Agency Strategies for Surviving a Recession

Agents who have lived and worked through previous recessions say business fundamentals that make sense in any economic environment ring doubly true in down times.

“To weather the storm, agents need to do what they should have been doing all along: diversifying their sales,” said Steven J. Spiro of Spiro Insurance and Financial Services of Valley Stream, N.Y

As markets soften and harden, as economies expand and contract, each type of insurance is affected differently and – just like the stock market – different types of markets perform differently within a cycle.

Spiro said he encourages agents to move products they don’t normally. Agencies that specializes in commercial coverags might look toward selling some personal lines as well – or vice versa. Life, health and disability insurance products can also help round out a book of busines during a downturn, Spiro said.

Martin Koles, principal of M. Koles & Associates in Forest Hills, N.Y., sees relationship-building with both clients and carriers as a smart move during downturns in particular. “Visit your clients and do more than just bring donuts,” he said. “It’s very important to secure relationships with customers because if they’re feeling ignored they have no reason to stay with agency.”

The same rings true for companies. Many have been expanding for a while and sooner or later they will evaluate the cost of doing business with individual agents. “If you want to survive the cut, you do it by giving companies enough good business,” he advises.

It doesn’t hurt to follow the lead of customers and monitor expenses. “As agents we have almost no risk because we have no products,” Koles said. “If we can control overhead, we control our own destinies.”

Beyond managing expenses, agencies should push for efficiencies as well. “Take advantage of ways to improve automation and get the most productive use of employees’ time,” Koles said. “If I can deliver a policy by e-mail, for instance, I just saved $4 in postage.”

In Pennsylvania, Gunn-Mowery’s G. Greg Gunn cautions about making major changes just because there is a recession. “If an agency is not aggressively managing its costs, changes would need to be made. However, we believe that if we are properly managing our costs, talent, and client relationships, few changes should be made,” Gunn said. He said his clients still have the same need for service, even though his agency may be receiving less compensation for that service. “So our staffing cannot reduce unless we have overstaffed in the past, which should have been corrected with or without a recession,” he said.

Gunn emphasizes the importance of adhering to the agency’s strategic plan. “If we stick to our game plan, a recession may create opportunities for acquisition of talent and clients as our competitors pull back.”

Agencies that stick to a plan can take advantage when others panic. “We have seen competitors overreact to previous recessions, reduce operations, and create opportunities for Gunn-Mowery, both with their clients and their staff,” Gunn said.

When it comes to advising customers, agencies may be called upon more than ever during a recession. “As companies cut costs, safety programs are sometimes unwisely cut back and claims increase accordingly. We have an obligation to be diligent in reminding our clients how important aggressive safety programs are in reducing long term costs and protecting key assets including their most important asset, their people, Gunn said.

Finally, like true sales pros, agents should stay positive. “Agents are a resilient bunch,” N.Y.’s Koles said. “We’re sales people so as a result we are optimistic and we’re always looking for tomorrow’s winner.”

Topics Agencies Human Resources