Some years ago, the AP released an article from London titled, “On Darwin’s 200th, a theory still in controversy.” It explained that even 200 years after his death, arguments abound surrounding his “theory” of the evolution of species as published in 1859 in “On the Origin of Species”. Being both a student of science and a man of belief, I have studied Darwin and found him to be incredibly complex and conflicted about publishing his work. First and foremost, Darwin didn’t want to offend his wife, a religious woman. Knowing that his theory was revolutionary in a tightly bound religious world (1859 England was not exactly liberal and permissive) he also acknowledged that, more than any other type of discovery; he had to support his theory with rock-solid evidence. And, even then, he knew that the vast majority of common man would neither believe nor accept the theory and even in the light of the best of evidence. He was prepared to die years or generations before his theory became known fact.
What does this have to do with the insurance business? Read on!!
150 years after the publication of Darwin’s most important work we still have a core of religious believers who cannot accept as fact that God’s word may not have to be taken literally to still believe in an omniscient and omnipresent Supreme Being. The controversy continues in schools, in pulpits and on the streets from every detractor who wants to raise a hue and cry decrying Darwin’s philosophies as sacrilegious.
Why would I dare to touch subjects as sensitive as religion and Darwinism in a business publication about selling principals? I use this example because I have found the same response in the masses of insurance agencies about the conversion of the industry from Quote/Price sales to Relationship Selling.
Darwin showed various species of plant and animal life (no, his theory was not just about monkeys and men) in their various stages of evolution and showed conclusive evidence that, not only did the evolution occur as a result of natural selection, but occurred over a long period of time.
Similarly, over the last 20 years (like eons for today’s business world) I have shown evidence of the transition of insurance sales from the counseling relationship similar to that of the family doctor through the 1950’s and into the 1960’s to the impersonal telephone quoting and even more impersonal internet quoting sponsored on television today through geckos, “tricked out” sales girls vending boxed insurance products and animated heroes “saving” insurance-needy individuals on behalf of a web portal.
Evolutionary ‘Dead-Ends’ in the Insurance Industry
According to Darwin, during various stages of evolution species changed. Sometimes those changes were ‘false starts,’ appearing to progress the line, but dying out when the changes were proven to be illusory rather than true progressions. In our industry, the ‘Do-It-Yourself” and “Insurance-In-A-Box” philosophies are proving to be such an illusion. And we, the agents and carriers, bear a great deal of the responsibility for this ‘false start’. After all, automation, in itself, isn’t a bad thing, is it? Neither is saving money by achieving cost savings on insurance programs. But the way the process has snowballed is in a destructive, not constructive way.
First came automated rating. When it became easier for agents to take information, enter it into a terminal and have a program evolve rates than to drag those binders and manuals around, the agency system, itself, began promoting “Fast Quotes” as a way to attract new clients. We began the age of immediate gratification.
The burgeoning direct writing industry occurred simultaneously and they were immediately attracted to automation as a device for expediency and efficiencies that they enjoy to this day. They began the era of telephone quoting and, eventually, direct quoting of prospects to the company rating systems without the need for the counseling or intervention of agents.
Personal and commercial lines package policies (homeowners and combined auto first, followed by today’s combined personal lines policies and the commercial BOP policies) sped the simplification of quoting. High-speed internet and interactive web portals that can access myriads of markets have made the rating of rather complex insurance applications for both personal and commercial lines simple enough that people can quote themselves similar to doing their own taxes out of a box.
The semblance of efficiency and cost-savings came at an extreme cost, the personal analysis and counseling about asset risks and their solution that reflects the differences between every person’s risk protection needs.
Sherry, my wife of over 50 years, is a well-known and very competent tax professional. With 40 plus years in the business of personal and business taxation, she knows enough to take well over 100 hours of continuing education each year to keep her up with the “simplified” tax laws as defined by our “simple” Congress and the States. Tough, several products assure you that you can buy the “box” and do your taxes yourself by answering a series of questions on-line. “It Just Ain’t So!”
You can’t convince a population who finds cute television ads appealing enough to trust these products with their financial security. How different is ‘Tax-In-A-Box” and “Insurance-On-Your-Own”? If people are naive enough to trust a series of simplistic questions to delve through 13,458 pages (in 20 volumes) of the federal tax code, they will also trust someone a thousand miles away (or in India) to ask them a series of simple questions that define their asset risk solutions. These are the evolutionary dead-ends that will only realize their demise when the worst occurs and people find that they either don’t have the right coverage or try to get advice and counseling from “the gecko”.
Just as the off-shoots of every evolutionary line grew, thrived for a few decades and died out, so will the “Tax-In-The-Box” folks and the “Insurance-On-Your-Own” folks. The fact is that every individual’s asset protection needs differ. The differences need professional guidance to assure proper protection, whether for tax computation or for insuring yourself, your family, and your valued assets. Otherwise we would also be doing Treat-Yourself physical diagnosis and health care. After all, human bodies are alike and made up of exactly the same components, right?
Agents Seek Short-Cuts and Ignore Their Primary Source of Clients
Every agent we have encountered has agreed that referrals are the best source of sales and long-term clients. You are not strangers when you meet. The prospects have been told about your competence by another of your clients who they trust. Yet these same agents will spend thousands on mechanized forms of marketing and quoting devices trying to gain an advantage on the competition by pricing the insurance products of more people faster. Why aren’t they devoting their time, money and assets to relationship selling? Because they think it is “easier” to do it with automation and appealing to the lowest common denominator, price.
How We Train “Lemmings” to Buy Insurance
This process (like the Tax-In-The-Box clients) calls to mind two other famous comparisons. In the Canadian tundra a small rodent multiplies by an in-bred ‘need to breed’ that generates millions of creatures in a four-year cycle. They are so plentiful that they are the primary support of the country’s Snowy Owl and Arctic Fox population. But every four years the population of millions declines to almost extinction. The cycle repeats itself because nothing has changed the in-bred need to propagate for these creatures.
We also have a population of lemming-like creatures who rush to every new technology as if the fact that it is new means that it is automatically better. They do their taxes from the box because someone tells them it will be easier and cheaper. They do their insurance from the box because everyone (including many agents) tells them it is easier and cheaper. If we offered them Do-It-Yourself surgery at a substantial discount from that performed by a qualified surgeon, they would try that, as well. The results will be the same. More and more people will try it. Not all will perish, but a growing number will determine over a period of time that they are missing singular and critical ingredients that are harming them in the long term. The “Snowy Owls and Foxes” that prey on this population will grow fat but will simply switch their orientation when the population is diminished sufficiently that the market is no longer supporting. But the “owls” and the “foxes” don’t worry. This breed will generate anew and will create new generations to feed upon in the future.
Will Our Actions Kill the Independent Agency System?
As second example of survival of the fittest is more tragic. In the 1850’s man was introduced to the island of Mauritius and to a flightless bird who had no reason not to trust other flightless creatures. Within 90 years the entire population of the birds (dubbed by the Portuguese sailors as Dodo) was dead and tens of thousands of years of selective evolution was extinct. Why? Because they had never been exposed to the world of modern man – the world that didn’t care about a million years of evolution and an ecosystem in balance.
Similarly, our population has had two hundred years of trained, caring professionals who looked after their financial needs in ways similar to the caring of the family doctor. When other industry professionals offered them the ‘Golden Chalice’ of cost savings, they followed the dream and no one told them to be careful. There was more to insurance than a One-Size-Fits-All product being “hawked” at sale prices.
How to Save Your Agency and the Agency System
We now have the chance to re-educate the insurance buying public. Your associations should be at the head of the battle and every insurance agent who intends to be in the business in ten years (or perpetuate his business beyond simply selling it when he retires) should target their clients to show them the VALUE of an insurance agent beyond price.
The ASSET PROTECTION MODEL of Relationship Selling (or any model of relationship selling) is meant to reinforce the value for which the buying public pays you commissions and fees. Yes, price is important, but not because the insurance buyer must have the lowest price for every product every year. This is the same buyer who doesn’t buy the cheapest cuts of meat, the cheapest clothes or the cheapest cars. They sense a difference in quality in these products. We must also teach them that there is a difference in quality in their asset protection devices that includes product and price AND the added value of a professional insurance agent.
If you are one of the thousands of agents now asking themselves, “But what do I have to offer besides price and product?”, I invite you to call us and invite us to do our GPP Analysis (Growth, Profit, and Productivity Analysis) for your agency. The result will likely surprise you. We will identify both value added services that you have (but don’t “sell”) or could have based on your employees, knowledge base, clients and culture. Of course, we also define efficiencies available to you in every area of performance of your agency. Perhaps the Asset Protection Model is a program in which you will thrive. If so, we will give you all of the ingredients and training and guide you through the process. If not, we will identify what will work best to enhance your growth and profit.
Just as you can believe in the Supreme Being and still know that evolution is a fact, not a theory (one of God’s greatest devices), you must know that insurance agents are inherently valuable and important to the protection of individuals and businesses. We need not follow the examples of the lemmings or dodos. The “owls” and “foxes” among us can simply find other feeder stock. Let’s take back our industry and show our clients and prospects what true value we can bring them by building and maintaining strong personal relationships created on value that they simply can’t get from “The Box”. Call Al Diamond at 800-779-2430 (al@agencyconsulting.com ) to discuss the process and choices for your agency.
Conclusion
Charles Darwin knew that his theory was radical so he spent years building empirical data to support it. While not all his research was correct, he was so far ahead of his contemporaries that the only arguments against his principals have been the emotional outbursts of religious traditionalists for whom faith in God is limited to the exact words written by man a few thousand years ago to make religious concepts understandable to humans of that era. We haven’t changed all that much, have we?? Just as people of faith today can believe in a Supreme Being while learning more about his wonders in every passing generation, so can today’s business people understand that personal knowledge and counseling cannot be replaced by automation and speed (if those technologies eliminate the individualism from risk management).
Darwin died knowing that his philosophies and principals were sound. I’m sure he assumed that (if the race didn’t kill itself off) we would realize the soundness of his work. Similarly, relationship selling based on professionals counseling clients about their particular risk needs is absolutely the only way to properly secure our clients’ asset risks. If we don’t kill off the agency system, the survivors will realize this and be stronger for the transition (another form of natural selection).
(This article is the basis of a presentation available to agency associations and other groups seeking to support, retain and grow independent insurance agents. Call us for more information)