JANUARY 2007
An interesting evolution has occurred within the independent agency system
within many of the inner city areas. I have noticed some agencies now have their
front windows and roof covered with announcements of the different services that
they provide but I must be honest when I say that it looks sloppy, unfocused and
desperate. When I see this kind of agency, I often wonder what is going through
the mind of the agency owner. Is he/she a mini
market or an insurance agency. I have settled on the latter. It is my
opinion
that if an agency is doing well, insurance is the one and only focus. If an
agency needs residual income from selling check cashing services to loans, you
have to wonder why this is all necessary.
Is the owner doing this because he/she is not able to collect enough broker and
service fees to remain profitable and/or are the
other services offered as a way to draw a customer in to eventually sell them a
policy? It seems like a modern day quandary of
…”which came first, the chicken or the egg.”
I recently saw two agencies on the same street in my local area. One
agency has a couple of insurance company neon signs and it was a clean,
well-presented store front. This agency was in business to offer one product
which is well defined. The other agency had bars in the windows, multiple travel
promotions, and a clutter of posters within the windows. I like to consider
myself an insurance agent/broker. This is what I do and I believe I do it well,
based on the appointments I have and my loss ratios that I have produced. Agents
and brokers, like myself, take special pride. We are licensed, bonded and
experienced and we specialize in an important line of business that almost
everyone needs, to some degree. So if I were a customer and if I were looking to
insure my vehicle, which agency would I seek out? Most people would seek out an
insurance agency but times have changed a bit. Convenience is becoming more and
more important for us and if I could go to an office that offered me multiple
financial products, wouldn’t that be better for me? The answer is found in the
type of consumer you are targeting for your office.
When I spent over 13 years writing nothing but auto insurance, I noticed how
confined I was in the customer I attracted and I couldn’t figure out
why I had such a hard time trying to round out or cross sell my customer base. I
was representing a company that had a double full page advertisement in the
yellow pages which targeting high risk drivers. Sure we included some
information about the other products we offered but for the most part, we
promoted SR-22s and DUI’s and “unfortunate driving records”. This was the
primary focus and it worked. We attracted what we sought. After speaking with
thousands of clients over the years, I understood why I could not sell more
policies to them. The vast majority rented
an apartment and were from lower income households. Why should I expect my
customers to purchase anything more than what they could afford and/or needed.
At the most, they might have interest in a renters insurance policy but when
paying the rent, utilities and other living expenses consumes the majority of
their income, you can’t expect to write much more business. The focus was to
write as much new business as possible and collect broker fees and service fees.
As time went buy, the consumer began to shop around more and fee income began to
diminish and it became apparent to me that the agency to redefine itself or
expect to languish in a changing market. Maybe this agency should consider
offering other financial products such as check-cashing, notary public, travel
or passport services to their customers. These products are essential for many
customers and this may help the persistency of the client book of business. If
that customer feels that the agency is a one-stop, get-all location, maybe this
is what “redefining” the agency is all about. How this is accomplished
within the agency will need to be determined but I would think that by having
separate department heads for each product, you could best maximize the shopping
experience for the client. In this circumstance, it is important to realize that
the agency owner is only as good as the products that are offered, not just the
fact that they ARE offered. Just because you have a notary but you are charging
$50 per signature, doesn’t mean customers will use you very long. Just because
you happen to sell auto insurance but your rates are higher than the insurance
specialist down the street, doesn’t mean you will keep the customer very long.
The customer is ALWAYS wondering if they have the best deal and they will shop
you.
As most of you already know, Infinity Insurance has opened a store in
Now, let’s look for a moment at those agencies who are targeting a different
market – the middle to higher income customers. Many of these customers are
professionals or business owners and are not likely to care much about
non-insurance related products. Most of them prefer to deal
with an individual agent who they feel specializes offering insurance products,
but many of them. One of the most difficult hurdles to overcome with this
customer base is that they are already insured with a major insurance carrier
and the agent has to convince them that making the change is either horizontal
or upwardly vertical; in other words, your product better be as good if not
better than what they already have. Additionally, your pricing has to be
comparable or lower and the only way to accomplish these goals would be to
represent the best insurers in the world – the preferred tier. I feel that
this niche is largely represented by carriers such as Farmers, Allstate,
Statefarm and CSAA and a few others, but they can be beat. To beat them means to
emulate the customer-client relationship as professional and focused. If this
client feels that you know their needs specifically and you are well versed in
personal and/or commercial insurance lines AND you represent A+ rated carriers
(which they already have), you can easily beat the larger carriers. I know this
from experience, I do it daily. It is such a different clientele than what I was
selling to back in 2001 – different needs and expectations. I enjoyed
specializing in auto insurance but as times have changed so have customers needs
and you have to decide where your agency falls within the insurance world. Most
of the IBN members that I have spoken to that were selling just auto insurance
have turned the corner and have either entered the commercial insurance arena or
are representing both personal and commercial insurers and general agencies - a
necessary move and one that is paying dividends.
With the excess of auto insurance companies in
I will leave you with this ridiculous analogy. Remember the Andy Griffith Show
from the 60’s (man I am old). Andy was the Sheriff, Justice-of-the-Peace, and
the editor of the local newspaper – he was considered the focal point of
Mayberry. The best agents want to be considered an “Andy Taylor” 
of their business. If your customer finds better service, expertise or pricing
somewhere else, in their eyes you have failed them and in essence, you have now
become a 
Gomer or a Goober or even a 
Floyd. Nobody wants to be a Gomer, Goober or even a Floyd!