The benefits of finding a specialty and how to get ahead of your competition
Over the past several decades, I’ve seen the move from generalist to specialist in the insurance industry enrich many agents. What separates some highly successful agents from their competition is their ability to become the experts in their specialty. Why? Clients look for value in their purchases. Clients will pay for expertise. In insurance, the value is not in the product; the value is embedded in the agent.
Selecting the right niche and becoming the expert takes work, and it is rewarding.
The selection process
Don’t just pick a specialization on a whim. Follow the truth of demographics. Before deciding on your specialty, do some research to make sure the niche segment is large enough to support your goals and provides a fighting chance of building your desired amount of commission income. As you think about a specialty, consider several practical factors:
- Income goal
- Total number of companies in the targeted class
- Average all-lines premium for the targeted class
- Average account commission
- Micro- and macroeconomic factors affecting the class
- Whether inflation and unemployment affect the class
- Trade or professional associations affiliated with the class
If you already have experience and a passion, consider allowing that to come into play. For example, I once hired an employee with sales potential who had a solid background in staffing. Because he was already an expert in his field, he was able to quickly learn insurance basics and be productive because of his industry knowledge. He understood client needs, could name drop, and had the credibility necessary to get his foot in the door.
It’s easier to become a specialist than to be a good generalist.
It’s important, however, to select a niche based on a variety of factors, not just passion. If you don’t have prior experience in a field, it doesn’t mean you’re out of the race—simply begin the process of becoming the expert.
Evolving into the expert
Every specialty has its embedded nomenclature and language that are fundamental to becoming valuable to a client. For example, if you are pursuing an assisted living account and use the word patient instead of the proper term, resident, you will be seen as an outsider who has not invested the time to understand the industry or its needs. When you can speak in the same language as your client, it helps keep the price pushers out of the picture because it allows you to turn to more value-driven issues rather than price.
From a practical perspective, how does a young agent become an expert in a selected specialty? Here’s how I went about it. When I was 26, I left the safe confines of a carrier salary to the ceiling-less world of commission income: retail sales. When I was looking for an area to concentrate my efforts, I decided to focus on construction, specifically electrical contractors. I saw this sector as an opportunity because I lived in Northern Virginia in the booming 80s and 90s; new buildings were going up everywhere, and they all needed wiring. (Plus I heard that electrical contractors made more money and had nicer offices than other contractors.)
To learn more about this industry, I joined the Virginia Association of Electrical Contractors and started attending meetings. One of the association leaders was a charismatic contractor from Northern Virginia, my territory. I befriended the contractor, Mike, and explained that I was new in insurance sales but had a great deal of insurance expertise. We had dinner and became friends. He taught me the business and introduced me to his friends; he was taking me under his wing and I let him. Mike became my mentor in electrical contracting, and with his help my agency became the endorsed agent for the association and my book of electrical contractors grew to between $3 million and $4 million within three years. His expertise also helped me move into HVAC contractors through a business partner for another $3 million to $4 million. Mike was my first large client and stayed a client for as long as I was in retail sales.
The moral of the story: Find a mentor in your prospective specialty. The most proactive way to find a mentor is to join a representative association, volunteer for the membership committee and work hard to help the association. Hard work gets noticed. As an added bonus, being on the membership committee provides a constant source of prospecting leads.
The nature of the business
The premise is simple: It’s easier to become a specialist than to be a good generalist. Specialization in a class of business shortens the learning curve, which means you can produce profitable results much more quickly than a prospecting generalist.
Specializing, however, does carry a high degree of risk for the reward. By its very nature, specializing means you are shrinking your universe of prospects. It also means a macroeconomic event that affects your area of specialization will have an impact on your entire book. And if you mess up, word will travel fast. But if you’re willing to accept the aggregation risk, your book will grow faster and be stickier, and your expertise will be appreciated.
There is little doubt that specializing early in your career can help you become more productive because it naturally helps you streamline your goals. Specialization makes you an appreciated and valuable asset to clients; it allows you to earn a higher income and build a long, meaningful career—if you’re willing to put in the work. So learn about your clients’ industry, join an affiliated association and find a mentor. Become the expert.
Arthur Seifert has worked almost 40 years in the insurance industry, including positions in sales, financial consulting, underwriting and leadership in multiple companies. Seifert currently oversees six niche insurance programs as the president of Glatfelter Program Managers (GPM). GPM, a division of Glatfelter Insurance Group, is a leader in the design and delivery of specialty insurance programs and is committed to helping brokers succeed in specialty markets by providing value-added resources. Seifert also has responsibility for all wholesale and retail sales and marketing for Glatfelter Insurance Group.