Can Your Agency Sell Insurance?

I wouldn’t want to count how often we have heard that sad lament from insurance agency principals.

The place looks a mess and the staff acts like the agency looks! Paper is everywhere, but no one can seem to find what they need at the moment.

Everyone seems to have their own little diary file, but deadlines are constantly slipped and customers are following up with irate calls because their requests are not promptly answered.

Backlogs abound but the industry benchmarks say I am actually OVERSTAFFED!

My employees seem to be under more stress and pressure than ever, but I do not have any more clients than I have in the past and, in fact, I may have less!

I get the best computer systems and keep them upgraded, but we seem to be having more systems problems than ever!


Unfortunately most agents will find the culprit in the mirror.

When times and systems were simpler, simpler methods for selling and servicing insurance sufficed, but times and conditions have become substantially more complex. The same agent who sold in 1990, 1980, 1970 and, in some cases 1960 and 1950 can not compete with the new insurance agent of the 21st Century UNLESS they are prepared to change.

But the change is not just in equipment, systems, procedures and staff. The greatest changes and challenges facing today’s business owner (insurance agency or other) are the changes in ATTITUDE and MANAGEMENT STYLE that differentiates today’s complex and technological agencies from yesterday’s sales and processing shops.


If you EVER find your mind wandering back to the “olden days” when insurance was simpler and more controlled, tap yourself gently on the right side of the head with a large wooden baseball bat. The “olden days” were not that good when you were going through them (I remember because I was a consultant then and was still hearing how bad the agency system had become). Unless you can change the weather and the tides, wishing for an agency the way it used to be is a futile exercise and a distraction to the real challenges of today’s marketplace.

If you believe that the companies are out to get you, tap yourself gently on the left side of your head with your trusty baseball bat. Insurance companies are out to make a profit. You represent THE historical way of distributing their products, but you do not represent the ONLY way they can distribute their products today. When the independent agency system was the only game in town, the companies would treat “good” agents with kid gloves, always hoping for more and profitable growth. For fifty years the direct writers took advantage of this system and stripped the agency companies of personal lines first, then commercial lines. Now the stock companies have decided that, maybe, the agency system is not the best way to sell insurance. Like some of our direct writer competitors, they are choosing NOT to choose a single distributions system. They will do business through agents who support their growth and profit needs when the clients want to deal with agents. They will do business direct to clients who do not see the value in an agent. They will do business on the Internet with those clients who have no use for either agents or company representatives. In other words, they will sell insurance any way the buying public wants. Yes, I know that the client would be better off with an agent, but does the public know that? And are some insurance products such commodities that the only difference between one company and another is price? The companies recognize all of this and are attempting to change themselves to survive another century.

Does that make them the Evil Empire? I think not, but it does strip the insulation away from the agency system that had no competition for 150 years. Now the agents who are aggressive will sell more insurance. The agents who are good underwriters will receive better contracts and contingency agreements than those who are poor underwriters, and the agents who actually manage their businesses, instead of letting their agencies run whichever way the employees want, will reap the profit rewards.

No, companies are not LOYAL. Loyalty is a personality trait that we have with each other, but not with a corporation. Still, they are the suppliers of the products that you sell. What profit is there from animosity with your only suppliers?

Agents fall into two spending attitudes, “CHEAP” and “SPEND-TO-THE-END”. “Cheap” agents try to get by with as little expense as possible (personnel and other) because their prevalent attitude is that the business is theirs and they should get as much money from it every year as it can afford. “Spenders” throw money at problems, assuming that the next computer system has to be better than the last and that if the staff needs more help, he must get it for them.

Obviously, neither agent attitude is healthy and both must be changed toward judicious but appropriate spending habits. If you do not invest in and maintain your car, it will break down. If you do not invest in and maintain your airplane, you will DIE. If you do not invest in and maintain your insurance businesses, it will either wither away or will be worth much less than you expect when you are ready to sell. The major investment you need to make is in your employees. Get the best you can and pay them more than they would get elsewhere. Money is not the greatest motivator of people – but the lack of money is the greatest De-Motivator and the cause of many employee departures. Beyond direct employee costs, the agency owner must invest in systems that meet the agency’s strategic needs. That does not mean the latest and greatest that the vendor wants you to buy. That means that you must understand the system needs for your agency’s maximum efficiency over the long term and get the systems that will support them. By the way, systems do not refer only to your computer database. Consider the availability and long-term benefits of Optical Scanning to replace paper files. Just as the cheap agent must learn to invest in the agency’s future, the spendthrift must learn to control his spending. The spender spends without thinking the process through, assuming that more and different is better than less and the same. That’s not necessarily true. Many agency problems are people problems masked as systems problems. Yes, it is much harder to confront and correct a people problem, but spending more will only make the people problem worse. It certainly won’t make it go away.


As late as the 1980’s it was difficult to find any management style but ‘Dictator’ at the top of an insurance agency. That seems to be changing, but the majority of agency owners are still Dictators by style. Some are benevolent dictators, treating everyone well until a crisis arises. Others resort are malevolent dictators, managing from a basis of the fear of their employees. Yet all were the only decision makers in the agency. The employees could check their brains at the door at 9:00 AM, and they wouldn’t need them again until 5:00 PM when they left. In the meantime, they were expected to do exactly what the agency owner wanted them to do.

In the days when labor was plentiful and cheap, this style could work, but the labor market has dried up. Technology has forced competence and the decline of the manual, clerical employee. The aging of the agency workforce has created either knowledgeable employees or drones with years of experience, and there are plenty of places for the employees to go if they get fed up with your management style.

So what’s a reforming dictator to do? He must become a Participative Manager!

A Participative Manager does not give up his authority, his responsibility or his final decision-making role. However, he acknowledges that others in his employ have skills, talent and experience different (and perhaps better) than his own and that decisions made by many heads are better than decisions made by one. He transfers some of his authority for the activities that help run the agency to qualified managers or staffers (with appropriate controls), he uses outside help to analyze and rectify operating problems within the agency, and he implements those changes to which he agrees, monitoring the results to assure that they attack the original problem.

If you are not prepared to grow and change with technology and the times, you may as well prepare for the next generation of owners in your business, internal or external. If you do not, you will experience continued and growing frustration as the business that you knew so well speeds out of your control. The lucky agents can still make a good living while the business enters a chaotic state, but growth and profit are squeezed out of the agency with the owner’s blood and that draining experience cannot last for long, even if the remuneration is good.