Good Agency-Carrier Relationships Travel a Two-Way Street

Carriers and agencies both face challenges in maintaining quality relationships

Agents might think they have their hands full trying to attract and retain quality employees, but they are not alone. Insurance carriers face challenges in getting and keeping quality agents, too.

For a company like St. Paul Travelers, which depends on independent agents for 90 percent of its business, the agent is the customer, and responding to the customer’s needs and building a lasting relationship with the customer must be taken seriously.

A carrier’s greatest challenge in attracting good agents is being able to set itself apart from the competition beyond the basics, according to William Ryan, senior director of marketing strategy and communications for St. Paul Travelers.

Differentiation can’t always be based on price alone. While that is one basic factor in the equation, Ryan said the quality of relationships, ease of doing business and choosing appropriate markets all play a role in the intermediary determination.

“Everyone talks about price, which I see as very funny,” Ryan said. “In insurance, we have a lot of differentiation capabilities.”

Ryan represented the carrier perspective on a panel of experts assembled in October in Nashville, Tenn., for a Society of Insurance Research discussion on agency-carrier relations.

It is important for a company to know its agents and to foster relationships with them through close communication, Ryan added.

Also, he maintained, many agents — and their customers — are looking for a brand that has recognition.

A good carrier will supply the tools and training to help agents become partners with added value. “In this commoditized world, it really comes down to ‘what is the role of the agent?'” Ryan told the Nashville audience. “Our thought is that they should be consultative — a value-added partner.”

Part of a carrier’s role is to help small- to midsized agencies (which comprise most of the market) to get comfortable with changing technology, according to Ryan.

“It’s a volume business with a lot of flow, and customers are looking for convenience — a one-stop-shop approach has a lot of value to many agents,” Ryan said.

Growth orientation may be subjective, according to Ryan, but it is something that carriers look at closely. Insurers generally avoid agencies that are “just in the harvest mode,” and instead seek out agents who want to grow with them. “If they’re committed to growing, then we’re very focused on them,” he said.

Agency Life Cycles

From an agent’s perspective, Rick Bondurant, director of agency management for the Independent Insurance Agents of Texas, said there are several factors that can influence an agency to pursue a certain carrier.

Agencies are looking for carriers that can keep them gainfully employed in an ever-increasing competitive environment. That means helping to support everything including human resources, management acumen and sophisticated risk management practices.

Not only must carriers deal with agencies at varying stages in their life cycles, but in a state such as Texas for example, carriers must also be equipped to operate in a highly diverse geographical region, Bondurant noted.

As younger agencies begin to develop, they first look for carriers with which they can establish a basic association. Bondurant said staffing and recruiting are a new agency’s major challenges. While his organization encourages its members to bring in “green people with the right attitude” and to “fish from a bigger labor pool,” this is one area where a carrier’s expertise and resources can make or break a fledgling operation, he said.

Branding may or may not be on an agency’s list of criteria. “Brand identification of a carrier is more important to an agency that hasn’t yet gained a name or reputation in the community,” he added.

As agencies progress through the process of prospecting for customers and gaining access to carriers, they seek increasingly higher levels of support to help them grow, achieve economies of scale and secure internal and external perpetuation, Bondurant said.

Customer Segmentation

Agencies also look to carriers for management expertise, especially on ways to handle segmentation issues and organizational concerns.

“Members are interested in getting assistance to perpetuate. Carriers can seal a relationship by bringing expertise agencies don’t have: prospect identification; research; customer preferences; recruitment leveraging; and human resources expertise,” Bondurant said.

Agencies are segmenting more between transaction-based customers — those looking for lowest prices who switch agencies very easily — and relationship clients — those who don’t move from company to company because of pricing.

“The big challenge is how to organize around their customers,” Bondurant said. “We’re also seeing increased segmentation between personal lines, small commercial, large commercial and employee benefits.”

The carrier-agent relationship often teeters on the degree to which a carrier can support the increased segmentation. Some of that involves being able to look beyond policy period horizons instead of always having to focus on the current renewal cycle, Bondurant said.

Similarly, in regard to supply chain collaboration, Bondurant said agencies are increasingly looking for ways to escape forced competitive pricing and compete more on an added-value concept. He envisions a meeting between the customer and carrier to negotiate the terms of more valued products and services covering a multi-year period.

“It’s a question of where you want to be in five years,” he said. “Compete on added value: total cost of risk.”

Market Influence

Panelist Edd Buhl, executive vice president for Ohio-based Central Insurance, which has 500 agents in 20 states, thinks the state of the market influences agency-carrier relationships.

According to Buhl, the current soft market forces two dynamics to take hold: agents need better pricing to maintain renewals; and carriers are striving to increase revenue. Thus, relationships are crucial. “You must have personal relationships because without that, you can’t compete,” he said.

In addition to personal relationships and an “ease of doing business,” Buhl said there must be stability in underwriting, financial stability and proper coverages to maintain lasting quality associations.

His company depends upon its agents for their local market knowledge and outreach. “We advance our name with our agents in their community,” Buhl said.

When it comes to the nuances of agents distinguishing carriers, Bondurant said the ease of doing business is very important. Agents also look at carriers’ total revenue picture, and for carriers that have a “broad appetite” — generally avoiding those that cater more to niche markets, he added.

Topics Carriers Agencies