Independent insurance agencies not only managed to survive through the 2020 economic downturn and pandemic, but also managed to keep their employees happy through all of the year’s disruption.
In Insurance Journal’s annual Agency Salary Survey, employees reported the highest levels of satisfaction with their agency compensation in years.
They were satisfied despite the fact that most agency employees received less compensation in 2020 than the prior year.
According to the survey, which polled nearly 800 agency owners and employees across all states, the average Agency Compensation Satisfaction Index was higher in all three categories — management/owner/principal, producer/sales, and support staff/CSR/account executives. Satisfaction ranked the highest in the past five years, according to the survey results. So while average total pay fell for nearly all agency personnel, except producers, satisfaction over agency compensation in general actually increased in 2020. (See page 32)
Agencies and their employees have been holding their own, says Al Diamond, president of Agency Consulting Group based in Cherry Hill, N.J. Agency owners know now is not the time to reduce staff.
“If they have good, competent people, agency owners are going to do whatever is necessary to retain them in expectation that the pandemic will go away and the agency will start growing again,” he said. “There are agencies that are using this time to get rid of deadwood,” Diamond said. But agency owners know the value of good, competent people and how difficult they are to find.
Employees are grateful, he said. “They feel they’re lucky to have a job,” he said.
Agency employees see first-hand how clients are struggling with the effects of the pandemic in industries such as hospitality, restaurants and entertainment, and they try to help them reduce their insurance costs as much as possible, Diamond says. “It’s a difficult time for all of those small businesses and so it’s the agency staff that sees this,” he said. “They’re not going anywhere.”
According to the survey, agency employees were mostly satisfied with how their own agency responded to COVID, too. On a scale of 1-to-5, agency employees ranked their own agency’s response to the pandemic at a 4.17, with 5 being most satisfied and 1 being least satisfied.
The accommodations provided to employees due to the pandemic included:
- Work from home options (88.9%)
- Added safety precautions such as partitions, masks and extra cleaning (71.1%)
- Flex time or paid leave (28.8%)
- Additional wellness programs (8.6%)
- Virtual in-house events (28.1%)
- Additional tools to help communicate with agency clients (34.9%)
- Employee Assistance Programs (14.6%)
Close to half of all agencies responding to this year’s survey implemented salary freezes (40.2%) due to constraints from the pandemic; however just 7.7% reported implementing salary reductions or furloughs, while 15.8% reported employee layoffs. Despite the challenges, 42.5% reported adding new employees during the pandemic.
While nearly half of the survey respondents (45.0%) said they are concerned how the pandemic will affect their agency’s business in the future, just 15.1% said they are concerned about job security due to the pandemic.
Chris Burand, founder and owner of Burand & Associates LLC based in Pueblo, Colo., says that for agencies that have managed personnel issues well during the pandemic, it comes down to leadership.
“I have some clients that have just nailed it and their employees are so appreciative.”
Remote work options have helped employees as they struggle with managing remote schooling or helping aging family members. But Burand said for many it’s been a win-win for everybody. The agency hasn’t had to increase wages and the staff are saving money and managing family issues such as remote schooling. “So for some employees remote work has been a godsend and those employees are saying, ‘I’m never going to leave this agency.'”
Some agencies may not have had the right leadership, or the right structure, or training, or maybe they didn’t have the right hardware, or have lost employees, Burand says. “And it wasn’t a matter of paying more money.” In his view, it’s been more about the agency leadership, and how that leadership managed what is likely one of the most difficult years ever for independent agencies.
The changes in how agencies operated through the pandemic and still do today are likely permanent.
“I think many agencies will never go back to the way they operated in the past,” says Tony Caldwell, co-founder, chairman and CEO of OAA.
“Talent acquisition is rapidly becoming, or is already, the number one issue for agencies and high-quality employees, particularly younger ones, are and will insist on workplace flexibility. In addition, offering virtual work will allow agencies to recruit more broadly, in geographic terms, and this will in turn force agencies who might not want to offer that kind of work to do so to be competitive.”
Mary Newgard, partner and senior search consultant for Capstone Search Group, a national recruiting firm dedicated to the insurance industry, agrees.
“I think what agencies will find is that the ability to retain talent and to attract new talent and being able to put the remote characteristic right out there on their jobs, behooves them in two ways,” she said.
“You’ll get a deeper talent pool, and you won’t have to pay way above market value to get it.”
“Given the competition for talent that will only increase, agencies have no option to reduce compensation and now remote work will be necessary to offer to attract talent as well,” Caldwell added. “There are many agency employees though who prefer to work in an office environment and so what will likely develop is flexibility where employees work both from the office and home, some work remotely and some work solely in the office.”
It’s important for agencies not to view remote work as a lesser opportunity, Caldwell says, claiming it actually offers many advantages and the potential for fixed cost reductions for rent, insurance and other expenses.
The key management issues in return for remote work are managing productivity and sustaining culture, Caldwell said. “Technology has plenty of solutions for the first and regular communication (which can be done in virtual as well as in person) is the key to the second.”
According to Caldwell, with respect to compensation, he expects that average salaries will increase, particularly as the U.S. moves out of the recession. “But I also expect that agency efficiencies will be increasing at the same time,” he said. “Increasingly, client self-service trends and decreased travel time, among others, should allow both service and salespeople to handle more accounts and more premium.”
In the end, he expects this should allow agency compensation to increase without a concurrent decrease to the bottom line.
Half of all agencies (49.0%) responding to Insurance Journal’s Salary Survey reported no changes to staff size in 2020, however nearly one-third (29.7%) reported staff sizes increasing in 2020. Some 45.4% of respondents say they anticipate adding new agency staff in 2021.
Newgard hasn’t seen a slowdown in agencies hiring either.
“When the shelter in place began in March, we definitely witnessed firms that were in hiring mode or going to make changes, shutting that down,” she said. “If there was going to be a knee-jerk reaction to COVID, it definitely transpired in March and April. But by the time we got into June, the hiring activity had returned,” she said. “I think is a really great indication of the strength of the insurance industry and the brokerage market.”
Newgard believes the value of remote work will influence compensation going forward. “When agencies are strong and they’re generating a lot of revenue, they’re okay hiring people and they’re okay paying them what they’re worth. So one of the biggest changes that I would see coming from last year is this relationship between the idea of a remote workforce and what that means for compensating that remote workforce.”
“One of the things that we’ve seen from agencies and from professionals themselves looking at new career opportunities, is that they were willing to maybe trade a little bit of the increase in compensation that they normally would have for somebody more experienced to allow them to work from home. It kind of became a trade-off.”
By and large, insurance professionals, especially account managers and client service managers, are willing to take lateral money, Newgard says. “Sometimes, even taking a little bit of a pay cut to get that flexibility of working from home, at a minimum, three days at home, two days in the office.”
According to Newgard, many at the account manager level are seeking 100% remote. “And when they bring that stuff up, compensation isn’t the number one thing that’s going to keep them in their position or attract them to a new one,” she said. “It’s the location.” That option tempers compensation expectations for a lot of people. “And I think we’ll continue to see that this year.”
Remote work is not working for all independent agencies. Managing staff can be difficult for agencies that may only have one principal and two customer service representatives, says Jeff Holmes, senior vice president and chief operating officer for SIAA. “Many independent agencies that do have a storefront have difficulties managing CSRs remotely,” Holmes said.
At the same time, remote work, or flexible work, can help agencies expand their recruiting opportunities, Holmes agrees. “Somebody may be more willing to make a commute two or three days a week, if they live an additional 20 or 30 miles than maybe what they did in the past,” he said. “So flexible work options could be something that creates more opportunity to acquire talent in the future.”
Holmes says remote working is not for everyone. “We did a survey of our employees within the building — they were put into remote relatively quickly,” he said. “While I think we can keep our employees remote long term, the employees have actually expressed the desire to come back, simply because they miss each other. They have fun in the office and it’s interesting.”
But Holmes agrees with Newgard that “flex schedules and telecommute, allows agencies the ability to look well beyond the geography,” he said. “Independent agencies can now draw a wider talent pool and that’s a great benefit.”
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