This is one reason why it’s hard to recommend being an exclusive agent to a young person. When they get out in the field they find it is hard to make their quotas, and with limited underwriting options, they can go on probation. They also sometimes find another agent in their company writing the same account that they just bypassed to be in compliance. When they bring this to management’s attention, nothing is done.
It often appears that ‘new revenue’ is more sacred than ‘renewal revenue.’ Anyway, it’s been going on for 70 years or more; get some new blood in the door to write their friends and relatives then when they fall off the wagon the company will still retain much of that business.
Agents, no matter if they are exclusive or independent, need to be seen as more than insurance sellers. I know, that is a tough thing to do. But unless the customer senses some intrinsic value from the relationship, there will be no loyalty. Sell on price, lose on price.
retired risk manager: When you look to purchase goods / services for your household, do you not look at the price tag? Selling on price is consumer driven, and carrier driven now. How many commercials do you see on the TV, or hear on the radio now, that DO NOT mention saving money?
The items that you mention are commodities. Any consumer will have the ability to decide which blender to purchase. Very few lay people are aware enough to know how to interpret a homeowners or auto policy. Very few are even aware of the endorsements they may need. People who rent out their house …. is that a commercial use, if so, does that void coverage? If an insured rents out their car, is there coverage for accidents or theft of the car? Just two examples of why the expertise of a local agent is worth $$. Not every decision is strictly price driven. Many years ago, when I was on the agency side, I called on an ice company with a large fleet. They had a debit experience mod because the drivers kept hitting the awnings of the stores that stocked the bags of ice. At that time, if the insured opted for a property damage deductible, the mod had to be recalculated as if the deductible had been in place at the time of the accident. With a $1,000 deductible, the mod immediately flipped to a credit mod. The premium.difference was substantial. Now, and here is an important point, the client changed their safety rules (proactively) and if the loss was the drivers fault (example:not reading the height sign), the driver had to pay 50% of the claim, up to $500. It came out of their next paycheck. Since the drivers were notified in advance of the policy, and signed an acknowledgement of same, it did not violate any payday law. After the first driver got tagged with the penalty, and complained to his co-workers, there were NO MORE stupid accidents. That is being a proactive agent. Also, their current agent had not told them that there was a “selling price” endorsement (property policy) that would cover loss of bagged ice if their cooling system failed. The cost of that endorsement, $0. It was free. They also did not have any boiler/machinery coverage. Did I get the account…. you bet. Given those huge holes in coverage, the client said I would have gotten his business even if my total premium had been higher. Do you have PIL coverage on your homeowners policy? Personal Injury Liability … liable, slander, false arrest, wrongful imprisonment etc. I would bet that the telephone agents don’t mention that. But who needs that you ask? Do you serve on an HOA board, a nonprofit board etc.? But enough, I think I’ve made my point.
risk manager, I think the point other agents are making, is what we are seeing across the board. P & C, whether you like to admit it or not, is being commoditized by the carriers. Yes, yes yes, no one is suggesting that what we are seeing, (uninformed consumers making decision based on cost,) is the correct way everyone should handle their purchases. But, this way of thinking in today’s agency world, unless you are kidding yourself, is very much like a driving instructor told me when I was 16 and was preparing to get my driver’s license. If you have the green light at an intersection, and another car is running the light and you continue anyway because you have the right of way, you have not accomplished anything if you are now in the graveyard because you did not yield. Just look at the article. There is very little new P & C organic business out there to write. Instead, today’s agent must find a way to take business from another agent / carrier to survive. Do I like it? NO. Do I agree with the way this business is going? NO. However, I like to think I am astute enough to realize that if you hold your ground trying educate the mass consumers out there, who, by the way, have the attention span of a chicken, on the benefit to paying more for something that is almost a pure commodity just because you can explain it better than the next person, you will soon be out of business. If this approach did not work(finding similar coverage at a lower cost) then you would not see the direct models, and Independent Agency channels thriving. Geico is gaining considerable markets share each year. Do you think they are doing this based on selling “value”?
Your points are not unvalid, lest you miss my point. They were just much more valid 30 years ago. To the average consumer today, you better have rate to engage them. The average consumer does not care how many insurance related designation initials someone has behind their name.
we had a new agent in our small community who was tearing up the new bus numbers until people started having claims and finding out they had 500 deductibles on their windows and standard collision coverages
I have had a surgeon look me in the eyes and admit he had no idea what I was talking about as far as risk management, but that he trusted me. Clients like this are fairly rare though and the 800 numbers are making their huge headways mostly based on savings. I am tired of telling my customers to make sure they carry at least 100/300, if not more, when these other companies quote them the state minimum.
Agent14 and CAVEat have valid points. Sadly, if an agency is built on such shifting sand, there is no future for the agent. I have a couple of agent friends who have taken a different approach, they charge a flat fee for service, and sell the policies net of commission. It is legal here in Texas. The clients seem to understand that the agent’s advice is not commission driven, and the retention % is amazing.
Well, the captive personal lines agents are the ones who must be wondering what they have gotten themselves into. I cannot see a new, startup agent making it as captive in 2019 and beyond.
Independent agents are another story. They are thriving at the moment. There may come a day in which agents are no longer needed / wanted to do the carriers’ bidding. But for now, they are paying the IA agents very well.
Can’t tell you how many times I have had an Allstate, Farmers agent calling me asking me to help them place something and asking for partial commission. I say sorry,we can’t do that.
This is one reason why it’s hard to recommend being an exclusive agent to a young person. When they get out in the field they find it is hard to make their quotas, and with limited underwriting options, they can go on probation. They also sometimes find another agent in their company writing the same account that they just bypassed to be in compliance. When they bring this to management’s attention, nothing is done.
It often appears that ‘new revenue’ is more sacred than ‘renewal revenue.’ Anyway, it’s been going on for 70 years or more; get some new blood in the door to write their friends and relatives then when they fall off the wagon the company will still retain much of that business.
Agents, no matter if they are exclusive or independent, need to be seen as more than insurance sellers. I know, that is a tough thing to do. But unless the customer senses some intrinsic value from the relationship, there will be no loyalty. Sell on price, lose on price.
retired risk manager: When you look to purchase goods / services for your household, do you not look at the price tag? Selling on price is consumer driven, and carrier driven now. How many commercials do you see on the TV, or hear on the radio now, that DO NOT mention saving money?
The items that you mention are commodities. Any consumer will have the ability to decide which blender to purchase. Very few lay people are aware enough to know how to interpret a homeowners or auto policy. Very few are even aware of the endorsements they may need. People who rent out their house …. is that a commercial use, if so, does that void coverage? If an insured rents out their car, is there coverage for accidents or theft of the car? Just two examples of why the expertise of a local agent is worth $$. Not every decision is strictly price driven. Many years ago, when I was on the agency side, I called on an ice company with a large fleet. They had a debit experience mod because the drivers kept hitting the awnings of the stores that stocked the bags of ice. At that time, if the insured opted for a property damage deductible, the mod had to be recalculated as if the deductible had been in place at the time of the accident. With a $1,000 deductible, the mod immediately flipped to a credit mod. The premium.difference was substantial. Now, and here is an important point, the client changed their safety rules (proactively) and if the loss was the drivers fault (example:not reading the height sign), the driver had to pay 50% of the claim, up to $500. It came out of their next paycheck. Since the drivers were notified in advance of the policy, and signed an acknowledgement of same, it did not violate any payday law. After the first driver got tagged with the penalty, and complained to his co-workers, there were NO MORE stupid accidents. That is being a proactive agent. Also, their current agent had not told them that there was a “selling price” endorsement (property policy) that would cover loss of bagged ice if their cooling system failed. The cost of that endorsement, $0. It was free. They also did not have any boiler/machinery coverage. Did I get the account…. you bet. Given those huge holes in coverage, the client said I would have gotten his business even if my total premium had been higher. Do you have PIL coverage on your homeowners policy? Personal Injury Liability … liable, slander, false arrest, wrongful imprisonment etc. I would bet that the telephone agents don’t mention that. But who needs that you ask? Do you serve on an HOA board, a nonprofit board etc.? But enough, I think I’ve made my point.
risk manager, I think the point other agents are making, is what we are seeing across the board. P & C, whether you like to admit it or not, is being commoditized by the carriers. Yes, yes yes, no one is suggesting that what we are seeing, (uninformed consumers making decision based on cost,) is the correct way everyone should handle their purchases. But, this way of thinking in today’s agency world, unless you are kidding yourself, is very much like a driving instructor told me when I was 16 and was preparing to get my driver’s license. If you have the green light at an intersection, and another car is running the light and you continue anyway because you have the right of way, you have not accomplished anything if you are now in the graveyard because you did not yield. Just look at the article. There is very little new P & C organic business out there to write. Instead, today’s agent must find a way to take business from another agent / carrier to survive. Do I like it? NO. Do I agree with the way this business is going? NO. However, I like to think I am astute enough to realize that if you hold your ground trying educate the mass consumers out there, who, by the way, have the attention span of a chicken, on the benefit to paying more for something that is almost a pure commodity just because you can explain it better than the next person, you will soon be out of business. If this approach did not work(finding similar coverage at a lower cost) then you would not see the direct models, and Independent Agency channels thriving. Geico is gaining considerable markets share each year. Do you think they are doing this based on selling “value”?
Your points are not unvalid, lest you miss my point. They were just much more valid 30 years ago. To the average consumer today, you better have rate to engage them. The average consumer does not care how many insurance related designation initials someone has behind their name.
we had a new agent in our small community who was tearing up the new bus numbers until people started having claims and finding out they had 500 deductibles on their windows and standard collision coverages
I have had a surgeon look me in the eyes and admit he had no idea what I was talking about as far as risk management, but that he trusted me. Clients like this are fairly rare though and the 800 numbers are making their huge headways mostly based on savings. I am tired of telling my customers to make sure they carry at least 100/300, if not more, when these other companies quote them the state minimum.
Agent14 and CAVEat have valid points. Sadly, if an agency is built on such shifting sand, there is no future for the agent. I have a couple of agent friends who have taken a different approach, they charge a flat fee for service, and sell the policies net of commission. It is legal here in Texas. The clients seem to understand that the agent’s advice is not commission driven, and the retention % is amazing.
Good Luck to all young agents.
Well, the captive personal lines agents are the ones who must be wondering what they have gotten themselves into. I cannot see a new, startup agent making it as captive in 2019 and beyond.
Independent agents are another story. They are thriving at the moment. There may come a day in which agents are no longer needed / wanted to do the carriers’ bidding. But for now, they are paying the IA agents very well.
Can’t tell you how many times I have had an Allstate, Farmers agent calling me asking me to help them place something and asking for partial commission. I say sorry,we can’t do that.