As the market softens four principles
to help develop a renewed foundation built on trust
By Jack Calabrese
Did the longest hard market in recent years put a strain on your carrier relationships? Unfortunately, if you’re like many agents and producers, the answer is “yes.”
As capacity tightened and profit margins shrank, carriers were sometimes forced to take drastic action. This has left agents trying to explain the reasons behind significant premium spikes or non-renewals to an increasingly frustrated group of customers.
Yet there is good news on the horizon. Market conditions are expected to soften, and both carriers and agents can anticipate a shift back to growth mode. But before that can happen, carriers and agents must work to repair their previously fractured relationships.
Closing open wounds
At its core, insurance has always been a relationship business, which is why the friction between carriers and agents in recent years has been particularly concerning. Some larger carriers could not adapt to tightening market conditions fast enough and had to take extreme measures as a result. This caused some agents to abandon long-time carrier relationships and search for more responsive and agile local or regional carrier partners.
Now, it’s time to set aside any hard feelings. It’s important for agents to remember that carriers did not make decisions to raise rates or cancel policies lightly, and they were keenly aware of the impact those tough choices would have on their distribution channels. At the same time, carriers should commit themselves to restoring agent confidence that may have been adversely impacted—or even lost—during the hard market.
Rebuilding trust
Creating a mutually beneficial relationship is in the best interest of carriers and agents. These four principles can help both parties work constructively to develop a renewed foundation built on trust.
- Start with the fundamentals. As agents re-engage with their carrier partners, they should follow a few essential building blocks of productive relationships. They should seek in-depth knowledge of their carrier partners’ products and processes. Aim to write quality business that meets each carrier’s specific risk appetite. And, perhaps most importantly, communicate effectively with underwriters.
This last part is sometimes the most challenging, especially when agents know a particular aspect of a client’s risk will impact the underwriter’s decision. In these cases, however, honesty is always the best policy. Producers should provide underwriters with all the details they need to make the most appropriate and informed decision.
While doing so may impact the competitiveness of the quote, it will also protect the value of an agency’s book of business, which is dependent on the quality of risks agents write.
- Avoid common setbacks. A good approach is for agents to take professional pride in writing the best business possible and matching it with the most suitable carrier partner. Producers should also realize they won’t win them all.
We have all faced underwriting decisions that appear to be heavy-handed or even unjust. In these cases, it’s OK for agents to push back. But by keeping their composure and displaying empathy, agents will build trust with underwriters, which will lead to more business.
One of the biggest impediments to building a strong relationship happens when agents treat a carrier like an adversary. I’ve been an underwriter in the past, and unfortunately I’ve had many personal experiences with agents who disregarded processes and put up roadblocks, especially during times when I had to make an unfavorable underwriting decision. These attitudes created conflict and deepened the rift between carriers and producers.
Agents can also turn an unfavorable underwriting decision into a potential positive by sharing risk mitigation strategies to help their clients reduce their rates or secure the coverages they need. Doing so will create the additional benefit of positioning the agent as a trusted advisor to customers.
- Seek balance. Gone are the days (if they ever existed) when a producer could solely focus on writing business. Factors like social inflation, climate change and nuclear verdicts all impact risk, forcing agents to roll with the changes and respond either proactively or reactively.
At its core, insurance has always been a relationship
business, which is why the friction between carriers and
agents in recent years has been particularly concerning.
Simultaneously, data analytics and AI are creating seismic shifts in agency operations. AI in particular can assist agency owners and producers in terms of knowing who is writing what and where the best places are to place business.
Maintaining balance amid all these competing priorities isn’t easy, but producers can build a track record for success and interact with their carrier partners consistently by protecting their biggest and most fleeting resource: their time.
Agents should begin testing AI systems and other products to help them work more effectively. Consider whether a virtual agent can help better manage customer service inquiries or billing questions, so agents have more time to write business.
Those who are unsure of the best technology or approach for their agency should consider joining a network of independent agents and ask their experts to provide options that can benefit the business, its employees and its clients.
- Rely on others. Building mutually beneficial agency-carrier relationships isn’t always easy, especially when just starting out. New agents must find the right carrier partners, build an agency staff, identify the right technology, and create a marketing plan, all from scratch and all at once.
Whether a brand-new producer looking to win business or a seasoned agent looking to expand their business, it’s wise to engage with an independent agency network that is dedicated to support, educate, inspire and mentor its member agents.
Groups like SIAA are committed to developing viable and reliable points of distribution for our carrier partners. We offer programs to new agents transitioning from a captive environment, and we provide ongoing support for established producers and agencies. We can even help agencies manage their regional or national books of business so they can maximize their contingency compensation opportunities. Networks are not all created equal, but most can provide a quicker, it not immediate relationship with carriers.
Play the long game
The bitter taste of the hard market won’t go away overnight, and rebuilding relationships with carriers will take time. But agents who commit to understanding their carrier partners’ needs and writing quality business will mend strained relationships faster and position themselves for a productive—and potentially very profitable—future.
The author
Jack Calabrese is the chief growth officer for SIAA, the largest alliance of independent insurance agencies in the country. Jack has served in various leadership roles with SIAA for seven years and has worked in the industry for two decades. As an experienced insurance professional, keynote speaker and sales leader, Jack is passionate about listening to and speaking with independent agents while developing strategies to help them succeed.
