Tag Archives: agents and brokers

Post-Pandemic: 4 Tips for Independent Agents

There is a stretch of road yet to travel—but at long last the post-pandemic world is coming into view. As vaccine distribution accelerates and case counts drop, independent agents are contemplating what the future will look like. While it surely won’t be identical to the pre-pandemic business environment, there is room for optimism. 

Technology will be a key to a fast recovery. In 2020, many independent agents were able to leverage technology to maintain relationships and even grow their businesses. But there is an opportunity to improve on objectives like paperless processes, remote relationship building and digital communications.

Technology can help independent agencies exit the pandemic era strong and ready for the future. Here are four smart ways agents can use technology in this new landscape and thrive in the years ahead:

Self-Service Tools

Some agents fear that clients will feel ignored or make decisions that diminish revenue if they can manage their own policies digitally. 

In reality, clients appreciate and even demand the ability to do some policy maintenance on their own, when they wish. No one wants to wait until 9am to call or visit their bank, and insurance is no different. The ability to get a quote on a new auto policy or request an endorsement through a mobile app is not only considered highly efficient, but also respectful of the client’s time. Moreover, providing the capability creates a strong audit trail for the agency, saving staff from the tedium of compiling emails into a record.

Many clients (and especially millennials and Gen Z) expect to be able to transact routine business on their devices, without assistance. While they want the ability to email or text their agent for advice (and most also appreciate timely outreach from their agent), self-service is fast becoming essential for agency success.

United Western Insurance Brokers (UWIB), a Seattle-based agency, discovered firsthand the value of self-service in 2020. After the pandemic hit, UWIB braced for a severe drop in business, thinking that clients would either ignore or actively cut back on their policies. Instead, the agency wrote more new premiums in the spring of 2020 than it did over the same period in 2019. Why?

UWIB’s online customer portal, which offered self-service and other convenient digital options, enabled remote, contactless business transactions. Even when clients were in lockdown, they could manage their policies—and the agency was able to write new business. 

Automated Client Engagement

We’ve all received “personalized” communications where the personalization ends after the “Dear (NAME)” opening. And in an industry where relationships are key, that tactic has been a big turnoff for independent agents who have considered automated client communications solutions in the past. 

The good news is that technology-backed client engagement has evolved lightyears from this kind of fill-in-the-blank approach. When integrated with an agency management system, marketing automation platforms—the lingo for mass digital communications—intelligently and intuitively identify important reasons for outreach. Automated communications share actionable,  relevant information with clients to help them make better insurance decisions. In short, advances in artificial intelligence (AI) and machine learning (ML) mean that technology can deliver the right message to the right client at the right time to create a truly personalized client experience. 

These advances are a boon for agencies looking for a way to set themselves apart from their competition. Intelligently prepared communications produce open rates and click rates far above insurance industry averages (which, according to MailChimp, are 21% and 2.1%, respectively.)

In addition, automation can remove the labor and expense required when sending renewal reminders, soliciting reviews and feedback, and seizing on life events or other triggers for new accounts and policies. Automated client engagement can even keep track of how often clients want to receive emails and create segmented lists that ensure clients receive content based on their particular lines of business or locale. These tools are helping agencies do more while still keeping the personal touch in their business. 

See also: 4 Predictions for Independent Agents

E-Signatures and Electronic Payments

From mortgages to contracts to transferring money at the click of a button, consumers have gotten used to being able to transact business remotely.  When it comes to covering their risks, clients expect their insurance to move at the same speed as everything else in their lives—which is why e-signatures and electronic payments are a necessity for independent agents.

The benefits to clients are clear, but there are strong business advantages for agents, as well. Clients are more responsive and timelier in returning signed digital documents, and they are more likely to pay premiums on time when they can use a credit card or ACH from their bank account. It’s true that some credit cards, mobile wallets (e.g., PayPal and Apple Pay) and pay-by-text services impose higher fees than checks or ACH, but the improvement in customer experience is more than worth it.

CB Insights, a technology analyst firm, reports that in 2019 paper checks accounted for 52% of disbursements in the insurance industry, compared with just 22% on average in other industries. The firm further states that ACH (Automated Clearing House) payments, which made up less than a quarter of insurance disbursements that same year, are a tenth as expensive as cutting a check.

Automated Policy Checking

The next big thing this year for independent insurance agents may be automated policy checking. Currently, most policy checks are outsourced and performed manually in batches. Using the traditional outsourcing approach of conducting the policy check and returning it to the agent, the process can take up to two weeks.

This can all change through automation. Some insurtech providers are offering solutions that use machine learning to check policies in a matter of minutes, with upwards of 90% accuracy and lower costs. Agents who pioneer automated policy checking in 2021 may gain a cost advantage and an edge in closing time-sensitive deals. The technology is worth testing.

Rather than separating agents from their clients, technology—when properly used—can actually build closer relationships and enhance customer loyalty.

In the past year, we’ve seen agencies adopt technology at a rate never seen before. This is no time to stop—in fact, agencies should double down on their investments. Technology has been proven to increase books of business and retention rates. As agencies look to their post-pandemic future, it’s time to see technology for what it is: a tool to not only accelerate business but to better adapt to the road ahead.

Tip the Sales Scale in Your Favor

At least on the surface, benefits and insurance producers are supremely confident individuals. They believe they are just a bit smarter, a little more clever and particularly more likable than their boring, traditional and not-so-smart competitors. This is at least part of the reason they approach the building of their book of business as a popularity contest; it is why they believe this to be a “relationship business.” 

Without realizing it, they are building a trap for themselves. Because producers are competing for the title of “most popular,” they make relationship development their relentless focus. When they win the occasional deal, their belief is reinforced, and the cycle continues.

It’s time to get real

I recognize the importance of a strong business relationship as much as anyone. But it’s essential to keep the relationship in perspective and realize business relationships and social/personal relationships are two different animals. It’s not that they can’t co-exist, but they have to stand on their own.

In the book “The Go-Giver,” Bob Burg and John David Mann explain, “All things being equal, people will do business with, and refer business to, those people they know, like and trust.”

It would be easy to read that statement, focus on the part about people doing business with those they know, like and trust and feel validated. This seems to support the position producers hold on to, that this is a “relationship business.”

Change the rules, change the balance

Of course, you need people to know, like and trust you. However, the most important words in the statement are actually the first four, “all things being equal.” The relationship is nothing more than a tie-breaker.

Most everyone competes on a level playing field. Producers show up with the same spreadsheet and the same list of value-added services and parrot the same promises of excellent service. From the buyer’s perspective, “all things are equal” with every broker — all brokers look the same to buyers.

The relationship trap leads directly to another fallacy believed by too many producers. Tell me how many times you have heard a producer say, “It takes two or three years to develop a new client.”

This is actually probably true. But it doesn’t have to be. It’s only true because it takes that long to get to the point that a prospect knows, likes and trusts you more than anyone else.

So, what should you do? 

Don’t let things be equal.

In their book, Bob and John also advise readers how to tip the odds dramatically in their favor. Do the following, and you will find the advantage you have been looking for to grow in a healthier, more predictable and meaningful way.  

Deliver more value than anyone else — This doesn’t mean eroding your bottom line. The value doesn’t have to, and usually doesn’t, come at a financial cost to you. Share ideas and experiences and make introductions that will benefit others. This isn’t to be done in some quid-pro-quo fashion; deliver value with no expectations. Also, don’t confuse giving away value with working for free.

See also: Do You Know What You Don’t Know?

Deliver value to more people — Delivering value shouldn’t be reserved for active prospects. It also shouldn’t be reserved for decision-makers. Deliver value to anyone and everyone as a part of what you do every day. Whether it’s through your blog, social media or any other interaction, make delivering value your primary goal.

Keep others’ interests as your primary focus — Stay focused on helping everyone around you be more successful at what they do, and your success is all but guaranteed. 

Be authentic at every step — The only way people will eventually come to know, like and trust you is if they are allowed to know the real you first. Sure, some may not like you. That’s life. But nobody will ever trust you if they sense you aren’t being genuine.

Follow the four principles above, and you take the “all things equal” out of the “doing business” decision. Now, when you add in the know-like-trust, magic happens. This potent combination will result in the most substantial business and personal relationships you can imagine.

Deliver value before you meet

You may wonder, “How can I deliver value to someone I don’t even know?” The answer lies in your marketing strategy. Take the time to understand your target audience’s goals and needs and make that the focus of your educational content. Do this, and others will find immense value every time they interact with you, even if it’s only consuming the ideas you share.

Stop thinking about marketing as a way for you to get more prospects. Instead, recognize that marketing is an opportunity for you to help educate and deliver value to others.

Build on the value when you meet

How does the value continue once you do meet? Build it into your sales process. Your sales process should deliver so much value that others would actually pay for the privilege of meeting with you.

I know this sounds Pollyannaish, but it’s possible. Build your sales process on the following foundation, and you will experience it for yourself:

  • Start the sales process by taking time to learn what a specific prospect values.
  • Make the primary focus of your sales process about analyzing the prospect’s current situation and identifying what is keeping the prospect from having what they value.
  • Demonstrate how you deliver similar value to others and explain how you could do it for them.

Stop thinking about your sales process as a way to get people to buy from you. Instead, start thinking of it as a process you offer to ensure others get the value they need. This becomes the key to slaying the “it takes two to three years to develop a new client” beast. Imagine how quickly you could move a motivated prospect to close if you delivered the following:

  • When you help a prospect clearly see the potential of a better reality, how long do you think they want to wait to see if they can have it as their own?
  • When you guide a prospect through self-discovery to better understand what is holding them back, how long do you think they want to wait to learn how to address those needs?
  • Once a prospect is confident in your ability to deliver better results, how long do you think they want to wait to get started?

I can’t give you specific answers, but I can tell you the entire process will be measured in weeks, not years.

See also: Ecosystem-Based Business Models

It’s not you; it’s them

Stop teasing prospects with a promise of the value you’ll deliver once they become a client. Stop telling them, “You need to hire me to figure out how much value I can actually deliver.” This is effectively what your spreadsheet, capabilities presentation and promises of better services require. I don’t see you winning many popularity contests with that message.

Instead, deliver value at every step – before a prospect meets you, during the sales conversation and in the detailed plan you provide showing how the value will continue to flow.

The more value you give away, the more you will receive in return.

To Post or Not to Post? Choose Wisely

Social media can be a rewarding place for insurance agencies – it provides a platform to build relationships with customers and prospects and, ultimately, grow revenue. The benefits have never been greater. In fact, a recent study from Sprout Social indicates that, after consumers follow a brand on social media, 91% will visit its website or app, 89% will make a purchase from the brand and 85% will recommend the brand to a family member or friend.  

But social media can also be an unforgiving place. Over the last year, we’ve seen an uptick in social media fails as businesses tried to join conversations about trending headlines and serious issues – from pandemic developments and racial justice to election validity – sometimes causing irreparable reputation damage and business impact.

As consumers increasingly turn to social media to inform decision-making, it’s critical for agency owners to build their social media skills to navigate the risks and reap the rewards. Here are six tips to get you started:

1. Establish the ground rules.

Creating general social media guidelines for your agency will help you make faster and smarter decisions in any situation. The guidelines can be as simple as a one-page document that outlines:

  • Your social media objectives 
  • Your target social media audience
  • Your social media “voice”
  • Topics you will/will not address on your channels 
  • Frequency of posting
  • Engagement approach 
  • Who has access to post on your social media accounts
  • When and when not to respond to conversations

These guidelines can and should evolve along with your agency. Revisit them regularly to ensure they still complement your overall business strategy. 

2. Be a good listener.

While you shouldn’t make posting decisions based on what everyone else is doing, you also shouldn’t make decisions in a vacuum. It’s important to truly understand a trending situation as well as the mood on social media and in traditional media before making a decision about whether to post. 

As you evaluate the situation, look at the conversation that’s already happening. Are other agencies jumping in? If so, what’s driving that? How are people responding to that content? Are the media stories about agency response positive or negative? Are your customers and prospects joining the conversation? Are they asking you to join? Why? Understanding the landscape can help make a decision that feels right for your business and the moment.  

See also: Personal Connections Via Social Media

3. Walk the walk.

When the racial and social justice movement gained momentum last summer, businesses were eager to show their support on social media. Those with a track record for actively discussing and addressing these issues were greeted with positive feedback. Those that issued hollow statements about support and solidarity without action were savaged. For example, Ben and Jerry’s statements were viewed as appropriate because the brand and its founders have a long history of social activism, while the NFL’s statement that included the phrase “we need urgent action” was blasted. 

4. Pause when appropriate. 

Sometimes, you just need to hold off on any kind of social media posting – either because everyone’s attention is elsewhere or out of respect for the situation at hand. For example, many insurance agencies we work with paused on posting around the presidential election because that event dominated the social media conversation. And we’ve advised them to pause during moments of national and world crisis because of the gravity of those situations. Continuing to post promotional content at these moments can imply your agency is disconnected from the world around you – or simply doesn’t care. Pay attention to what is happening in the world and pause posting during times of crisis.

5. Engage with care.

Treat the content you like and share with the same care you treat your own social media content. Before you deem something worthy of engagement, review it carefully. Verify the content’s accuracy, check for hot-button language, know your source and review the current comments to avoid an inadvertent issue. For example, a controversial news figure might post something completely neutral on Twitter that you think is relevant to your customers. However, your customers might view a retweet of that post as an endorsement of the controversial figure.

6. Live the brand. 

As an agency owner, you are the brand, and anything you post on your social media accounts becomes a reflection of that brand. In a recent New York Times story, journalist and digital communication expert Sree Sreenivasan summed it up well: “The fact is that it’s impossible to separate the personal use of social from the professional, and everything you say online can and will be used against you. There are ways in which you can try to safeguard your privacy and control who sees particular content, but the onus is on you to be vigilant. So, the more seriously you can take your social media activities, the better.” You can mitigate your risks by embracing the same social media guidelines for your business and personal accounts. 

Every day on social media, agencies of all sizes are judged by what they say and what they don’t say. Understanding the risks that come with a social media presence – and how to mitigate them – is just as important as understanding how to use these platforms to connect with customers.

The Key to Agency Management Systems

Digital capabilities are more important than ever across all parts of the insurance ecosystem. That includes the world of principals and producers, who rely on agency management systems (AMS) to serve as a workbench for their main activities: selling insurance, managing clients and managing themselves. 

While some vendors have slowly expanded the capabilities of their core offering, others have integrated with larger, agency-focused suites of stand-alone software solutions that offer a broader range of capabilities to speed up transactions, automate processes and create a better overall experience for agents. Insurance carriers that consider agents’ ease of doing business one of their differentiators will likely have to integrate with these platforms at a minimum. 

Insurers may use AMS solutions for internal MGAs or agencies, but the primary overall users of these platforms are independent insurance agents. Modern AMS platforms are designed with these agencies in mind. Originally, these solutions began as enterprise resource planning platforms, but now they act as day-to-day workbenches. Carriers that want to improve overall agent relationships, which ultimately leads to better policyholder relationships and retention, need to consider how their products, processes and policy information will be part of these AMS ecosystems.

General Functionality of an AMS

While smaller agencies usually turn to an AMS that offers capabilities like advanced lead management and carrier connectivity, larger agencies are more likely to take a component-based approach and select a software suite with a broader range of solutions. These differences are not unlike the differences in core systems approaches taken by larger and smaller insurers. 

The difference in AMS purchasing approaches can cause some confusion about what functionality an AMS should offer, but there are three general categories of functionality that any solution, whether stand-alone or suite component, should cover: selling insurance, servicing customers and managing the agency itself.

AMS platforms help with selling insurance policies by tracking prospects, managing leads, understanding appetite, automating communications and generating quotes, among other capabilities. They can help service customers through capabilities like serving as a central record of customer activity (e.g., changes in policy, billing, claims, etc.). AMS solutions can also help improve operational efficiency by facilitating agent workflow, tracking calendars and deadlines, managing alerts or tracking individual and aggregate agent activity. 

Selling Insurance

Sales capabilities in an AMS include functions like managing leads, generating quotes, reporting underwriting appetite, automating emails, creating and storing templates for communications, managing the pipeline, marketing integration and integration capabilities (or APIs) with insurers’ portals. 

Quoting and underwriting appetite has become an area of focus for agents because omni-channel approaches are becoming the norm. Agents are also relying on AMS platforms to manage mobile messaging and social media posts, not just email and phone. In some cases, this might require insurers pre-approving templates or implementing software that can monitor compliance through a direct integration with the AMS or through workflow steps. AMS platforms are also commonly offering “next-best action” recommendations built on analysis of touchpoints and customer responses to marketing initiatives. 

Servicing Customers

When it comes to servicing insurance customers, AMS platforms typically offer download from/upload to insurers, execution and recording of endorsements, document management, ACORD forms, policy information updates, contact information maintenance, the storage of billing information, bill pay, monitoring of claims and record of payments. The platforms can also automatically alert agents when there are any service concerns that need their attention. 

Agents prefer platforms that make it easy to conduct all of their business through one interface, so allowing integration between agent portals and AMS platforms is a wise option for insurers. Agents and insurers alike are focused on the customer experience, meaning that AMS platforms should keep track of all policyholder interactions across the insurance life cycle. 

Ease of upload to insurance carrier systems can also be a differentiator; a recent Novarica study showed that 38% of young agents’ AMS platforms did not include upload ability, but they would like to have that capability. Consistent data across insurers and agents can improve customer service for inquiries as simple as updating contact information to more complex interactions like filing a claim.

See also: How Carrier Tech Drives Agency Change

Managing Agents

Agency management is a basic tenet of an AMS, and each platform should include some form of workflow management; monitoring of compliance, credentials and license; commissions tracking; general ledger and accounting; dashboards that show agent performance; data and analytics functionality; and sales and technology training. As AMS platforms have evolved to keep up with platform and industry trends, so have these capabilities. 

Regulation is top of mind for most insurers, and AMS solutions can help maintain compliance through monitoring and managing agent credentials and licensure. An AMS can produce reports and send alerts to ensure that agents are staying up to date with their licenses. AMS platforms can also help agents with their workflow management, including laying out process steps, milestones, dependencies and approvals. 

These components are becoming increasingly sophisticated; insurers looking to simplify agents’ day-to-day work should be clear about which steps require touchpoints with the carrier so the AMS can be configured properly. Some AMS platforms offer analytics capabilities to help improve sales and retention for agents and their overall agencies, routing particular opportunities to the agent who is best equipped for that specific lead. 

The marketplace for AMS platforms is broad, and agencies have plenty of options to choose from. Insurers therefore cannot routinely predict which AMS platforms the majority of their independent agents are using. Instead, insurers have to stand ready to be flexible — with data APIs, integration with connectivity platforms, easy download capabilities, readily available digital assets and, above all, a willingness to listen to their agents and understand what kinds of integrations would be most valuable and helpful to them.

6 Burning Questions on Field Reorganization

Insurance carriers have a long history of tweaking their field organizations and compensation plans to make the captive agent channel more effective and efficient. But the stakes have become higher and the moves bolder in the last several years. Faced with stagnant agent counts, declining agent productivity and elevated expense ratios relative to direct players, carriers are taking sweeping action to ensure the continued viability of the agent channel. From Allstate to Farmers to numerous regional carriers, timid steps have given way to massive reorganizations and wholesale redesigns of compensation programs.

As we advise executives at national and regional carriers active in the agent channel, the most frequent question they pose to us is: “How do we know if it’s time to go big (or go home)?” Although good agents tend to welcome change that makes a carrier more competitive in the marketplace, others may resist it. For the insurance distribution executive, agency transformation is difficult, time-consuming, risky and potentially controversial.

We’ve laid out a set of diagnostic questions that executives can ask themselves to determine whether the juice is worth the squeeze and whether the time for real transformation has arrived.

To gauge whether a large-scale reorganization is worth pursuing, ask
yourself the following six questions:

1. Do your field leaders have multi-channel or multiproduct responsibility?

If they don’t, you are behind the times. Other carriers are aggressively breaking down channel and product silos in their field leadership. Whereas previously only top agency executives were responsible for decision-making across channels and products, more recently middle management such as directors and AVPs are being deployed across multiple channels (e.g., exclusive agent, independent agent and retail) and products (e.g., auto, home, life, commercial and financial services).

This deployment is not only more efficient but also more effective. It increases channel and product coordination, allows field leaders to optimize across channel and product efforts and eliminates counterproductive competition for agent attention. It also provides an abundance of career path options for leaders on the rise.

2. Are your district or agency managers able to focus on coaching and sales performance management?

The days of “jack-of-all-trades” district and agency managers are numbered. Historically, these managers were expected to recruit agents, train them, provide them with marketing support and coach them on sales. In an optimized field organization, these managers are liberated from lower-value recruiting, training and marketing duties so they can focus on their core competency of sales management and sales coaching. This shift is enabled by centralizing recruiting, training and marketing functions at home office through centers of excellence that support the field.

3. Are your spans of control current relative to best practice?

The rules of thumb are changing. While carriers used to assign one agency manager for every 20 to 30 captive agents, new guidance is 40 or even more. This evolution is based on analytics that reveal a lack of correlation between coverage and productivity: Fewer agents per manager doesn’t necessarily lead to more production.

We are aware of carriers pushing the envelope even further, such that the average manager span of control will grow significantly over the next two years. Increasing familiarity with video-based technology and virtual meetings in the context of COVID-19 will only accelerate this trend as “windshield time” constraints become less relevant.

The move toward larger spans is happening at the director and AVP levels, too. In lockstep with their increasingly cross-channel and multi-product approaches, carriers are rolling up more and more premium and agent count to these field leaders.

See also: 4 Keys to Agency Modernization

4. Is your field leader compensation sufficiently variable and tailored geographically?

The emerging best practice is for nearly half of field leader compensation (for director roles and above) to be variable. Those with a significantly smaller variable portion may fall into maintenance mode rather than gunning for growth.

Ideally, variable compensation is paid through periodic (e.g., quarterly) bonuses based on the performance of the field leader’s geography relative to targets. Avoid making field leader bonuses a function of individual agent outcomes, lest they spend too much time catering to low performers.

Target-setting for bonus purposes should be driven by an analytically savvy team at the home office and should reflect differences between growth markets vs. mature markets in the weighting of various criteria in the bonus formula.

5. Are there more than three or four layers separating your top distribution executive from your agents?

More organizational distance between your top distribution executive and your agents generally means less clarity of field roles, less accountability for outcomes, slower issue escalation and resolution and reduced visibility for top field leaders.

The ideal number of layers in your field organization depends on how many channels you have – you can imagine a carrier with EA, IA, retail and direct requiring more layers compared with a carrier that is agent-only. It depends, too, on the geographic scope and amount of premium overseen by the distribution function, with smaller, regional carriers often requiring one less layer relative to large, national players.

Right-sizing layers is a powerful reorganizational tool that not only reduces unnecessary expense but also streamlines field effectiveness when done right.

6. Are your field management roles consistent across your geographic footprint?

Some carriers have extensive geographic variation in field roles across states or regions. This can result from mergers of carriers with different field structures, or from a well-intentioned effort to empower local leadership to experiment with new or modified roles. In the long run, though, this variability muddies the waters and harms field effectiveness by undercutting role clarity and accountability.

Field reorganizations represent an opportunity to clean up the proliferation and inconsistency of roles by standing up an optimal set of standardized roles in all geographies. Although the allocation of time to various activities within the role description (and, by extension, the relative weighting of criteria for bonus determinations) may rightly vary to reflect geographic nuances, the roles themselves should be uniform in all locations.

If you answered “no” to at least two of the previous questions, you are likely to unlock significant value from a larger-scale transformation of your agency management structure. If you answered “no” to three or more, it’s definitely time for change. Like going to the dentist, the longer you wait, the more painful it will be.

Even if you answered “yes” to every question, your work is not done. Leading carriers regularly revisit these topics and perform at least bi-annual check-ins of field structure effectiveness in the spirit of continuous improvement. They do the organizational equivalent of flossing, brushing and occasionally undergoing a corrective procedure to keep things healthy.

Pivoting to agency compensation, consider the following four questions to find out how much room you have to improve your agent compensation plans:

1. Are your agent retention and agent productivity on par with competitors?

These key performance indicators vary dramatically. Agent retention after 18 months can be as high as 90% and as low as 35%. Average monthly agent policy production ranges from two to 25 for auto and from one to 15 for home. Similar gaps apply to commercial and life production. If you’re trailing the rest of the pack in these key metrics, it’s likely that your agent compensation plan is a big part of the problem.

Modern compensation plans use an aggressive pay-for-performance approach to create significant dispersion between top and bottom performers. Carriers can choose to vary commissions based on growth (and other factors), or to use a large variable bonus to create the spread of agent compensation outcomes. Either way, the idea is to maximize the incentive for agents to grow, while minimizing the amount of enterprise resources directed to agents who aren’t producing (many of whom should probably exit the agency force).

Contemporary compensation plans enable a variety of entry points for different types of recruits and match compensation mechanics to their cash flow realities to boost retention. For example, the proper plan design is quite different for an agent with no experience than for a well-capitalized experienced producer who is switching carriers.

2. Are your agents cross-selling effectively?

Many carriers have a shockingly low rate of cross-sell, even when their business models are based on the premise of increasing account density among acquired customers. Cross-sell must be a foundational element, not just an add-on, in a modern compensation plan. This means building cross-sell requirements into the core of a compensation plan (e.g., a variable commissions grid or bonus schedule).

Importantly, carrier comp plans should be agnostic to how their agents achieve their cross-sell ambitions. Agents should be rewarded for cross-sell whether they do it themselves, enlist specialist sub-producers or engage the assistance of line of business specialists in a team-based selling model.

3. Are tenured agents still growing rather than plateauing?

Some carriers allow tenured agents to “dial it in” regardless of whether their agencies are growing or shrinking. Even if a carrier has rolled out an improved, pay-for-performance compensation plan, it may have grandfathered long-time agents on outdated plans. Growth-oriented carriers avoid these practices.

See also: Crowdsourcing 6 Themes for 2021

4. Have you enabled economic interest for your agents to foster the business owner’s mindset?

Numerous carriers provide a payout to departing agents that is calculated as some multiple of renewal commissions over the prior 12 months. The concept has different names at different carriers (e.g., fallback, termination benefit, contract value) and may be tied to different requirements (e.g., non-compete or non-solicit clauses), but the core function is the same: to make running an agency more like owning a business by growing long-term economic value alongside the growth of the operation.

A handful of carriers have gone even further, enabling agents to sell renewal commission rights to third parties, subject to approval by the carrier. Farmers, Allstate, Auto Club Group and Horace Mann are among those that have enabled this enhanced form of economic interest; several other carriers are considering doing so or are working on their programs.

We consider this enhanced economic interest a win-win for agents and carriers. Agents are likely to find an external buyer willing to pay more than the enterprise’s fallback amount. It is not uncommon to see transactions close at multiples of two to three times prior 12-month renewal commissions. Carriers, for their part, get the benefits of more motivated agents, sophisticated and well-capitalized buyers joining the agency force and lower enterprise payouts due to third-party sales. In addition, carriers may find that enabling enhanced economic interest is a popular “win” for agents that aids change management efforts during a broader revamp of the agency compensation plan.

Some misconceptions have kept more carriers from embracing this concept. As more carriers understand that enhanced economic interest does not cede enterprise ownership of customer relationships or eviscerate any non-competition or non-solicit constraints, we expect a rising tide of adoption.

If you answered “no” to two or more of these on agency compensation, it is probably worth pursuing a significant overhaul of agency compensation.

Agency transformation work is not for the faint-hearted. It can be tempting to defer meaningful change to field organizations and agency compensation plans in the interests of avoiding disruptions and maintaining harmony. However, if the exercise outlined above suggests a significant gap between your current state and best practice, your agent channel is unlikely to remain viable against direct channel competitors. Ultimately, all parties are better off when carriers fearlessly tackle transformation and find ways to enhance both efficiency and efficacy.