2001 Best Practices Study

Analysis of Agencies with Revenues Less Than $500,000

C ARRIER R ELATIONSHIPS

“We pride ourselves on the thorough job we do with our submissions. We make sure all of our apps are complete and correct and have all the information the carrier is going to need. Our carriers keep telling us how unusual we are.” eyes or slip anything past them. In our small community we sometimes have to quote on something that we know is not that great for the company even though it looks good on paper. We just make sure the insurance company knows all the facts so they can respond appropriately. They have learned to trust us, so when we tell the company ‘this is a good piece of business’, they take our word for it.” “Our best relationships are with carriers that support us in trying to be the best we can be whether it is providing us with dollars for co-op advertising or to develop a website or just giving us advice when we ask for it.” “Our companies trust us because we don’t try to pull any wool over their

Like most small agencies, retaining their markets and satisfying volume requirement is seen as a challenge, one that requires constant attention. Nevertheless, the most successful agencies in this revenue category have a very simple game plan for establishing and maintaining carrier relationships: (1) put forth a sincere, consistent effort to represent the carriers fairly and honestly; (2) do your very best to produce the kind of business the carrier wants; and (3) make it easy for the carrier to do business with you. To execute this plan they do a lot of front-end underwriting, placing only business that the carrier wants or making sure the carrier is aware of all the facts and has the opportunity to respond appropriately to the risk. Effort is put into submitting only complete, correct, well-organized applications that include diagrams, pictures, claims histories, or other information that is needed for the carrier to quickly and properly underwrite and process the policy. When the carrier offers new services or products, they try to accommodate and utilize them if possible. In addition to playing by these rules, these agencies try to establish personal relationships with carrier contacts. They work at scheduling periodic face-to-face time either in the agency or at the carrier to discuss what they can do together and how, and to address issues that need to be addressed. They also seek to serve on the carriers’ advisory boards. On the other hand, these agencies are not afraid to walk away from a carrier relationship if it is hurting the agency/client relationship. P ERPETUATION /L EADERSHIP D EVELOPMENT Many of the agencies interviewed for this study named perpetuation and leadership development as one of their three greatest weaknesses. Of those that had addressed the issue, various approaches emerged. Although many of the younger principals, especially those located in more urban areas, felt there was still time to address the issue in the future, they had instinctively begun to think in terms of growing their business and its value for a future merger or acquisition. Many of the more rural agencies felt an affiliation with another agency or one of the agency networks such as

“I am helping my son gain confidence to make the tough decisions by throwing things back to him and asking him how he thinks it should be handled. When he sees that the decision he would make is the same decision I would make or is better, it gives him confidence.”

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