When asked if the insurance agency industry is “healthy” we often don’t know how to answer that question. We respond with, “in terms of what measurement?”
Are there more of less agencies in the U.S? There continues to be a consolidation of the agency industry. But that is more accounted for because of poor internal succession planning and poor business practices than because of our competitors outside of the agency industry. Our owners are ‘aging out’ without properly preparing their successors. And some owners who cannot bear to control their costs are forced to merge in order to continue in the business because 1) they took too much out of the agency every year, and 2) they couldn’t say no (to employees, to producers, and to vendors). Instead of learning how to become more productive and doing with less, they “costed” themselves out of business.
How do we know that these are the reasons? We are directly involved in many consolidations, succession plans and perpetuation plans every year and, because of our Composite Groups, we learn about many more every year.
There are fewer agencies out there but the survivors are doing ever more business. Our Composite Groups continue to grow reflecting the fact that more agencies are paying more attention to their own performance standards.
When we consult with agencies directly and help them with Strategic Planning, Organizational Development, compensation programs for employees and for producers and the active buying, selling and merging of agencies, we can easily tell which will be the survivors and which will reap the benefits of their asset values when they retire.
So our answer to the question about whether the agency system is ‘healthy’ is a resounding yes! Not only is it healthy but it is building very sound businesses both local, regional and national, in urban, suburban and rural settings.
As I write this article, I am preparing for two major initiatives, a series of seminars to be conducted throughout the United States to help agencies form Succession and Perpetuation Plans and a revolutionary internet marketing program that will allow agencies to create an almost unlimited number of prospects for growth – at no cost to the agencies. These are two of the “hottest” issues that would maintain and strengthen independent insurance agencies throughout the U.S. (along with the hunt for good producers and employees).
The marketing concept is already here (see www.mondaymorningmarkets.com ) for more information or call me (800 779 2430). The seminars are ready to deliver and will be announced (hopefully) before the end of 2016.
The common indicators that we see in Survivor Agencies is:
1. They invest in their future. They buy the best people they can, and they pay them fairly.
2. They are continuously looking for producers.
3. They are making friends with older agents through their association membership and continuously “market” to them for the eventuality of their retirements. They are often using our Contingency Buy/Sell Agreements to provide a no obligation means of securing a fair price in the event that something happens to the older agents.
4. They do not sit in their offices every day. They are either selling insurance or are visiting their clients to keep them close to the agency.
Look at our Composite Group for your own agency to see how you stack up with the averages for your size agency. Look at your own agency to determine if you are established to be a SURVIVOR, yielding you the right value for your business when it’s time to retire, giving your clients and employees the stability, and giving your successors the chance to create their own equity.
If you need help re-establishing your agency or forming a Succession or Perpetuation Plan, call us (800 779 2430).