Many insurance agency owners grew up in only one agency – their family’s agency. Some went off to work at a carrier or a big shop but generally only for a few years. Only experiencing one way of doing things can make running an insurance agency extra challenging.
Other agency owners were great producers and love the insurance industry so they decided to purchase a book of business or start a scratch agency. When you get your insurance license there isn’t any training in accounting, marketing, leadership, or operations. So let’s be honest there is no playbook on how to run an insurance agency (but there should be!).
However, if you got into a leadership role or agency ownership, running a business is very different from selling insurance. If I’m being honest – it’s way harder! You have to change hats all day long, get buy-in, and handle problems, selling insurance seems way more fun!
If you challenge yourself to become a great leader, running an insurance agency becomes far more fulfilling. As your agency grows the challenge and strategy need to grow as well. When we do our agency assessment we get to walk in and help align the team and build the new strategy. Growth comes with growing pains. Those in reality are the best kind of pains.
Growth comes with growing pains. Those, in reality, are the best kind of pains.
Challenges When Running An Insurance Agency
Remember, if it were easy, everyone would do it! Running an insurance agency and or business is challenging. What we know in advance, we can prepare for in advance. Here is a rundown of the typical agency challenges we see in running an insurance agency:
Building a Growth Strategy: Most agencies grow at an anemic level. Agencies need to develop a minimum of 8% per year. Rate increases cover losses, and you can grow at 3-4% without too much effort. But to produce 8-15%, you need a clear plan.
The challenge is, what do you do to unwind? Agencies can focus too much on new business, but growth comes from retention, business placing, rate increases, cross sales, coverage increases, firing low-level clients, and budget management.
Hope cannot be your growth strategy, but if you have never done it before, it seems overwhelming on where to start.
Financial Management: This one gets me all the time. Often the person managing the books either doesn’t know good insurance bookkeeping or doesn’t know insurance. Too many agencies operate from the what’s in the bank mentality vs. taking the diligence and time to create a budget and stick to it.
Monitoring Team Performance: You can’t manage what you can’t measure, but agencies tend to run more on feelings than facts. Every team member needs to have a scorecard and benchmark. Team members may be super friendly, but they need to be performers.
Carrier and Market Changes: Choosing is the best part of being an independent insurance agency owner. The worst part is choosing. For many agency owners dealing with carrier challenges and changes, and regulations is a full-time job and often gets untended.
Hiring & Keeping Talent: We hear this all the time. It’s hard to find the right people. Yes, it is – so what are we doing about it? You need only a few people to make a difference. Don’t get burned out. Part of running an agency means the leader needs to practice recruiting forever.
Technology Selection, Use, and Adoption: Technology is how we will power agencies for the future. However, some of the veterans have resistance to adopting technology. The leader must stay strong and hold the line – remember, we cannot become a Blockbuster by not evolving.
Customer Experience: Without Processes and Procedures, everyone does what they would like. Your customer experience is inconsistent and sometimes cringy. The best agencies have a customer experience process trained on and followed.
Marketing & Branding: You have an insurance license, not a marketing degree, right? To run a business, there has to be a marketing plan, budget, and strategy to keep awareness high.
Get Your Vision Right
You can’t run your family, health, or business unless you know what you want. Knowing what you want is difficult. For me, it felt limiting for a very long time.
Rather than being open to opportunity, it felt limiting until I was burning out and not growing. There was no light at the end of the tunnel; there was only more.
I realized the following about a vision:
- My team needed to know where we were going and why
- I needed to maximize my resources (including my time!)
- We needed to prioritize
- Without a vision, I was limiting my company – hope was my strategy
Many younger agency owners are selling to private equity because they don’t have a clear vision. I wake up every day thinking about my company’s vision and how to execute it. Here is the funny thing: my vision gets updated every year, and that’s ok!
We learn, and we have new tools and resources. To run an insurance agency, you need to know where you want to go to lead your team to success. Every mission has to be clear, and the definition of success has to be documented. No vision means no success.
How to Hire and Fire Based on Values
In insurance, we are desperate as my unmarried 40-year-old girlfriends. We either don’t like or aren’t good at training green people, or we love to torture and hire the industry re-treads.
I’m going to scream this we keep the wrong people far too long, and it destroys your culture.
There are agencies I go to that get this right – it looks like this:
- Shared goals that they are excited and obsessed about
- Love for the agency, team, and client
- They have broken up with price sensitivity and understand the value they bring
- It’s clear why to work and do business with the agency
- They love numbers
- They want to win together
- They follow processes and procedures
When you have team members who do not share the same values they won’t stick it out. When I look back at my team, the ones that didn’t work fought my values. They wanted to negotiate my values or tell me why their way was better – the problem was OUR way was working as a team.
I learned a long time ago that my company is not for everyone. It doesn’t make them a wrong person, doesn’t make me a wrong person.
I want Navy Seal Team 6. Some people want to sit on the couch.
As a side note, you think finding a good team member is hard to come over to my shoes. I have to find someone willing to travel 80% of the time, share our values and my agency’s growth principles, wants to be tracked, and get account managers to make renewal calls and the sales team to quote over the phone.
Their entire family has to be on board. It’s not easy, but I commit to doing it.
Get Your Hands On Data
Feelings don’t have brains, and data doesn’t have feelings.
Too many insurance agencies like to run on pure emotions. Things like this:
- We are so busy – I must hire
- Everyone is upset about the rate – our retention must suck
- I’m too busy to do this – I’m asking too much
- My customers only want to come in and pay – we have to take cash
The reality is that many insurance team members may also be ex-high school drama club members. Insurance is complex, and we all feel overwhelmed and taxed.
When you get your numbers right – have no fear. I understand this is a process, not a light switch. You can run your agency much more strategically when seeing what is happening.
- “We are so busy” Doing what? Are we in a busy season? What is the revenue per team member?
- “Everyone is upset about the rate.” How many remarkets are we doing? How many of these should we be doing? How much did the rate increase?
- “I’m too busy to do this.” What activities are you doing? What is the priority? What is the process?
- “My customers only want to come in and pay.” 10-minute payment transaction x 12 months a year = 2 hours per year. Is it worth it?
You can’t operate only from numbers, but you need to train yourself when there is a feeling to find a fact.
Processes & Procedures
Clarity is kind.
Many team members want a clear plan of attack to know what is expected of them. When you start to launch processes and change muscle memory, you will have some resistance but stay strong!
As your agency grows, you need to identify workflow, who does what, and what the expectation is. In insurance, we have tons of logins, many decisions to make, and customers to manage – making judgment calls every day is just another thing.
You want your agency to be like Starbucks, a unique yet consistent experience.
Just as important, your agency needs to Tier clients and set expectations. The bottom line is better clients need priority. In too many agencies, the worst clients get all the love. Your team needs to practice what to do
If your team is the agency’s most significant investment (aka expense) and all too often we let them roam free. What happens when teenagers have no coaching – they ask their friends for advice.
To succeed, we need to ensure we are investing and guiding our team. There is no replacement for time.
The more time you give your team, the following great things happen:
You build trust and respect
You work on preventing fires and not putting them out
Your team communicates better, and you identify areas for improvement
Your team has clarity on their role and your vision
They understand the metrics deeper because you can discuss and review them
You wouldn’t buy a home and not have maintenance on it, as a leader to run your agency your biggest asset is your team, and they need nurturing.
Are You Running the Agency or Is the Agency Running You?
Many agency owners come to us burned out, tired, and thinking of selling. This is directly correlated to the agency running them vs. them running the agency. We see it all the time the agency owner is a firefighter getting called into action to save the day.
The problem with this model is that it doesn’t help anyone. The leader is focused on today, and in reality, they need to be focused on 3-5 years down the road to building a strategy, the team, and clearing out obstacles. Living for today does not accomplish that.
In your agency, you may need help operating and running the business. That’s ok – remember how we started this blog? Growing pains are good pains. Our Agency Assessment may be just the fit for your growing team.