a veteran producer is one such speculation. After all, new people can work out. How many agents reading this were ever inexperienced producers? How many of you are still in the insurance business? If you made it, so can others. But if no one takes a chance and risks making a few hiring mistakes, the youngest producer in the country will be the last.

Alan Shulman, CPCU, is the publisher of Agency Ideas, a subscription-only sales and marketing newsletter. He is also the author of the 1001 Agency Ideas book series and other popular P/C sales resources. He may be reached at (800) 724-1435 or by e-mail at:
shulman@agencyideas.com. His Web site is www.agencyideas.com.

Topics Agencies Talent Property Casualty

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