GROW UP!

Rough Notes, Mar 2007 by Primiano, Scott M

Moving up-market and cross-selling are effective countermeasures for a soft market

The industry forecasts are in, and all the predictions point to another soft market for 2007. Except, of course, for coastal areas where the weather "pros" have predicted a "higher than average" hurricane season for the new year. According to the Insurance Information Institute, even auto insurance rates are expected to drop slightly in 2007-the first decline in eight years.

The impact on you, the agent, and your carriers is obvious. Decreasing premiums mean decreasing commissions and all-out warfare in the market. Once again you'll find yourself fighting to keep what you have and struggling to attract new business with something other than a price advantage. Even if you retain 100% of your existing accounts, your revenue will likely drop by 8% to 10%, and you will work very hard to offset this revenue depletion and still grow.

So ... what to do? Well, we can accept it and do the best we can do with what we have and hope for better times to come or, preferably, we can act. It is of little use feeling sorry for yourself or being angry about a situation over which you have no control. Things are as they are and, I assure you, they will be what they will be regardless of how you feel about it. You can make hay in the rain, so let's get busy.

Strategy One: Stay on offense

Recently, while I was on a tour, I was astounded by the number of producers who were chained to the chair, enveloped in a cloud of paper, manila folders, and sticky notes. The same was true of underwriters and marketing reps. Having not been been used in some time, many of the files were dusty. Apparently, many clients whose accounts had remained dormant for years were now reaching out for competitive bids-and some even wanted mid-term quotes. This, on top of the normal marketing activity, had our production folks and underwriting teams literally buried. Systems and desks were clogged, quotes were late, submissions were sloppy, and new business production was grinding to a halt because everyone was too busy. Ouch.

Okay, chill. Be busy and crazy for most of your day-but get off your chair and get out to see your clients and prospects. Yes, the occasional Saturday at the office is called for, and there will be late nights and early mornings dealing with the administrative avalanche. Still, we must allocate consistent time to production. And stop complaining about it. When we signed up for this gig, nobody said it would be a nine-to-five, Monday through Friday effort. There are times when we can work less and other times when we need to work more. Said differently, sometimes you eat the bear; sometimes the bear eats you. The bear is gnawing, so get your priorities straight, set a schedule that includes new business and service calls, work from a plan, and breathe.

Strategy Two: Move up-market

You can't really control the rates, but you can control whom you prospect. Look at your average account size and the type of client you normally write. Ask yourself what a $5,000 increase in average account size would look like and estimate the impact that such a bump would have on your revenue. There is a myth that says larger accounts are only for large agencies and senior producers. Nonsense. Of course you are not going to launch yourself from mini-BOPs to middle market accounts, but you can set your sights a little higher without getting a new designation.

Work a "top-20" list of profiled accounts that will give you lift. Carry this list around to your existing clients who occupy the same niche and ask them who on the list they know and could refer you to. Ask them who on the list they know that you might want to stay away from and, most important, ask them who is not on the list that you should be talking to.

Consider this: If you want to grow your business or your book in 2007, you must have a substantial increase in production. Chances are good that you won't be able to do it simply by doing what you have done before. This will only get you to where you have been before, and it won't be enough. So something has to change, and that something is a someone-you. The most efficient change you can make is to write the same number of new accounts you have written in the past but have each account worth more. Busy as you are, writing more accounts of the same value that you have ever written before is simply not a viable option.

Strategy Three: Round out your existing accounts

You are an insurance producer, not a line-of-business producer. So act like it. Many of you have correctly and efficiently specialized in a particular niche. Many of you have incorrectly and inefficiently specialized in a particular line of business as well. As a true advisor, it makes good service sense to focus on your clients' needs for their entire program, not just their P-C, comp, benefits, life, home, auto, or financial planning needs.

Rounding out an existing account does not require you to have profound expertise in all lines. There is plenty of help available from a technical and professional standpoint. However, it does require you to rise beyond your existing comfort zone, ask questions that you haven't asked before, build a needs assessment, and use a checklist (The Rough Notes Company's Agency OnLine has all the tools you'll need). It also means that you'll need cross-selling partners-either within your agency or in partnership with another-and that you recognize that a client need represents your opportunity to help and to get paid for it.