Tuesday, October 27, 2009

Determining P&C Insurance Trends

by Tony Veteto

Independent agents are often "blind sided" by carriers who change their rates seemingly out of the blue. The reality is that insurance companies, much like people, tend to have the herd mentality (very few like to lead when rates are going down and even fewer like to lead when rates need to rise).

So how does an independent insurance agent get a handle on the rate trends that will inevitably impact their clients and subsequently the agent's income and workload?

While there is not a single magic answer to this question, a great place to start is by getting informed. How you may ask? Simple, listen to as many conference calls as possible each quarter. Every publicly traded insurance company holds regular conference calls which are open to analysts or any member of the public who wishes to participate.

As an example, I have been listening to conference calls for a number of years now. The "hard market" is coming sooner rather than later. How can I make this statement? Well, on virtually all of the second quarter conference calls this year I heard the words "positive rate action" over and over again. Positive rate action is just a polite way of saying rate increase! Prior to the second quarter of 2009 I had not heard the words "positive rate action" for at least three years. Now every carrier is throwing these words around and you can bet that a rate increase is coming to a policy near you.

When you start to hear a consistent theme amongst multiple carriers you must realize that in the near future that theme (whatever it happens to be) will reach your locality. So it behooves you as the agent to be aware of the trends that will impact you.

A great resource for conference calls is Yahoo! Finance. Check out this link for the conference call area: http://biz.yahoo.com/cc/

Key areas to listen for on the conference calls are:
  1. Loss cost trends within the various lines of business (personal, commercial, etc.)
  2. Catastrophe losses and trends
  3. Expense ratio management
  4. Investment portfolio changes and trends
  5. Management's commentary regarding their results
It is very important to listen "between the lines" and try to pick up the subtle trends that may not be as obvious as the items listed above.

In summary, one of the best ways for independent agents to be informed of trends in the P&C industry is by listening to as many conference calls as possible. By doing so you will have a better understanding of future impacts to your clients and your agency.

Wednesday, October 21, 2009

Becoming A Successful Independent Insurance Agency

by Tony Veteto

So the question is what does it take to become a successful independent insurance agency.
The answer (truthfully it would take a novel to answer this question) is deep and wide, yet there are some quick highlights I will point out that are suitable for a quick read.

  1. The agency owner must be a driven sales focused machine or find producers and employees who are.
  2. There must be an atmosphere of professionalism and integrity at the core of the organization.
  3. Clear vision on what type of clients the agency will be built on from day one. Preferred insurance agencies tend to bring better multiples when being sold due to higher retention and better profitability in the books of business.
  4. Highly efficient and automated work flow and technology. An agency in today's world will find it tough to grow without a good client management system, comparative rating system, and creating paperless files.
  5. Carrier selection must be chosen based ease of doing business, high commissions, and strong products. Travelers, Liberty Mutual, Safeco, The Hartford, Metlife Auto & Home, Kemper Auto & Home, just to name a few are carriers that are highly automated, offer service centers, and paperless documents.
  6. Focus on direct bill business, i.e. personal lines and small commercial. The excess and surplus lines business which is agency billed must always be touched every renewal just to get the policy renewed. You spend all your time touching files rather than selling insurance to new and existing clients.
  7. Marketing on a consistent basis through multiple means is extremely important. For example, a consistent cross-selling campaign, referral capture and reward program, account rounding for all mono-line policies, networking in the community, building referral partners like Realtors, loan officers, attorneys, accountants, direct mail campaigns, Internet leads, carrier co-op advertising, Internet advertising, social networking, seminars, niche marketing, etc. You do not have to do all of these at once, but certainly the more you do consistently at the same time the better your lead consistency will be.
These are seven quick points and hardly did I scratch the surface. Tague Alliance is a master agency with SIAA (Strategic Independent Agents Alliance) and our goal is to help our members build their agencies. We provide direct carrier appointments, high commissions, profit sharing, marketing support and resources, training, agency consultation, vendor discounts, and much more.

We have a small primer on the Steps To Setting Up An Independent Agency. Go to our website at www.taguealliance.com for info about our organization and SIAA. Click on So You Want To Be Independent and request the "Steps" document. It will be sent to you with no obligation and no sales pressure from us. If you have a need for help we would enjoy seeing if there is a mutual fit between your agency and Tague Alliance.

Have a great day!

Tony Veteto
VP Agency Development
Tague Alliance