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SEARCHING FOR UNICORNS

SEARCHING FOR UNICORNS

March 30
08:52 2022

SEARCHING FOR UNICORNS

What to do when you find it tough to find a new account manager

Providing interesting, differentiating perks that help you to recruit and retain the best employees for the long term is the goal. Account managers don’t leave cultures that are welcoming.

 

Judging by the emails, calls, and texts I am receiving, quite literally, on a daily basis, it’s time to talk out loud about the dried-up pool of qualified account managers and how to overcome this very real challenge for independent insurance agencies of all sizes. Some agencies have reached critical mass and are experiencing related potential E&O (errors and omissions) situations as a result. The struggle is intense and worrisome, and the answers aren’t all easy.

Examples include the poaching of rural, lower-paid employees by large, urban agencies who pay big salaries and, yes, signing bonuses. Working remotely makes this more prevalent. Interestingly, there are some who found the grass not so green on the other side, and returned to the former agency, despite the monetary differences.

Motivations for account managers are not necessarily economic, all things being equal.

Predictable vs. “black swan”—a brief history

COVID is not the cause of this situation; it was percolating for about a generation (20 years or so)before the pandemic brought this weakness into sharp focus. A slow drip of components has contributed over time to the current reality—it was neither sudden nor accidental, to use our own insurance speak. Not all agencies have experienced all of the components, but most have experienced at least some of these scenarios.

It’s good to understand the contributing factors in order to address them, as appropriate, and assure a bright and vibrant future for agencies.

  • As an industry, many players (carriers, technology vendors and agency owners alike) have held fast to maintaining the status quo, rather than recognizing and embracing change.
  • Some failed to recognize the value of qualified account managers until they began to disappear from the landscape.
  • Boomers are retiring in record numbers, taking their wisdom and experience with them, with no organized or codified strategy for passing it on to those who come after. Bottom line, account managers are leaving at a faster pace than they can be replaced and trained.
  • Some mistakenly believe that assistants and processors can replace what qualified insurance servicing professionals bring to the table. Quite simply, they cannot. “Processing” is just one component of the account manager position and not always easy to separate from the overall job. Those whose professional account managers have abandoned ship and left only processors behind can attest to this fact.
  • Carriers continue to transfer tasks (and expense) to agencies (rating, quoting, billing questions, and data entry into their systems without full data reciprocity, etc.), while reducing commissions. This has contributed to the processing overload and overshadowed the more rewarding components of the account manager position.
  • There is a general and persistent lack of formal training for account managers. Agencies are far more likely to invest in outsourced training of producers than account managers. Even formal producer training is less common than it once was.
  • There are business model challenges, including a downward pressure on commission income, upward pressure on the expense of agency ownership, and hesitancy to embrace a fee-based approach.
  • Agency manager compensation has remained relatively flat for some years—until the recent surge spurred by supply and demand.
  • Technological change has expanded the need for:
  • Formal operations management; yet few agencies make the investment.
  • Addressing evolving, complex exposures to loss and emerging coverages that address them.
  • New ways of operating, to meet clients’ evolving expectations.
  • Digital strategy, including rethinking business models, workflows, and the accompanying re-tooling of staff training and education, including account managers.
  • More money to pay for and properly manage technology.

Recruiting opportunities

Out of the upheaval may come a silver lining or two. There are industries and organizations particularly hard hit by the “big resignation” that has accompanied the pandemic. Which of those occupations are closely linked to that of insurance agency account management? Which individuals may possess the right personality type, education, and/or motivation to become a service professional for an agency? Can your agency offer an attractive alternative for them?

For instance, teachers and nurses—and don’t forget pharmacists. These individuals have college degrees, are incredibly burned out by their recent experiences, and have the “servant’s heart” and caring factors that are prevalent among the best account managers. Their salaries are commensurate with that of top account managers, with a lot less stress. Their primary motivation is not money; many are declining huge bonuses, and looking for something new. Their primary satisfaction comes from helping others and making a difference—just like account managers. Crafting well-placed ads that specifically target these occupations could result in some excellent, trainable candidates, with the basic DNA to become effective account managers. They are accustomed to structure and a more “corporate” environment, which you will need to deliver.

It is essential to incorporate personality testing into your recruiting/hiring process, especially if the individuals have no past experience in insurance. If they aren’t innately cut out for the job and also lack any insurance experience, it could be too much to overcome. In addition, creating an intentional and comprehensive educational career path with specific timelines, will be critical to their success—and yours.

Get creative

It is noteworthy that the agencies that seem to be suffering the least from employee leakage are those providing what others might consider very rich compensation packages—not just wages, but old-fashioned, generous profit sharing, including 401(k) matching and significant performance-based compensation bonuses, recognition, and more. These agencies set a high bar for performance and they share the re-ward of increased growth, retention, and profits with those who help them attain it. They invest in their account managers, and are rewarded by low turnover and the accompanying expense.

Providing interesting, differentiating perks that help you to recruit and retain the best employees for the long term is the goal. Account managers don’t leave cultures that are welcoming.

There are other employees with service acumen who have dropped out of the workforce and could be lured back in if you can make it possible for them to succeed. For instance, restaurant and hospitality-related industries may hold a treasure trove of potential employees. Recognizing and solving for their barriers to re-enter the workplace is key.

Many in the “big resignation” have not returned to work because they cannot find or afford childcare. A solution employed in the way distant past, which could make a comeback today, is that of providing affordable and trustworthy childcare for employees at a reduced cost or as part of a creative compensation package. Creating your own solution or partnering with other businesses to provide convenient, quality daycare and/or after school care for your employees’ children could be the component that moves the unicorns in your direction.

Create a pathway for new entrants

Speaking of throwbacks to the past, there is a movement afoot to create opportunity for young candidates and to encourage diversity to meet the needs of agencies and their clients into the future. Consider partnering with these organizations, to replenish the supply of future insurance professionals, by providing internship opportunities within your agency. Food for thought for a future column!

Domestic outsourcing. There are individuals and organizations who pro-vide remote account manager services. This is basically the approach that is occurring with agencies hiring account managers in different cities and states who work remotely as employees or independent contractors. I have worked since the mid-90s with agencies that had employees move and continue to work for the organization from a distance or who worked remotely long before the pandemic. If the agency was properly automated, with appropriate procedures and operational oversight in place, this was possible even years ago. Technology has really made this seamless and can provide a win-win for agencies and employees and clients.

Today, as agencies hire account managers who reside in different states, new challenges are created, as regulations, forms, and coverages may vary from state to state, especially in the area of monopolistic workers compensation, certain auto coverages, and surplus lines, to name just a few. EPLI laws can also vary.

Proper licensing is essential, as is auditing. Effective operations management can make all the difference. Creating a team culture is a challenge, but not impossible; finding the right balance is an intentional endeavor—it will not just happen.

Off-shore outsourcing. This is more complicated. With one very narrow exception of which I am aware, non-citizens of the U.S. cannot be licensed. Therefore, they cannot perform certain duties that only licensed individuals can handle: SNET, or solicitation, negotiation, execution, and/or transacting afterward. These individuals should not be communicating with clients, and perhaps not carriers, depending upon contract language, to remain in compliance with insurance regulatory statutes.

Some agencies are not operating domestically with appropriate encryption protocols in place; off-shore security issues are often overlooked, as well, creating added risk to agencies and clients. It is critical to work with a professional network security partner to ensure compliance and safety of your clients’—and your—data. In addition, some clients may have a negative view of working with organizations that employ off-shore solutions. Others may have privacy concerns. Can you assure your clients that their data is protected? Are you prepared for those inquiries and concerns?

Happy hunting

Every day brings new challenges. We are fortunate to be in an industry that offers opportunity to so many, all while helping our clients negotiate the risk management minefield.

There are new people who are waiting for an opportunity and there are agencies that need them. Taking the time to develop and execute a strategy to attract and retain these individuals is a worthy agency endeavor.

 

The author

Mary M. Belka is owner and CEO of Eisenhart Consulting Group, Inc., providing management and operations consulting to the insurance industry. She also is an endorsed agency E&O auditor for Swiss Re/Westport. A graduate of the University of Nebraska, Mary holds the CPCU, ARM, ARe, RPLU, CIC, and CPIW designations.

 

About Author

Jim Brooks

Jim Brooks

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