A pair of industry experts espoused the benefits of insurance exchanges and small agencies today and in the future during the recent Insurance Industry Roundtable run by the WIAA Education & Research Foundation in Irvine, Calif.
Richard Kerr, founder and CEO of Dallas, Texas-based MarketScout, talked about exchanges as something beyond mere gateways that provide market access.
Insurance exchanges do provide market access as one of their primary functions, Kerr said, but beyond that, an insurance exchange can help agents “complete a number of issues that independent agents have had to deal with historically that are challenging for them.”
Those issues might be human resources, accounting, management and the “types of things that make it difficult for them to accomplish their primary function, which is to sell insurance,” Kerr said, adding his pitch that an exchange is great for new agencies just starting out.
“[W]e really believe that the exchange is the way of the future for the independent agency system, because the exchange becomes the big brother to the independent agent, enabling them … to go do what they do best,” Kerr said. “And that is to sell insurance to their customers, even to the extent that they may want to use the exchange as a service center to back up their servicing issues. It would be good there as well.”
In fact, Kerr thinks exchanges will become so popular, that they will come to rule the industry.
“I think that the exchange concept will replace traditional distribution,” Kerr said. “I do believe that wholesalers and MGAs will need to either affiliate with an exchange or become one in-and-of themselves. The difficulty there is the land grab is on, and either you’ve built the model and you’ve grabbed your piece of real estate or you haven’t, and first mover’s advantage.”
Beyond the clusters there are exchanges that assist agents with more advanced, and even esoteric, services, such as sales cultures, Kerr said.
“All of these provide maybe one, two, or possibly three of 15 or 20 items that an insurance agency needs,” he added.” An exchange is an end-all solution for the independent agent. From that exchange they can pick or choose seven or eight of the items out of the 15 or 20, or perhaps even one or 2. But the important thing is the exchange needs to be a complete solution to all the challenges that are faces by the independent retail agent.”
The Little Guy
Phil Hakopian, who became an agency owner back in 1988 when he joined Farmers’ Insurance Group, knows what it’s like to be in a small agency, and survive a soft market, after going out on his own to try and make it.
“Probably my biggest trouble was markets,” the CEO of Rancho Cucamonga, Calif.-based Conerstone Insurance Services said. “I had a heck of a time trying to get appointed. I thought, as a Farmers’ agent, that (I) was a very well-trained agent and the industry doesn’t really look at us that way. So I had to muddle through that.”
Then Hakopian went to Western Insurance Agents Association and was able to get appointed with them. That move, he said, “gave me direct access to – at the time Hartford was the main company – and I was able to start writing with Hartford right away.”
From his experience starting small, he has some advice for some other little guys out there.
“I say this to everybody, if I was able to do it, anybody could do it,” he said. “It is a tough deal. You need to be willing to go out on those appointments. You can’t sit around and wait for the phone to ring. You have to be smart about your marketing, and I think it’s all about relationships. Without the relationship I think this business goes nowhere. I am not GEICO. I am not Progressive. I am Cornerstone Insurance.”
For the full report on the WIAA Insurance Industry Roundtable, click here.
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