MARKETING
Agencies are encouraged to go out on their own
By Dennis H. Pillsbury
Steve Chappell, President of MAIA's Agents Assistance Corp. and its subsidiary, Agents Marketing Assistance Corp.(left), and Bob Pierce, CEO of MAIA (Michigan Association of Insurance Agents), were instrumental in developing the Independent Agents Group Great Lakes (IAGGL), a cluster designed to help agents gain their own contracts with insurers.
It should hardly come as any surprise that market access ranks at the top of many lists of problems facing independent agents. That certainly is the case in Michigan. Surveys of members of the Michigan Association of Insurance Agents (MAIA), Lansing, Michigan, invariably identified market access as the number one concern of agents. "Our leadership saw that as a mandate for us to do something," says Steve Chappell, president of MAIA's Agents Assistance Corp. and its subsidiary, Agents Marketing Assistance Corp.
When market access was first expressed as a member need, MAIA's leadership responded with a two-pronged approach: 1. "We midwifed Great Lakes Casualty Insurance Co. to provide private passenger auto insurance and then stepped away from it," Steve notes. (Great Lakes, based in Wayland, Michigan, was set up in 1995 and started doing business in 1997. Agency contracts are available only to owner-agents, who invest in the company through its parent, NewCo Financial Holdings, Inc.) 2. "We partnered with Iroquois Group in our initial effort to increase market access for our members," Steve continues. "MAIA was fortunate to bring on staff Bill Anderson who had a wealth of cluster experience to spearhead that initiative. We were with them for about five years and built the program up to a pretty good size. It was very successful in achieving our main goal of market access; however, it proved to be contrary to our ultimate goal of creating new, independent, self-sufficient agents. It became clear that there was a philosophical difference stemming from our being a trade association and Iroquois being a for-profit company. Iroquois' goal, as well it should be, was to bring agents into its group and keep them there."
That difference led to a termination of the relationship in July 2002.
"We still wanted to provide market access for our members, so we sat down and brainstormed on a way to create the cluster of the future," Steve adds. "We held a number of meetings with companies to discuss our cluster idea and it was received positively by carriers. Several agreed to work with us so we formed Independent Agents Group Great Lakes (IAGGL) as a subsidiary of Agents Marketing Assistance Corp. IAGGL was formed as a cluster with the agency becoming a sub-producer of the company. However, business is funneled directly to the carrier so the carrier gets a true picture of what kind of business the agency is submitting and how carefully the agency staff is completing applications and so on. We did this so the agency and company got to know each other and eventually would reach the point where an agency contract was given to the agency. To further facilitate this, we worked with the companies to determine criteria that would need to be met for a new agent to get a contract and made this a goal for any agency that joins the cluster. For example, an agency might have to reach $250,000 in premium and a 60% loss ratio to qualify for a contract."
Bob Pierce, CEO of MAIA, explains further: "We have a program, MI Future, that is an overall effort to bring more people, particularly young people, into the independent agency system. MI Future provides job shadow days, an internship program where we provide members a stipend through the MI Future Foundation to hire college students part-time, professional development programs, a producer development program and a Total Quality Agent (TQA) program for agency principals where their agency is compared to Best Quality criteria. Our insurance company partners provide financial support for their agents to participate in a number of these programs."
Bob continues: "We wanted a market access program to complement these efforts, all of which are designed to enhance the independence and the success of our members and grow the independent agency system. IAGGL was formed to support this goal."
IAGGL provides access to personal lines markets. MAIA has partnered with AgentSecure on the Internet for commercial lines market access.
"We ... wanted to provide market access for our members, so we sat down and brainstormed on a way to create the cluster of the future."
--Steve Chappell
Agencies have to pre-qualify to become members of IAGGL. "When an agency calls in and expresses interest," Steve explains, "we'll send out our brochure about the cluster. We make it very clear that we are looking for good agencies with motivated agents and staff who want to take steps to be successful. We want them to move to the next level. We're not interested in agencies who view this as a dumping ground or who aren't ready or willing to take the necessary steps to be successful. We make it clear in the brochure we send to interested agencies that we want agencies that are committed to the concept; are committed to sales and marketing; are committed to achieving a direct appointment; and will be committed to our companies." The brochure says MAIA is looking only for agencies that have:
* A solid P&C background
* An agency management background
* Sales experience
* Two or more full-time employees
* An automated agency with Internet access
* A commitment to adhere to policies and procedures
* An ability to work as a team member and for the benefit of the team
* Retail office space
If an agency continues to be interested after reviewing the brochure about IAGGL, Steve will meet with the agency and present a more in-depth view of IAGGL's workings. "I go to their facility and make an hour-and-a-half Power Point presentation that goes through in detail what each side in the transaction expects. I try to leave no questions unasked. I'm trying to learn about the individual while I am there."
Steve will then determine if the agency and IAGGL fit. If it is determined that there is a fit, the agency will apply for membership by filling out an application and completing an agency profile and an agency narrative; providing loss and production runs for each carrier the agency currently represents; providing a copy of the agency E&O dec page; and paying the first month's access fee.
The final step involves marketing to the companies that support IAGGL. "We currently have five companies supporting the program," Steve says. "Once an agency's application is accepted, either I or the agency or both will approach each company. The companies we have write the gamut of personal lines coverages from the high end to the low end. It really depends on the agency's appetite which company or companies make sense."
Bob concludes: "We have a lot of cluster experience and have taken the good things and tweaked them to create the cluster of the future for our members to grow independent agents. We are confident this will be successful." *
For more information:
Contact: Steve Chappell
Phone: (517) 323-9473