How independent agents
can build for the long haul
By James Keane
After a few tough years of the most difficult operating environment in decades, which put carriers into survival mode, the insurance industry now appears poised to bounce back. Competition has returned, carriers have stabilized, and they are looking at independent agencies to help write more business. Meanwhile, funding is also flowing into the sector from carriers, tech companies and industry networks, offering agencies new levels of efficiency.
However, a beneficial market alone does not guarantee growth. The agencies that will thrive and continue to do so as conditions change are those with an effective strategy. They track the right metrics, seek the most viable opportunities, and use the most effective technology, all with a clear plan to grow their business.
Growing pains
While the insurance industry has returned to more solid ground, growth can bring friction depending on what stage of development an agency is in.
Startup agencies often struggle to land appointments with clients because they may have a limited track record, volume and infrastructure. Meanwhile, established agencies may have more subtle, and in some cases more costly, growing pains.
During the hard market, many agencies viewed premium growth as a primary indicator of health. However, while that looks good on paper, it does not necessarily mean the agency is growing. As rates have softened and premiums have fallen, agencies that weren’t tracking policies in force may discover their business was actually shrinking during those years.
Agencies must understand what business carriers want to write. Many insurance carriers have narrowed their focus in recent years, staying closer to their target markets and making fewer exceptions. Those that do not have a clear picture of each carrier’s risk appetite are likely wasting time and opportunities.
A foundation for long-term growth
Building sustainable agency growth starts with knowing where you stand and finding the right opportunities.
The first step is to ensure you are tracking the right metrics. As many agencies discovered during the hard market, revenue alone can be misleading. Meanwhile, the policies in place tell you only whether your book is actually growing or just inflating its rates. Using both numbers together offers a baseline for sustainable growth.
The next step is finding the right opportunities. Many look to niche markets because they can help the agency specialize in theseß areas and compel it to build a repeatable process. Once an agency has a proven playbook in a niche, it becomes less difficult to expand into adjacent lines. This also makes it easier to bring on new producers, because they can benefit from refined training around proven agency knowledge.
Agencies must also understand the makeup of their books of business, what carriers they are writing with, and where they are having the most success. Knowing where the gaps are and what revenue sources they are missing can help identify where to focus their efforts.
Technology can level the playing field
Fortunately, technology now enables smaller agencies to create opportunities and efficiencies that were not available in the past. Many of these agencies still do not have an agency management system, which puts them at a competitive disadvantage.
When powered by AI, an agency management system does not just organize client and carrier data. It can surface cross-sell and upsell opportunities that might otherwise go unnoticed and help measure client sentiment before a retention issue becomes a lost account. Additionally, a well-maintained management system can offer significant value if an agency ever looks to sell.
While the most valuable tools are those that streamline operations, agencies can seek out other tools for additional value, for example, using rater tools to help find more competitive quotes, video platforms to interact with clients, or even electronic signature platforms for faster bindings and a better client experience. When applied well, technology makes an agency more efficient, helps producers get up to speed faster, and creates a better experience for clients.
How a strategic partner can accelerate growth
Building and growing an agency takes time and a lot of sweat equity. The right network and partner can offer guidance, consultation and direction that help agency principals maximize their opportunities and avoid pitfalls and costly mistakes.
The right network can serve not just as a resource, but as a strategic partner that offers market insights, tools to build and scale an agency, perspective to inform decision making, and even access to vetted technology platforms.
Our SIAA NXT Intelligent Distribution Platform, for example, connects agencies with information regarding carriers and partners on a single platform to help write and retain more business through data-driven insights and streamlined E&S submissions. SIAA’s AgencyIQ utilizes data analytics and business intelligence to help agencies analyze their book of business at a granular level to understand what they are writing, whom they are writing it with and where they are having the most success. Such tools allow agents to write new business faster and focus on producer training, ultimately aiding in better performance and less turnover.
Agencies that build lasting value are the ones that put in the work before conditions are favorable and keep going when they are not. That means tracking the right numbers, using the best tools and thinking beyond the next renewal cycle.
The planning, work, and systems you put in today is what your agency will be worth tomorrow.
The author
James Keane is vice president at SIAA, a network for starting, growing and evolving independent insurance agencies. The organization has over 5,200 member agencies writing more than $18 billion in total premiums. James can be reached at james.keane@siaa.com. To learn more about SIAA, visit siaa.com. To learn more about SIAA NXT and The Intelligent Distribution Platform, visit siaanxt.com.
