Insurance Agents Advised to Learn from Professional Employer Organizations

June 24, 2008

As insurance agents and brokers search for ways to respond to the continuing soft market, they would be wise to follow the example of professional employer organizations (PEOs) that are winning over small and mid-sized employers, according to one consultant.

“There is a fundamental shift occurring in the small, mid-sized employer market today,” says James A. Schlueter, president of the Total HR Network. “Insurance agents and brokers are searching for ways to deal with deteriorating commissions and increased competition in this soft market. Unfortunately, most of the sales strategies in the media advising the agents/brokers how to respond to the soft market environment are missing a vital point. It’s not about you; it’s about your customer,” he said, speaking to a group of insurance agents and brokers in Southern California.

“It’s a classic mistake. Most insurance agents and brokers begin looking at their products, redesign their insurance programs, restate the features and benefits and then send the sales team out to sell it. That’s a recipe for failure,” he maintained.

“That thought process needs to be reversed,” said Schlueter. “Rather than starting with your product, consider what your customer most desires. Then understand how you can best help your customers achieve their goal. It’s not about your features and benefits, it’s about your client’s aspirations.”

He argued that insurance agents and brokers are dealing with deteriorating revenues and market share while PEOs are exploding. PEOs provides outsourcing of payroll, workers’ compensation, human resources, risk management and employee benefits administration to employers.

Schlueter cited statistics from the National Association of PEOs that show PEOs grew by $10 billion in gross revenues in 2007 to $61 billion. There are more than 700 PEOs operating in all 50 states and they are growing at 20 percent per year, according to NAPEO.

Why are PEOs growing?

“Sales don’t happen until you make someone care about something and most small to mid-sized employers care very little about your insurance products,” Schlueter told the insurance group. “What employers really want is time to enjoy the fruits of their labors. PEOs are capturing market share because they are responding to this important aspirational goal being expressed by the client.”

He said PEOs have responded to clients who dread being overburdened with mundane management issues that are preventing them from doing the things that will actually build their business and eventually allow them to enjoy the fruits of their labors.

PEOs not only eliminate many internal headaches, but they also cut out the need for several vendors, including insurance sales people, he added.

“Insurance agents that just focus on their insurance products will continue to lose market share until they begin to hear the message coming from the client. Time is more important than money in the small business environment today. It’s simple: you can make money, you can’t make time. Product-oriented insurance agents are picturing a sorry reality; PEOs are promising delivery on an aspirational goal that most small and mid-sized employers have,” said Schlueter.

Source: The Total HR Network

Was this article valuable?

Here are more articles you may enjoy.