Shane's Blog

Bye Bye Soft Market?

MarketScout has released it's end of year market barometer.  According to their data the soft market may be over, or at least trending toward a new direction.  Check out the article and data at the following link:

MarketScout Link

Surface Computing

I heard about a new product that Microsoft has in the pipeline called Surface Computing.  It looks like something out of a movie or tv show.  Take a look:

Naturally, being the insurance nerd that I am, I started thinking about how this might affect agents in the future.  I have always liked touch screen technology as it levels the playing field for us non-typist.  Plus if this technology really works then it seems like it might make our interaction with computers a little more natural (how many times have you really wanted to put your fist through the screen).

Could we be approaching the days of the surface of our desk actually being our computer?  Think about the auto quoting process.  The prospect comes in your office and sets their phone on your desk, instantly it takes all of their information and auto fills the rating system.  Then it brings up a coverage selection screen, where you show them your value as their trusted advisor. 

Once all the options have been selected, the applicant then goes through a coverage checklist and insurance review process, again with your help.  They check off rejections of coverage and gain a better understanding of what coverages (like life insurance) that they may not have in place.  Then they lay their credit card or debit card on the desk and as the payment is processed an electronic auto id card transfers to their phone. 

This id card could even be connected to the payment process so that if the policy cancels then the id card automatically updates to show that the id card is no longer valid.  Maybe a little to much sci-fi for you, but you never know. 

New Year New Plan

Yep, it's time to make the resolutions.  No doubt most of you have already been thinking about this, but I would guess you have had your hesitations.

An article today in my local paper stated that most New Year's Resolutions were forgotten by April 1st.  This got me to thinking. Why do we have such a hard time with following through with our resolutions each year?

I think it is fare to assume that most people still making resolutions are mostly optimists.  You know, the glass is half full crowd.  I am one of those, but I am also in that group that has forgotten the resolution by April 1st.  One major resolution that has become popular is to stop making resolutions altogether.  However, I think this is just the group of people (former optimists) that have converted to being pessimists.

How about making a few resolutions that are actually attainable, and then be patient.  Now I am terrible at the "be patient" part, however that is one of my resolutions this year.  Our society is so driven by instant gratification that we really have a hard time getting anything done or achieving any set goals because we just don't have the patience to see them through.

Here is an example of one of my mess-ups.  This blog. You will notice that my last post was in July 2008, almost six months ago. Here is the story.  I started this blog with the goal of posting every 2-3 days.  Now, in hind site, that is absolutely unattainable with my schedule.  I started out great for the first 2-3 weeks.  As a matter of fact, I was on fire, making 7 post between May 19th and May 30th.  Then I made a few post in June, then one in July, then silence.  

Now, I didn't intend on this, it just happened.  I was busy, but most of all, my original plan of posting every 2-3 days was just too overwhelming for me.  Sounds silly, but it is true and this is exactly how we let our resolutions fall through the cracks. So instead of posting every 2-3 days, why not start out with a goal of once every 2-3 weeks and then work to improve. 

What about your marketing or growth plans for 2009?  No doubt you have thought about it, but how long will you stick to it?  Set a well thought out and realistic plan, execute the plan, then be patient with the results.  If you are like me, you may need to start with one simple goal, and then work your way towards balancing multiple goals. 

Whatever your plans are for 2009, my hope is that you will stick with it and achieve your goal.  If I can help let me know, or if you just want to hold me accountable for my posting plan, then send me an email if you don't see a consistent pattern.  Happy New Year!

The Purple Cow

A few weeks ago I had the opportunity to attend the Texas Independent Agents Conference.  One speaker was head and shoulders above the rest.  The speaker's name is Scott Addis and he is an agent in Pennsylvania.  In addition to running his agency and producing new business, he is now speaking and consulting on his approach to selling insurance; which he calls the Purple Cow approach.

Scott is an advocate for changing the agent's mindset.  He encourages agents to be a "Purple Cow" instead of an regular Brown Cow.  Everyone's seen a brown cow, but how many people have actually seen a purple cow?  Check out his web site and see what you think:  www.beyondinsurance.com

Playing Offense

I'm from the school of thought that says "the best way to play defense is to have a better offense".  Run and Shoot in football, Walk-Single-3 Run Homer in baseball,  Coast to Coast in basketball, don't be discouraged that the other team scored, just make sure you outscore them by the end of the game...that sort of thing.  Is it time to play some offense in your agency?

I talked to an agent friend of mine in California the other day and he said that they were having trouble generating new business because they were spending all their time re-marketing their entire book of business to increase retention.  Personally I don't think this works.  Yes, you can save a few accounts this way, but what is the opportunity cost?  How do you keep your pipeline full when the market changes?  A defensive mindset will put you at the back of the pack when the market changes because you will have to spend time rebuilding your prospect pipeline.

I have always lived by the saying that if your not growing, then you are going backwards.  In other words there is not a "stay even" opportunity in the insurance business.  Even if you save 100% of your accounts then the premium decreases in a softening market will reduce your revenue. 

Make a decision to play offense today!

Distribution Choice

GEICO Independent Agent.  Proudly representing State Farm.  Are these tag lines in our future?  I know this sounds crazy, but why not? 

Allstate has independent agents (our agency is one of them).  Farmers writes most of their business East of the Mississippi through Independents.  Most Independent Agent carriers are testing the waters of direct sales.  Distribution in our industry is literally all over the place.

Honestly I am a little surprised that we have not seen this yet.  I know GEICO now has local offices in some major metro areas staffed with...you guessed it, an Agent.  I know he/she is probably employed by GEICO, but nonetheless still an Agent.

My point is simple.  If our industry wants to provide consumers with true choice, then it is not crazy to say that the Independent Agent provides just as much of an alternative to GEICO as selling direct provides to Travelers, Safeco, or Hartford.

Survey Results

Last week I mentioned that I would be conducting a survey about the consumer's understanding of an "Independent Insurance Agent/Agency".  I surveyed 25 people and found some interesting results.  This was a simple 1 question survey.  The question was "What does it mean to be an Independent Insurance Agent?".

Over 80% of the people surveyed said it means "One" or "Single".  If my survey has any merit then we might want to start thinking of some other terms to help convey to the consumer that we are the agent of "Choice" or "Multiple Companies".  If the consumer automatically thinks "One", then that seems to conflict with the message of multiple quotes or multiple options. Obviously the term "Independent" isn't cutting it.

What do you think?

"You" Part Two

I compiled some data yesterday from the most recent Growth and Performance Standards (GPS) publication produced by the National Alliance for Insurance Education.  The results may be common knowledge for the civilized world, but it was news to me.

There are five agency revenue size categories in the GPS study: under $500,000, $500,000 to $1M, $1M to $2M, $2M to $3M, and $3M and above.  This is commission revenue not premium written.  Now remember I am looking at these numbers from the perspective of personal lines and how Independent Agents can compete against State Farm and GEICO.

What I discovered was that the larger the agency revenue size the smaller the personal lines contribution to total revenue.  As a matter of fact the largest agency group ($3M plus) showed that only 20% of their revenues were from personal lines.  On the other hand the smallest agency group (Under $500,000) showed that 60% of their revenues came from personal lines.  The pattern starts with the smaller agency at 60/40 personal/commercial lines and trends through the groups until it hits a point of 20/80 personal/commercial lines ratio.

Now I am not debating on whether it is profitable for agencies to seek new revenue sources as they grow, and I know that there are many profitable and growing agencies in the larger revenue category.  What I do believe is that smaller (let's call ourselves nimble and growing) agencies have the weapon of choice (multiple carriers) when competing against the large direct and captive writers.  Larger Independent Agencies are not the competition for nimble and growing agencies; the captive/direct writer is.  The larger an agency becomes, the harder it becomes to create a brand around "You".  It is not impossible, just harder.  As agents grow and have success they begin to "hide" behind their agencies thinking this is more professional.  Please don't hide behind your agency; the independent agency system needs you to step out front and brand "You".

The "You" Brand

I had an interesting thought yesterday.  Why are some State Farm agents more successful than others?  In our local area, we have two county seats that are approximately 20 miles apart.  One county has a population of about 85,000 and the other about 65,000.  Each of these communities has 3-4 State Farm agents, but 1 agent in each community is dominant in terms of agency size and individual agent brand.

My point is that if advertising and carrier branding were the keys to agency success in the insurance business, shouldn't each of these agents be doing close to the same amount of business?  The fact is that I can name each of the dominant agents by first and last name, but I couldn't tell you the names of the other State Farm agents in the area if my life depended on it.

They have created a "You" or "Me" brand around a single individual.  Consumers (at least for personal insurance) identify with a single agent more than they identify with an agency.  The consumers I have talked with can't tell you the difference between State Farm agents and Independent Agents.  I have some interesting data that I will follow up with in part two of this post.

Brand Theory

I have been conducting an ad hoc survey for the past few weeks.  I have been asking non insurance people one simple question.  "When you you hear the words Independent Agent, what do you think this means?"

The most common answer has really freaked me out; the most common answer from the surveyee (not sure that is a word but you know what I mean) is that they think it means "one" or "single".  This really caught me off guard because the entire independent agency universe understands that independent agents represent many insurance companies not just one company.

Recently I have started asking a second question; what is the difference between a State Farm agent and an Independent Agent.  Again, the response shocked me; "I'm not sure".  Have you ever had that conversation where someone ask you what you do for a living and you jump up and say "I'm an insurance agent". I always get an immediate question right after that, "for what company?".  When I say I'm an independent agent, I get this glossy eyed stare. My survey is telling me that the glossy eyed stare is a result of the consumer not knowing what I am talking about.

What if we are confusing the consumer with the term Independent Agent?  This has me bothered enough that I believe I am going to take the survey to the next level. I'm raising the bar and taking this survey all the way to the center of the survey universe.  It's time to stand in front of Wal-Mart.  Stay tuned for the results.