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17 Ways to Build Your Personal Lines Book

Author: Peter van Aartrijk

Personal lines competition continues to intensify unabated as more and more players enter the marketplace. However, independent agents CAN fight back...IF they are willing to make some fundamental changes in the way they do business. In this article, I'll present seventeen ways your agency can compete and WIN in personal lines. 


The words "personal lines" should not make you shudder or roll your eyes. The orphan child of insurance insurance can still make you money. If you do it right. Here's how...

You've heard the bad news about personal lines. Agency companies leaving markets. Commission cuts. Relentless competition from direct writers (PS: They now write 70% of the business).

The good news: Independent agents can fight back. But you must be willing to make some changes in the way You do business. Here are 17 ways to help you build your personal lines book. If implementing all of them seems like an impossible task, try three or four. But make a commitment, and go for it.

1.  Set up a "profit center" for personal lines.
This doesn't have to be a big deal. Organize yourself to know exactly what your agency makes in personal lines. For example, how much commission income do you need to break even?

Ted Eidson, chairman of a family-owned agency in Orlando with $10 million in premium volume, says the profit-center approach enables him to show each CSR what he or she brings to the bottom line. He adds up their actual expenses, such as salary, Social Security, and benefits; and "soft" expenses, such as vacation time, and compares it to their actual commission income. When you first begin the process, he said, "You can get some real surprises when you see that they are losing money for the agency, and that isn't doing anyone any good."

Michael P. Wilson, president of Sedgwick James of Washington, says personal lines comprises 7% of his revenue but 20% of profit. "It will never be a significant portion of our business, but it is a significant profit center," he says.

Check with your insurance companies; many provide professional help in the profit-center approach.

2.  Choose your companies.
"It is just not efficient to place business with a large number of companies," says Sharon Cunningham, president of Business Management Group, a subsidiary of ITT Hartford Insurance Group formed to consult agents. Choose four or five that make it easy for the agency to do business, offer some added value, are competitive in price, and are committed to the personal lines marketplace, she says.

There are more options for markets than you might think. As major agency companies withdraw, regional companies and big niche writers are filling the void. Wilson figures his agency can write 85% to 90% of its target wealthier homeowner market via two companies. "But to go to 95% we'd probably have to add 20 more companies," he said. "It's not worth it."

If you maximize your effort with one company, Wilson acknowledges, you are more exposed. But he likens it to an investment: "The more risk, the more reward.

3.  Hire the right people.
Producers ought to produce. Period. If an agency hires a full-time personal lines producer, he or she must be an aggressive salesperson with a strategy for producing at least $25,000 in new business commissions, Cunningham says.

Jack Kwicien, senior vice president, personal insurance marketing for The Maryland Insurance Group, asserts that in order to achieve a decent profit margin in personal lines, there must be $125,000 in commission revenue per employee.

Eidson adds: "When you want someone who does everything you have to have highly organized people." CSRs must be "adaptable, customer focused, career oriented, and willing to work in a completely automated environment," Cunningham says.

4.  Write it down.
Put your sales strategies on paper. How will you assist your producers with warm leads? Where will the new sales come from? The plan should list the specific tactics you'll take to complete your mission: e.g., number of new referrals and contacts needed on an average day.

Track results-by month and by producer or CSR-on a large chart for all to see, says agency consultant Virginia Bates. This builds a good-natured rivalry and takes it out into the open so it becomes a non-secretive, pride-on-the-line issue," she said. Have monthly or weekly meetings, even if they involve only a couple of people, to build morale among the troops. Activity levels for producers and CSRs should be communicated clearly and monitored frequently.

5.  Think new business.
Don't hang out a shingle and wait for the business to come in the door. Why? Because the clients who come in will be those rejected elsewhere and may not be what your companies want to write. "That is what has killed the independent agent," said David Platt of Platt-Leavitt in Salt Lake City. "You get adversely selected against."

John Timm, president of Timmco/Wagner Insurance, Portland, Ore., says agents must continuously approach current customers and newcomers. The goal: 40 new accounts per month. "Our constant marketing puts us in a sales mode," he says. "We think sales."

"There is just as much profit to be made in personal lines as in commercial lines," said Tom Crawford, former president and CEO of Southern Heritage, an Atlanta-based personal lines company for packaged homeowners and auto policies. "But agents have to start marketing again.

"When was the last time you got a call from an independent agent?" he asked. "You get them all the time from direct writers."

6.  Dump outdated sales techniques.
"You can't get by with selling product or price," says Cunningham. "Consumers want you to focus on them. You must use relationship-selling techniques to make the sales and maintain on-going contact after the sale."

Think efficient. When Platt goes on a sales call he brings a portable computer already loaded with his company's rates and prices all policies on the spot. This avoids the need to return to the office, get the information, and call the prospect back. "The consumer wants a response right away," he said. "Otherwise you look disorganized."

"The key is for agents to develop sales expertise," Kwicien says. "because companies will always need a sales arm for their products."

7.  Marketing should be consistent.
Agencies need to decide who their profitable personal lines clients are and develop strategies for selling to more of them, Cunningham says. The agency's marketing techniques will vary depending on the type of clients, size of territory, sales force, etc. But marketing should be consistent. Sending a letter once or trying an ad campaign for a while won't deliver the message often enough.

Platt seeks commercial accounts of less than $5,000 in premium and offers a package of health, life, home, auto and other coverages, such as snowmobile. "All of a sudden you have a $10,000 account," he says. Platt says these accounts are largely ignored by larger agencies and brokers. A typical client: a plumber.

Platt uses the Yellow Pages to find those prospects, and two producers cold-call, asking for ex-dates on commercial and personal lines. He also identifies neighborhoods matching his client base, and calls prospects in those areas to get ex-dates.

While it is mind-numbing, telemarketing is less expensive than direct mail, Platt insists. His producers divide their day as follows: one hour cold-calling for ex-dates, two hours making appointments for those dates, three hours on appointments, and one hour responding to paperwork.

Crawford recommends agents go to fairs and trade shows (home, boat, etc.). Raffle a television set, and on the raffle card, ask for ex-dates. One agent got 2,000 ex-dates at a boat show-all for a $300 TV. Fifteen to 30 days prior to renewal, Crawford says, agents should call their ex-dates and ask to quote the business.

8.  Cross-selling fills in the gaps.
If you're big in commercial, why not launch an effort to market personal lines to your business clients? Ask every auto customer for their homeowners or renters. Other possibilities: floaters, flood, umbrellas, marine, RVs -- even disability and life. These are the warmest leads you have.

The average family has five insurance policies, but the average agency writes only 1.3 policies per family, according to Bates. By launching a sustained effort to round out accounts, she feels agents easily could add an average of a half-policy per account.

"Most agents think they have done an excellent job cross-selling, but they haven't," Timm says. "We thought we had, but we hadn't. The chance for growth in our client base was tremendous." Today, his agency is 87% cross-sold.

Check for key missing coverages. "A simple review of your homeowners files, coupled with a telemarketing follow-up, could produce some nice [flood] premium," says Dave Meehan, president of Bankers Insurance Group, a St. Petersburg, Fla., company specializing in flood risks.

The agencies conducting the most consistent, aggressive sales programs are the least likely to get hit with E&O claims, Bates says. That's because they can't be faulted for at least offering consumers the coverage.

9.  CSR's already are selling; they just don't know it.
CSRs should be "coached and managed to do a better job of meeting the customer's needs," Cunningham says. "They often don't understand that asking questions about the customer's insurance programs, recognizing opportunities, and making recommendations can be part of their jobs. They should role-play these activities and feel comfortable with them."

Bates added: "CSRs often feel their job is to provide dam good service. They talk to their clients in such a nice way and don't even realize they could sell all this other insurance. Organize a plan and make CSRs realize they are really salespeople, even though it may be unpalatable to them, she advises. Some CSRs, for example, can be judged successful if all they do is keep their book of business cross-sold.

10.  Take advantage of co-op advertising.
In an effort to produce warm leads, companies often are willing to share the cost of direct mail and advertising. A close partnership with Safeco has allowed Timmco Agency to send out 100,000 direct-mail pieces in one year, Timm says.

George Johnson, vice president of Safeco's property and casualty marketing, says a typical mailing goes to 10,000 addresses that an agent is after. The average response is 4%, of which 15% to 20% can be converted to sales, he said.

The company also will co-op a program to existing customers in an effort to cross-sell. Fireman's Fund and Chubb run co-op sales and marketing programs for agents selling affluent homeowner programs. Fireman's Fund offers such help as brochures, sales invitations, telemarketing training, policyholder newsletters, stationery, in-house customized leads and sample sales letters, says Joe Galardy, sales and marketing executive.

11.  If you can't beat 'em, copy 'em.
Many people around the industry say it's time to stop fighting the direct writers and begin emulating their tactics. "If you look at State Farm and Allstate," Wilson says, "you are required to get so many ex-dates and make so many sales."

"You have to write personal lines like a direct writer," Platt says. "You have to determine what markets you want to be in, and you need a system of marking ex-dates. You need to be continually expanding your sphere of influence and grafting in new people," Platt said. "You have to make a commitment to solicit or you will be selected against if you just sit back and take it."

Progressive's COO says independent agents should learn from the experiences of major agency companies who have left personal lines. "I am interested in agents who say, 'Let's find a new way to do this because what we did in the. past isn't working so well.'" That means developing a closer. relationship with a single company, with the agency stressing sales and the company policy and claims service, he says.

12.  Compensation breeds motivation.
The annual increase and/or bonus for CSRs should be tied to sales and service goals, use of automation, retention of the business, educational accomplishments and teamwork, Cunningham says. "Agencies are experimenting with new compensation arrangements in an effort to keep their costs in line while also rewarding their best people."

And have some fun. Anyone working at the Eidson agency gets five bucks for bringing in an ex-date that goes to a quote -- even if it isn't written. Eidson calls it a "bird dog" bonus. The result: Eidson employees are likely to ask for ex-dates outside the workplace. And 80% of new business comes from referrals.

13.  Is your idea of good service what your customers think?
"Many assume they are providing good service when they are not," Cunningham says. "Annual reviews are not conducted by most agencies. Life insurance is not offered, or there is no follow up on claims. The customer may accept that the agency is closed at lunch but may not like it. Written communication not be clear or friendly."

Would your clients like you to stay open later at night, or on Saturdays? Why not send a short survey and find out? Kwicien, a former sales manager for a direct writer, says: "The battlefield in the '90s will be who can provide the best service to the customer when it is convenient for the customer, not to the agent or company."

14.  Keep an eye on the customer service centers.
Several major companies have opened the centers to offer service support such as claims handling, while their agents focus on sales. Typically you give a couple points of commission back to the company in exchange for a lower price and/or reduced effort on your part.

Opinion among agents ranges from enthusiasm to hostility. Timm is writing more than $2 million in personal lines via a total of three other agents and one CSR. While his agency used to have a 50/50 business split, he's now at 80% personal, with 4,000 customers around Oregon.

Servicing is "a pleasurable but not productive job," Timm says. Safeco's service center employees in Portland does a better job, he claims, because they are always available via a toll-free number, something he can't offer. "Our clients can call from Hawaii or California when they're on vacation with questions on rental cars.

"I hate to admit it, but frankly the service center is better in most cases," he says. "You think you're such a darn good service provider, but the fact is that I sat and listened to these service center folks, and they are friendlier and give more consistent service."

"The customer service center is the most serious threat to the American Agency System," counters Eidson, who says insurers have opened the centers because agency/company interface hasn't moved fast enough.

"We aren't in manufacturing; we don't make widgets. We are in the service business. We may be poor salesmen, but by and large the American Agency System does a super job on service. Otherwise we'll have to be like car salesmen: sell, sell, sell, because the only real commission will be on new sales." But Eidson acknowledges that a producer who makes a lot of mistakes in servicing may have no option but to go into a service center.

15.  Consider a cluster.
Forming partnerships with other agencies means you can wield greater premium power for potential markets. Platt's shop is part of a cluster group covering 35 individual agencies in five states, with total premium volume of $ 100 million. The cluster gave him an entree to the Hartford and Metropolitan (under customer service center contracts).

16.  Automate!
Here are two ways automation can increase your productivity. Transactional filing: As correspondence arrives, it is entered in the appropriate client file on computer and later filed chronologically in paper form. This frees up the CSR to focus on sales while an assistant files renewals and endorsements. Rotation servicing: Instead of splitting up clients alphabetically, CSRs work with anyone who calls. The result is quicker response and fewer returned calls.

"CSRs must learn how to work with an electronic file and how to manage the conversation with the customer so they can complete the transaction while still on the phone," Cunningham says. "People just want the job done when they call; they don't want anyone to call them back." following a hail storm in Orlando. "No big deal," he declares.

17.  Find your own perspective.
"My goal is not to be the biggest agent in Longwood, Fla. says George Frey, who owns the George Frey Agency. "I want to be the most profitable."

[Note: This article was originally published in 1993, so names, positions and employers may not be current...but the information is as pertinent today as it was at the time of publication.]


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