How to Improve Communication with Insurance Companies

By Catherine Oak & Rachel Schoeffler | May 19, 2014

Today agents must assume an active role in establishing solid relationships with their insurance companies. The key to any good relationship is communication. Agencies must devise a well-organized plan to communicate with their carriers. This article shows owners the way.

Since some insurance companies communicate better than others, it’s up to the agency’s management to ensure a dialog occurs. That means good relations cannot be allowed to stagnate, and weak relations must be improved upon.

The following are steps agencies should take to establish healthy relationships with their carriers. Most are relatively easy tasks that shouldn’t take much time. The steps will be easiest for those agencies that have business and sales plans in place.

Before setting up a communications plan, agency owners need to evaluate which companies will meet their needs as competitive, responsive markets.

How does one become a preferred agent? The key is to focus on better managing the agency company relationships.

Relationships of the past may no longer meet today’s needs, especially if either the agency or company has targeted certain classes of business that aren’t of interest to the other.

Insurance companies continue to limit the number of agencies they do business with, often to better their resources and reduce costs. Most companies differentiate between the services they provide their “preferred” agents versus what they provide their “standard” agents.

It’s usually worth the effort to achieve preferred agency status with as many companies as possible, because the preferred agent may receive better underwriters, quality target/niche marketing programs or exclusive programs and often higher commissions.

Another benefit: “preferred” contracts usually contain enhanced profit-sharing agreements, value-added services, interface capabilities, training programs and financing of various items such as producers, acquisitions and perpetuation.

How does one become a preferred agent? The key is to focus on better managing the agency company relationships.

Establish an Action Plan

First, assign an individual or two from the agency to each carrier. This person(s) will be that carrier’s “relationship manager.”

For the firm’s “top” carriers, divide the relationship manager’s responsibilities among the owners and/or a key non-owner producer or CSR, depending on who has the best relationship with the carrier. While carrier relationship management should always be a major focus for owners, dividing up the duties with other staff will ensure that the steps are implemented.

A company relationship management plan should include:

  • Job assignments;
  • Planned visits;
  • Information and data to communicate; and
  • A budget to implement the plan.

Collecting and presenting information will set the tone of the communication. Prepared and well-informed agencies will immediately grab the company representatives’ attention, since unfortunately most agencies fail to do their homework.

Keep in mind that it takes time and money to nurture a successful company relationship. Track the plan and make sure it’s followed. Even a strong relationship will eventually die if it’s neglected.

Review the Markets

The next step is to learn about the agency’s relationship with its markets.

To do that, make a list of all the firm’s companies and include three years’ worth of the following information:

  • Written and earned premium;
  • Commission paid;
  • Contingents received;
  • Number of policies;
  • Average commission per policy;
  • Number of submissions;
  • Number of quotes; and
  • Hit ratio and loss ratio.

Write down what targeted classes of business that the carriers seem to be interested in and which ones they are competitive in. Create a report card for the company based on staff input.

Also, determine the carriers’ perceptions of the agency by having them fill out a report card on it. Ask what three things the agency could do to improve the relationship in order to write more business. If the agency dares, tell the carrier the top three things they should do to improve the relationship with the agency’s personnel.

Find out how the agency can take advantage of the value-added services the carriers offer, such as financing new producers or perpetuation, training, etc.

The next step is to create a profile of the firm. The profile should be the business plan and firm’s sales and marketing plan. The profile should include the firm’s mission statement, goals and objectives, history, organizational chart, key employees, agency marketing materials, sales approach, top 10 classes of business the firm likes to write as well as its producers and include the firm’s new business history.

If looking for new markets include some key financial statistics on the firm, errors and omissions (E&O) information, the top carriers, premium and loss ratios for the past three to five years.

Agencies, like people have their own unique personality. Agencies that know who they are and know their strengths and weaknesses will be in a good position to communicate their needs to the carriers.

How can agencies expect the markets to meet their needs when they don’t know or understand their needs themselves?

Meet with the Companies

Next, take the agency’s business plans or agency’s profile package and the insurance company evaluation directly to the firm’s key markets. Set an annual meeting with them to discuss agency goals and future opportunities.

The agency principal in charge of markets and the relationship manager for that particular carrier should meet with the regional vice president or branch manager of each contract company, as well as the main underwriter assigned to the agency and the marketing rep for three reasons.

To inform the company’s management about the current status of the agency and the future plans.

To find out where the company stands now and its plans for the future.

To discuss how the agency and the company can and should do more business together in the future.

Being proactive is a sign of strength and the carriers appreciate this. Set up follow-up meetings to discuss progress on the agency-company game plan on at least a quarterly basis.

Both parties need to be open and frank in these meetings. Discuss the agency profile and the company evaluation and establish reasonable goals and commitments for future business.

It is also important to relay the meeting highlights to agency staff.

Enhance this now-stronger relationship by planning ongoing carrier “schmoozing” activities. It is easier to develop a relationship if parties meet often (social visits are especially effective). The entire agency needs to help establish good relations with the markets.

Summary

It is extremely important for insurance companies and owners of agencies/brokerages to build partnerships that are responsive to the business plans established each year by each party.

Building improved relationships needs to be a two-way street, so the agent cannot be passive.

Improved communication and a focus on improving relationships will save time and will make both parties more money, guaranteed!

About Catherine Oak & Rachel Schoeffler

Oak & Associates is a national financial and merger and acquisition firm, consulting with thousands of insurance agencies and wholesalers for the past 23 years. Email: catoak@gmail.com. Website: www.oakandassociates.com. Phone: 707-935-6565.

From This Issue

Insurance Journal West May 19, 2014
May 19, 2014
Insurance Journal West Magazine

AAMGA; Salute to Super Regionals; Premium Finance Directory

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