Agency Ownership…What’s It Like?

Have a seat, in the Owner’s chair…an Overview.

If you’re contemplating the role of owner in an insurance agency, it’s essential to understand the dynamics and interactions that will be integral to your success. Here, we’ll delve into the fundamental encounters between the agency, its staff, and customers, highlighting the critical aspects and strategies from an owner’s perspective.

If you’ve never been in the insurance business, then you may need a very basic understanding of what types of interactions are common between the Agency, its’ Staff, and the customers and potential customers you’ll be dealing with on a daily basis; so, let’s start there.

As an Owner, aside from managing your cash flow, paying bills, managing payroll etc., there are five major interactions that can occur when you encounter a customer or prospect. They’re aptly called “The Five Moments of Truth”. They’re called moments of truth, because if they aren’t done right the first time every time, then you won’t be very successful, not for long anyway. During each of these encounters, depending on how it goes for the customer, they’ll have a decision to make, (whether they intended to make one or not). The question they will ask themselves afterward is, do I stay where I am, or do I shop around and possibly leave for another Agency with better service?  If you lose a customer on price to a competitor, you will always have a chance to get them back in the future when you’re more competitive. But if you lose them due to poor service or a poorly executed service request, then you will probably never see them again.

So here they are…

The Purchase Moment of Truth. : This initial interaction marks the beginning of the customer relationship. A seamless experience in providing quotes, processing applications, and addressing questions is crucial. Any discrepancies or delays can deter potential customers and jeopardize future referrals.

A potential customer may call or come into your Agency for a quote in order to buy a policy; (An Auto, Homeowner’s, Boat, or Motorcycle Policy etc.). If this is a positive experience, and all goes well with the quote and the processing of the application, and it’s done in a timely efficient manner, then that would be considered a positive moment of truth that will hopefully lead to referrals and more products being purchased by your customer, and those who were referred to you as a result. But on the other hand, if the encounter involves multiple phone calls, mistakes, misquotes, being placed on hold for extended periods, then this may not be an interaction that results in a customer sale, much less someone willing to make referrals to their family and friends. You will in effect be advertising your own demise when you can’t get this one right.  Nothing upsets a customer more than delays when applying for coverage or receiving their policy when the premium is higher than what was quoted; This is not a fun call to get.

The Billing Moment of Truth. Clarity in explaining billing details, premium changes, and policy modifications is essential to foster trust and confidence. Failure to address customer billing concerns may result in dissatisfaction and potential attrition.

You must be able to explain your customer’s bill and answer questions regarding any changes in premium due to partial payment fees, policy changes, rate increases, etc. If you can’t tell them what they are paying for and why, that leads to a lack of confidence and trust, and again, an unhappy customer who will be making a decision they weren’t thinking about beforehand. “Do I stay, or do I go”?

Endorsement Moment of Truth. Timely and accurate handling of policy changes is imperative for an Agency Owner. Neglecting endorsement requests can lead to coverage gaps, potential liabilities, and tarnished customer relations.

When a customer needs to make a change to their policy regardless of what it is…, adding or replacing a car, adding a driver, changing a deductible, or whatever; the last thing you want is for them to receive their bill or Renewal Notice and the change hasn’t been made, or it’s incorrect.  Policy changes may not seem to be as time sensitive or important, but if they fall through the cracks or aren’t done in a timely manner, it can lead to coverage issues if a claim occurs, E&O claims for the Agency and even worse, lawsuits. It’s not fun being deposed, trust me, I’ve been there.

The Renewal Moment of Truth. : Proactively engaging your customers before policy renewals showcases commitment and care. This personalized approach not only enhances customer loyalty but also creates opportunities for cross-selling and expanding policy coverage.

Proactive service is always received at a higher level of customer satisfaction than reactive service. Anyone can react. Being proactive requires forethought and planning. Calling your customers prior to Renewal to thank them for their business and ask if they have any questions regarding their coverages, or to even give them a heads up about a pending rate increase will go a long way toward enhancing the customer relationship and improving your Agency’s Retention Economics. This is how you go beyond having Completely Satisfied Customers to Enthusiastic Customerswho will buy more products and make more referrals. Common sense I know, but you would be surprised how many Agencies drop the ball on this one. Agencies that do this well have a lot more energy and “pop” in their book of business than those who do not. And it’s the best time to cross sell policies and create more multi-policy households which obviously retain at a much higher level than mono-line households. And, you’ll get more referrals as a result.

The Claims Moment of Truth. The ultimate test of your Agency’s reliability and customer support lies in handling claims efficiently and with compassion. Being a steadfast advocate during a challenging time can elevate your agency’s reputation and solidify customer trust.

I’ve never gone along with the notion that insurance is a mere commodity.  The business  is just too relationship oriented for that, at least in an Agency environment. The insurance product is more than just a policy, it’s about the trust you place in the person, agency and Company who sold it to you.  But one thing is for sure, when a loss occurs and a Claim is filed, that’s when that Policy comes to Life! This is the most important one to get right. You have to be there for the Customer whenever required when a claim is filed. You are their most ardent advocate and supporter when something bad happens, showing concern, empathy, understanding and sometimes even sympathy or grief. After forty-five (45) years in the business, I could spend hours if not days on this topic. I’ve seen a lot of catastrophic events in my career that have turned lives upside down in a myriad of ways due to auto accidents, house fires, tornadoes, hurricanes, you name it, I’ve seen it. And this is why this business is such a “high calling” in my opinion, because what you do on a day in and day out basis has a direct impact on a family’s financial security and future well-being. This is where being a professional risk management consultant and running an insurance practice separates you from many Agencies that are no more than “policy peddling” operations just trying to sell a policy to make a buck. I know a lot of what happens when a claim is filed is out of the Agent’s control, just like rate increases and underwriting decisions; but being “in touch” and present for the customer is simply a choice you make in terms of the type of “practice” you are going to have. When a claim is denied, or the customer is wrong in their interpretation of the coverage, it’s just as important to be there and tell them the truth, even if it hurts. 

Critical Success Factors

Once you’ve mastered “The Moments of Truth”, your Agency should have a solid foundation for growth and a platform to drive new business with its’ people and processes. Everyone in the Agency needs to be contributing to new business generation and bottom-line growth and profitability by owning Processes directly correlated to specific outcomes they are responsible for. It’s fine to cross train several individuals who can do numerous tasks well, but I also believe in specialization to the extent that an individual who is focused on a specific role will usually achieve a greater outcome. Think of professional sports and the many examples of various position players in any given sport on any given team.  The Starting and Relief Pitchers, or the Designated Hitter in Baseball. Quarterbacks, Placekickers, and the Offensive Line, in Football. The Setter, or Outside Hitter in Volleyball, the list goes on. 

• People and Processes: Define clear roles, responsibilities, and processes within your agency to drive outcomes and achieve business objectives effectively.
• Employee Management: Prioritize hiring top talent, investing in training, and cultivating a positive work environment. Employee turnover should be anticipated and viewed as an opportunity for growth and enhancement.
• Leadership and Accountability: Lead by example, embodying principles of integrity, respect, and fairness. Provide constructive feedback, incentivize performance, and uphold a culture of excellence. (I highly recommend John Maxwell’s The 21 Irrefutable Laws of Leadership for an excellent guide on how this should be done).
• Marketing and Branding: Ensure consistency in messaging across various channels to strengthen your agency’s presence and differentiate it in the competitive marketplace. Embrace diverse marketing strategies to reach a broader audience. And remember; What you say you do, what people think you do, and what you actually do needs to align in the mind of the Customer or Prospect. Otherwise, you will Advertise your own demise. 

Operational Efficiency and Growth

Strive to work on strategic tasks that empower your agency’s expansion while delegating routine activities to your team. Establish scalable processes, monitor performance metrics, and continuously refine your strategies to drive profitability and sustainability. In other words, spend more time working on the business, not in it. (Power Position Your Agency, by Troy Korsgaden is an excellent resource for new Agency Owners on Agency Management. Available on Amazon).

In conclusion, by mastering customer interactions, nurturing your team, implementing robust processes, and amplifying your agency’s brand presence, you can pave the way for sustained success in the competitive insurance industry. Embrace these principles, adapt to evolving market dynamics, and wield a proactive approach to propel your agency towards prosperity and distinction.