The process is imperative

[T]hink of continuity not as a massive project to complete, but

rather a daily discipline to enforce and monitor consistently.

By Kari Glennon

Every producer’s book of business (BoB) is a continually appreciating asset. However, just because you’ve spent years establishing a highly successful book doesn’t guarantee that it will continue to exist if you’re not at the helm. For instance, how will your clients react when you tell them you’re planning to retire or if your agency is sold or merges with another entity? 

Unless you have a formal perpetuation plan, your BoB could shrink up to 20% or more when you perpetuate. This could have a significant impact on any agency’s bottom line. The statistics prove this point.

According to Reagan Consulting’s 2024 Agency Universe Study, agencies with formal retirement transitions averaged 93% retention, compared to 82% for ad hoc transfers. Further, an Independent Insurance Agents & Brokers of America (IIABA) 2023 report found that 88% of books retained 85%-plus of their revenue if the retiring producer assisted in the handoff for six to 12 months.

So how can your agency maintain continuity on a BoB? Every producer’s BoB is a continually appreciating asset that must be treated as such, regardless of the ultimate transition path (i.e., selling, merging or perpetuating internally). The goal is to retain at least 90% of your best accounts. Cultivating this level of continuity requires a disciplined effort across three primary pillars: Structured Succession Planning, Operationalizing Value (creating consistent operations around the BoB in transition), and Perpetual Client Retention (protecting the book during handoff).

Pillar 1: Structured succession planning

This is about making a formal plan for handing off the BoB to a new producer. There are several ways to do this.

• The internal transition. When identifying a BoB successor, it’s critical to pair clients with a successor who mirrors the retiring producer’s style. However, I strongly recommend that you look beyond your top producers and identify sales team members who have a deep knowledge of specific lines of business. These should be individuals who are exceptional at building relationships and can integrate them into their book of business.
  My theory is that the new producer must treat the existing client as if they’re a new client to the agency—even if they’re long-time clients—acknowledging that the client didn’t choose to work with them. As the new producer, never take for granted that a client is going to love you; the relationship may not automatically transfer. You still have to work for it and convince them that they should trust you with their business.
      Transparency is critical. Further, you must be willing to invest in the relationship from the ground up, taking them through your process and demonstrating how you, specifically, will help them control costs and manage risk.
      At the same time, don’t be afraid to take apart the BoB. The entire book doesn’t have to go to a single producer. Different parts of books should go to producers with the greatest ability to retain the accounts.
• The “glide path” model. I use this term because most retirees are gliding. Some of the transition plan may not even involve the client early on. It’s a matter of talking to the carrier, service team and anyone else who touches the account and creating a formal, phased handoff timeline (18 to 24 months is ideal) with clear milestones for client introductions, joint review meetings, and a gradual revenue transfer (i.e., how the revenue is paid to both the retiring and new producers).
• Knowledge transfer and valuation. In transitioning from departing producer to new producer, it is vital to document the retiring producer’s institutional knowledge (e.g., What major carriers have been involved on this account? Why did we change? What are the client’s preferences?) and make sure those notes are logged into the agency management system so everyone can see them. Knowing that history helps all involved move forward.
• Relationship transfer. A BoB is devalued if it relies solely on the presence of the retiring producer. That’s why agencies need to focus on transitioning key client relationships to other staff members well in advance—even if it means bringing another staff member to relationship meetings with clients. Having more than one point of contact helps build confidence in a client’s relationship with an agency.

Continuity is key to reducing dependence. If the producer on a BoB is retiring, it is imperative that the account manager who historically has handled the book continues to service it through the transition. If both the producer and account manager retire simultaneously, the likelihood of that account being lost is much higher. Without some sort of continuity, why would there be loyalty?

Pillar 2: Maximizing the book’s transferability

Use systematization as a value driver.

• The “bus factor.” Is there one person driving the bus? If so, you should expand your team to reduce reliance on a single individual (including the retiring producer) for core service processes. Frequently this means expanding the number of people on the service team that works with the producer. For example, to familiarize others with an account, the retiring producer could include several service team members (vs. just one) on emails and other relevant communications.
• Standardized workflows. If it’s renewal time and the new producer changes the entire process, expect major disruptions if not pure chaos! That’s why it’s imperative to document and enforce clear, consistent processes for servicing, renewals, and claims handling. The goal is to provide a predictable, replicable client experience, regardless of the producer. Everything needs to be standardized so that the level of service continues to meet client expectations.
• The central brain. The institutional knowledge in the brain of the producer and service person is so important that it must be considered agency knowledge. It’s vital that their data is thoroughly documented. Therefore, it is critical that we leverage the agency management system to store all client intelligence, ensuring that the relationships are housed within the agency, not just in the retiring team member’s head.

Meanwhile, there are key metrics one should master.

• Retention rate. Know the historical retention rate and set aggressive, measurable targets to maintain or improve it during the transition phase.
• Cost-to-serve analysis. Identify the true operational cost of servicing various client tiers (1, 2, 3, 4), determining as an agency which tiers to keep, and then driving as much efficiency in each of those. The entire book may not be worth keeping. While Tier 4 accounts may not be worth keeping, some Tier 3 accounts might be the perfect training ground for an inexperienced producer. Either way, your decision should be based on a cost-to-serve analysis.
• Revenue per employee. We all know that this is a critical efficiency metric that should be maintained or improved by the succeeding producer on the book that’s being perpetuated.

Pillar 3: Perpetual client retention

Following the 3 Ds—Determine, Document, Discipline—can help your agency protect a BoB during handoff.

• Determine what accounts to retain. An account’s value should not focus on revenue size only. Determining whether to retain an account requires a consistent, systematic approach. This means scrutinizing each tier for profitability, potential for growth and carrier relationship value, among other factors. (There’s much more on this topic in The Sitkins Principle, available for download at www.sitkins.com/whitepaper.)
• Document an action plan for high-value accounts. After determining which accounts to retain, create a specific, documented, multi-year engagement plan for all top-tier clients (Tiers 1 and 2) that outlines expected growth goals, reviews annual relationship management calendars, and identifies cross-selling opportunities. This action plan should be done jointly by both the retiring and succeeding producer.
• Exercise the discipline to stick to the perpetuation plan on every account. That’s the best way to ensure a high retention level on transitioned accounts. If you start to get lazy and you don’t live up to the plan you have in place, you risk turning over accounts.

Beyond adhering to the 3 Ds, agency leaders and producers should employ a two-pronged approach to deepening and protecting their relationships.

1. Multi-line penetration. The more lines of business and the more types of policies the client has with the agency, the harder it will be for them to leave. The BoB is stickier when a client holds multiple policies, so rounding out is key. This greatly enhances your ability to retain an account during a personnel change.
2. Multiple relationship rule. Mandate that every top-tier client has a robust relationship with at least two key agency staff members (the retiring producer and the succeeding producer/service lead). In other words, agencies should have a minimum of one service team member and one producer. This is the first and arguably best defense against client flight.

In closing

For agencies that have never had a systematic approach to continuity, implementing a perpetuation plan may seem overwhelming, but it doesn’t have to be. Perpetuating a BoB is all about succession planning, consistently handling and servicing the best accounts, and retaining your top-tier clients. The key is to think of continuity not as a massive project to complete, but rather a daily discipline to enforce and monitor consistently.

The author

Kari Glennon, senior consultant of Sitkins Group, Inc., has been a sales and marketing professional within the insurance industry for nearly 25 years. She has been an owner and partner of a firm, perpetuated her firm externally, and spent time as the chief sales officer for one of the largest middle-market insurance agencies in the nation.

Her true passion is to deliver strategy, inspiration, insurance knowledge, and coaching for independent insurance agencies. To learn more, visit www.sitkins.com

Not sure where to start? Sitkins Group private clients have exclusive access to a unique perpetuation planning tool. For additional information, visit www.sitkins.com.