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August 3, 2020

Winning in 2020

3 min read

Topic: SIAA Blog Insurance Agency Management Insurance Agency Growth Strategies

We’ve entered the back half of the year, a time when smart businesspeople typically double down on their plans for the year to ensure a strong finish. But this is anything but a typical year!

What many had hoped would be a short-lived economic contraction, due to the pandemic, is obviously now a protracted chronic economic disruption which will certainly impact the insurance agency business into 2021 and likely beyond. Agencies are seeing commission reductions due to business closures and lower renewal premiums. Especially worrisome is that new business production is way off for most; and premium rate increases, while helping, aren’t keeping up with retention losses. Some agencies are beginning to see income reductions and that trend is likely to continue.

That’s the bad news. There are, however, a lot of positive developments that can make your year (and next) one of growth and increased profitability.

At OAA, we’ve encouraged members to focus on building long-term growth and profitability by exploiting the advantages of leverage, size and relationship with key SPC’s for years. It’s 100% demonstrably true that agencies who focus placing business with carriers that pay more make more money. This has never been truer than today, when we have negotiated some amazing book transfer opportunities – paying nearly 30% commission. Many members are taking advantage of this and the new, increased, revenues are beginning to flow. If you’re not currently enrolled and active, I encourage you to reach out to us for help doing that now while the opportunity is here.

Because every business and family in America has some degree of income insecurity, they are more willing than ever to consider shopping, and switching, carriers or agents. Shopping behavior has never been this high. While this is a threat to lazy agents, it’s an amazing opportunity to grow focused entrepreneurs. We have a new member in Arkansas who is growing very rapidly, having started in business on March 15th, just by calling people and asking if they’d like help saving money right now. Their response rate is exactly what you’d expect, and their close rate is very high. The main opportunity is simply to be asking for business right now.

Our carriers are all offering strong new business incentives and those extra points of commission and income dollars are important to growing the top and bottom lines. We keep our “Opportunities Guide” updated with the places and ways you can increase your take on a dollar of premium. The difference for agents who do from those that don’t can be huge at the top and bottom of the income statement.

Consumers and businesspeople are using online resources including websites and social media at unprecedented rates. This means that agents who are aggressive in their marketing online and online presence will have greater success with new business than those who don’t. It’s difficult to see people in person now but Zoom makes it fairly easy and efficient to see people face to face. The combination of aggressive marketing and Zoom adoption is fueling some of our members’ growth. We have a lot of resources to help you develop these capabilities if you want to use them to grow your agency.

More members than ever before are expanding the product offerings in their agencies by adding commercial lines to the mix. This makes eminent sense, given the increased shopping behavior of businesses. SIAA’s “Business Insurance Advantage” is a great way to learn the basics of marketing and selling small commercial. Mitchell Brown’s “Unfair Advantage” classes (now held virtually) are winning rave reviews, and ever-increasing attendance as he shows practical ways to win commercial accounts. And our SPCs have never been more willing to appoint new agencies (and they are offering massive new business incentives).

Another big opportunity for every agency right now is to reduce expenses. An expense reduction is worth five times the value of a dollar in increased commission (because it typically takes five dollars in income to make one dollar in profit, but one dollar of expense reduction is a new dollar of profit). The biggest area for expense reduction lays in right-sizing commissions. The biggest and best agencies in the country pay a blended rate of 25-30% for personal lines and no more than 35% for commercial. Restructuring commission rates to encourage new business production and lower expenses is something our Agency Growth Coaches can assist with and they have a lot of ideas for other expense reductions.

The pandemic-caused economic issues we are seeing now are going to get worse in the coming months. According to most economic experts, they will be with us for several years. That’s a message of opportunity for entrepreneurs! The things I’ve mentioned here aren’t the only opportunities – there are many others. We have tremendous resources available to help you take advantage of this unique environment to improve your sales, marketing, and business management skills to increase revenue and profits.

It’s the third quarter. The game is won or lost in the second half. Where do you stand? What do you need to do? How can we help?

Tony Caldwell is a modern “renaissance man,” who is not only immensely successful in the field of insurance, but is also a writer, children’s advocate, mentor and even a licensed pilot.

Always keen on helping others make their dreams come true, Tony and his team have helped independent agents grow into more than 250 independent agencies. This has made OAA the number one ranked Strategic Master Agency of SIAA for the last 5 years, and one of Oklahoma's 25 Best Companies to Work for.

Tony loves to share his knowledge, insight and wisdom through his bestselling books as well as in free mediums including podcasts and blogs.

Tony and his family are members of Crossings Community Church, and he is very active in community initiatives: he’s chairman of It’s My Community Initiative, Inc., a nonprofit working with disadvantaged people in Oklahoma City; and chairman of the Oklahoma Board of Juvenile Affairs., and he has served through many other organizations including the Salvation Army, Last Frontier Council of the Boy Scouts of America, and the Rotary Club.

In his spare time, Tony enjoys time with his family. He’s also an active outdoorsman and instrument-rated commercial pilot.