Independent Currents

Ever notice how sometimes it’s the most important stuff that doesn’t get done at work? Every business, large or small, has four quadrants wherein all short-term and long-term work falls. (Some management guru wrote a book about this once.) Those areas are: 1) unimportant and non-urgent, 2) unimportant but urgent, 3) important and non-urgent, and 4) important and urgent.

The key is to avoid quadrants 1 and 2, spending the most time in quadrants 3 and 4-particularly 3. Quadrant 3 is challenging because these activities are critical to our long-term success and yet don’t get our attention because the daily stuff is in the way.

Ignoring important but non-urgent tasks eventually affects productivity. Slow product development, for example, hurts a company. Or an agency might be haunted by an inability to finish (or start) a business perpetuation plan.

An important-but apparently not urgent-activity for the insurance industry has been diversifying to a multicultural environment. That means hiring multicultural employees as well as moving into new geographic areas where multicultural customers are found.

Have you ever been to a new-economy company-a technology firm-and looked around? These firms reflect tomorrow’s America. Insurance does not.

So Rev. Jesse Jackson speaks to the annual IIAA convention and scolds the industry for clinging to a shrinking marketplace (i.e. white middle-class America). “Follow your vested interests,” he said. “Diversify not to prove you’re not racist, but because you want to make more money.”

To be sure, Jackson is a controversial political messenger, but it’s hard to argue with the message. In fact, business reengineer and author Tom Peters delivered the same point later at the IIAA conference, which essentially is this: Businesspeople need to be smart and aggressive. The marketplace is changing rapidly and if you want to succeed you need to be ahead of the curve. If you’re not open to change and looking at new things, you basically are saying that you are going to limit your business.

There are historic examples where the insurance industry didn’t work on quadrant 3:

In the late 1940s, underwriters didn’t think farmers could be written profitably. So they stayed away. State Farm moved in and built a franchise in rural America, eventually moving into smaller towns and now they’re at a theater near you, writing 22 percent of all personal lines in an environment where a 1-percent share is huge.

In the 1980s, insurance companies watched as buyers sought alternatives to insurance: captives, purchasing groups, retention groups and self-insurance. Carriers are still trying to regain that lost share of the so-called risk management dollar.

Likewise, multicultural America is a market that is slipping away when we’re not paying attention. Somebody-even the government-is going to provide them coverage.

The other important component of diversifying is supporting programs that bring new talent into agencies and companies.

Insurance Vocational Education Student Training, or InVEST, is a good example. The program has taught insurance-related business skills to more than 85,000 high school and community college students in 230 schools in urban and rural areas in 25 states.

More than 50 percent of the students are multicultural, and more than two-thirds actually wind up in an insurance-related career. But whether they enter the business or not, these are highly educated insurance consumers who understand how the business works. That’s good for the industry.

“It is imperative that we get the word out to young people that insurance is interesting and profitable,” said Barbara Miller-Richards, national administrator for InVEST. “There is real opportunity here-especially for those who are interested in serving the growing multicultural marketplace. This is a tight and competitive market for employment, and the insurance industry stands to lose talent [if it doesn’t get proactive].”

As for seeking diverse new markets to expand business, Miller-Richards noted that several national carriers created multicultural business marketing units in the mid-1990s. “Many of the companies have maintained these departments and continue to aggressively seek out these markets-obviously some more than others,” she said. “Those that aren’t are simply shutting out new business.”

Sources at two national carriers said their diverse business units were coming along fine, although not yet busting down the door with new business. It takes longer to develop good books in urban areas, they say. Agents there tend to need more marketing and sales assistance. Agents there also look for their companies to partner up with them on local charitable and neighborhood-improvement projects. They look for greater underwriting flexibility-which can be difficult for companies to stomach. They seek-and need-long-lasting relationships with companies in order to survive (note to companies: no drive-by appointments, please).

Miller-Richards encouraged companies to “reach out to the agents who serve and know these markets better than anyone. Look for new opportunities and new products outside of the traditional products. Be flexible in meeting the needs of this fast-growing segment of our population.”

Peter van Aartrijk owns a communications firm specializing in the independent agent distribution channel. To comment, send e-mail to ijwest@insurancejournal.com.

Topics Agencies Training Development Market