Over the course of the past decade, our firm, C. R. Ekern & Co. has worked closely with over 25 percent of the Insurance Journal Top 100 Agencies. Providing either sales training, leadership training, or consulting to these firms has allowed us to “sit on the fence” and intently participate and observe in their common steps of evolution.
While not all firms or producers are alike, here are some of the issues they commonly face and resolve:
1. They stake out their territory with a business reputation. Most of these firms compete in a regional scale (or national). Because of this, they compete against many levels of brokers and sophistication. They establish a known value proposition in order to replicate their reputation and expertise across these geographic boundaries.
2. They are investing in resource capabilities. Many of the Top 100 firms have invested in their own resource teams such as claims management and risk control. The purpose of this investment is so that they can truly develop a value proposition that differentiates them. They understand the evolution of our industry and are transitioning from transactional to resource driven.
3. They create and know their value proposition. This revolves around the deployment of resources and the ability to impact and quantify their value. They understand and use total cost of risk as their vehicle of credibility. This allows them to demonstrate an impact on their client’s business operations.
4. They know where their “bread is buttered”. As a general rule, 4 percent of their accounts bring them upwards of 50 percent of their commercial income. They surround this 4 percent with resources and a constant reminder of value through the stewardship report and client discussions.
5. They don’t drill dry holes. These firms have developed very sophisticated prospecting techniques and the ability to determine whether or not a prospect is real. They are constantly testing their prospect relationships and taking the temperature of their prospect base.
6. They don’t quote. The cost of doing business for these firms is elevated over those competitors who do not have internal resource costs. Therefore, in a competition that revolves around the commodity, they know that they have given up their advantage. Also, as total cost of risk disciples, they understand that the insurance is merely 20 percent of a buyer’s costs. When they focus merely on the insurance transaction they are under serving the client. So, they substitute quotes for “conceptual presentations” that are aimed at broker of record appointment.
7. They move their producers up stream. In the continued soft market, their renewal revenue base has eroded. In order to replace this and support their production engine, they point their producers at larger accounts. Again, because of their value proposition, the producers have the ability to change gears. These producers focus on business risk dialogue rather than simply hazard risk.
8. They are transitioning from commission to fee. As the soft market continues into its eighth year, these brokers have come to realize that there is no correlation between what a carrier pays as commission and their need to provide services with a profit.
It is important to note that the issues faced by the Top 100 are very similar to those of any well run insurance agency or brokerage. The importance to Top 100’s is more critical however due to the overheads and income required to feed their engines.
Ekern is president of C. R. Ekern & Co. He works with many top performing agents and brokers. E-mail: firstname.lastname@example.org. Web site: www.crekern.com
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