Art Moll, president of the National Association of Professional Insurance Agents, welcomes the opportunity to compete in the widening marketplace of financial services.
Art Moll, president of the National Association of Professional Insurance Agents, welcomes the opportunity to compete in the widening marketplace of financial services.
A few types of people bother me: the unethical; the defensive specialist, who is always so busy covering his rear that he accomplishes little; but I especially detest the naysayer, the prophet of doom and gloom.
If we were to believe everything we read about the death of professional insurance agents in recent years, all of us would have changed occupations.
Some people see a glass half full, others half empty. I like the view of my 93-year-old father-in-law who sees his glass as overflowing. I strongly believe that this is the best of times for professional independent insurance agents.
Let's explore some of the opportunities and challenges that face us.
First, banks may have opened up Pandora's Box. Their entry into our business is really a blessing in disguise. Certainly it will injure those agents who will not or cannot adapt to the new and rapidly changing landscape and the increasing demands of our customers, but those who can adapt are now positioned to reap far greater rewards.
Just think about the whole new range of financial products that we can add to our already large portfolio. These may include credit cards, mortgages and auto loans. Also, banks may begin to understand the true value of renewals, and this will make agency financing a lot easier. Think of the possibilities. We will now be able to compete with banks and other financial institutions with one great advantage--we are local agents who have developed long-term relationships with our customers. These additional products can be added in most cases with negligible increases in our operating costs.
The expansion of our product offerings is exciting, but we must also change our focus and offer our clients an enhanced service if we hope to win in this more competitive environment. We must become our clients' risk managers, whether they be personal lines or commercial lines customers. Our raison d'etre must focus on the core value of insurance--the protection of assets. We must provide the framework of a plan that changes and requires periodic updating and upgrading. That's something a 1-800 number could never provide. We must make sure that our clients develop a mind set that insurance is not a commodity and that price-alone purchases of individual products without a framework will surely lead to problems down the road.
Almost all agents are licensed to sell life and health products, but they rarely provide them for their clients. One of the most important and most undersold coverages is personal disability or income replacement. It is a difficult sale and it may take several years for the initial seed of your idea to germinate, but if a disability occurs and income is replaced you will have a client for life.
You should ask your client what it would be like if he or she were unable to work, with bills starting to pile up and savings being rapidly depleted. This is the seed you should plant. I'm sure that there is a positive correlation between the speed of recovery from an accident or illness and the possession of, or lack of, a disability income policy. Remember, the more policies you have for any client the more likely you are to retain that client, and retention is a large component of agency profitability.
One of our jobs as an agents association is to lay bare the notion that insurance is a commodity that can be purchased over the Internet or over the phone. However, our educational processes in this area will be effective only if every producer radically changes his or her approach and truly gives "value added" service. This risk management approach will neutralize the degrading advertising of the direct response companies such as GEICO. Their message will begin to fall on deaf ears.
I hear conflicting points of view regarding the viability of the smaller agent. Almost every day we hear or read about another merger. Big agencies are getting bigger. I believe that companies who serve the vast majority of our members are also frightened at the prospect of dealing with mega-agencies because they pose a troubling question for carriers: Who is going to dictate to whom?
There is a growing number of agents who enjoy sales, possess the entrepreneurial spirit and are uncomfortable working in a large bureaucracy. These outstanding individuals would really rather be in business for themselves.
Technology has made the small agency viable again. We should give this emerging professional agency the parameters and ground rules and let its producers sell. Make routine processing and policy issuance easy and fast. The rule that says that the agent closest to a risk has the best results is irrefutable. Certainly the smaller agent has had the most profitable underwriting results.
In addition, the industry must come to its senses and realize that we can achieve monumentally large savings if we standardize loss runs and accounting statements. I challenge the companies to make our lives easier by freeing us up so we can spend 90% of our time selling instead of 90% of our time pushing paper or duplicating data entry and files.
Each of us should stop and be thankful for the wonderful standard of living we have achieved by being a part of the insurance industry. Please remember that somewhere between today's dreams and yesterday's regrets are tomorrow's opportunities. Please change your focus. Become a risk manager for your clients, and enjoy the best of times. *
The author
Arthur I. Moll, CIC, CPCU, CLU, is president of the National Association of Professional Insurance Agents and president of Compaudit Services in Yonkers, New York.
©COPYRIGHT: The Rough Notes Magazine, 1998