Tag Archives: Insurance Agency Networks

If & When You Want to Sell Your Agency

If you are an agent or agency, make sure you do your homework diligently before you join a premium aggregator aka agency network group.  One of the key questions to ask is:  “What would happen if and when I decide to sell my agency, especially to an agency that is not a member of your network?”   Make sure that you get very logical and understandable answers, in writing of course.  Actually, it should be addressed clearly in their membership agreement.

It is also a good idea to make up a few sample scenarios and present them to the network representative, asking for clear answers to cover each situation.  Again, get the answers “in writing”, email or whatever covers it for you – in addition to what is stated in the agreement.   Think of a few agency sales or mergers in the area, of which you have some basic knowledge. Use them as your examples to present to the representatives.  There are many different scenarios that could be involved.

Bottom line, take your time addressing this issue and all the others involved when considering membership in a network.

If you are in need of a list of key questions to ask, get in touch with me and I will provide you with my list – for free.

Phil Tuccy – 941-527-7823 – ptuccy@insurancegroupconsulting.com

 

P&C Agent: “What Do You Really Want to Do?”

A P&C Agent and I were talking today and discussing his options with regard to the agency network group that might be best for him to consider, based on his particular circumstances.   He asked for my opinion.

I explained that I do not normally recommend one group over another as I want the agents to make their choices based on their own evaluations.  I supply some of the tools and related advice to help them make the most informed decisions but they decide on the final choice.

To help them in the decision-making process, one question that I like to ask is: “What do you really want to do?”  

It sounds simple enough but the agent needs to decide if he or she wants to be inside an office, fielding calls, processing business, supervising other production people, etc. or does the agent want to be free to produce outside the office and not be involved with the day-to-day activities of running an agency.  Of course, there can be a lot of room in the middle of these two scenarios but the answer to the question:  “What do you really want to do?” is often not asked of agents.   The answer is really very helpful in the process as many agency network groups offer variations to their main program models, to accommodate different agents’ needs.

It is too easy to assume that all agents want the same thing in terms of their involvement in the insurance business.  My image is often not their image.

Prepare to be “Underwritten”

I recently had a very interesting conversation with Shane Tatum, the President  & CEO of Integra Insurance Services, an organization in Texas which provides agency network affiliation for qualified agents and agencies.

While Shane was explaining the Integra prospecting approaches and overall philosophy for determining the quality and experience of agents and agencies that his organization seeks as possible members, he said something that I had not heard before.   He stated that they carefully “underwrite” each prospective member before considering them for inclusion into one the two key Integra membership programs.

Action words like ‘vetting’, ‘analyzing’, ‘evaluating’, etc.  are most frequently heard in conversations of this nature.  However, after hearing Shane describe the Integra “underwriting” approach, I do believe it is most descriptive of the actual process that needs to take place in order for an agency network organization to make the best educated decision as to who should be a member of a network group.

It is well known that traditional insurance underwriting requires knowledge of as much about the proposed insured as possible and the risks to which they may become exposed.  This information is needed to make an informed decision as to whether the company wants to provide insurance coverage.   Similarly, an agency network should want to know as much as possible about each prospective member.   Most do but some are more about quantity than quality.  Those that underwrite their prospects are models for the others.  As an agent or agency seeking an agency network group to join, look for the groups that make you feel as though you are being subjected to an underwriting process.   It will be to your advantage, in the long-run.

A written marketing that is well-developed will prepare you to be effectively underwritten.

Sale of Your Agency – Examples

Before you join a premium aggregator or agency network group, one of the key questions to ask is:  “What would happen if and when I decide to sell my agency to an agency that is not a member of your network?”   Make sure that you get a very logical and understandable answer, in writing of course.

It is also a good idea to make up a few sample scenarios and present them to the network representative, asking for clear answers to cover each situation.  Again, get the answers “in writing”, email or whatever covers it for you.  Think of a few agency sales or mergers in the area, of which you have some basic knowledge.  Use them as your examples to present to the representatives.

 

Decision Making the ‘Ben Franklin Way’

Most people know that Benjamin Franklin was a really interesting & creative man who contributed greatly to the development of many useful things in both society and industry.

In 1772, he introduced what was considered to be the first ‘decision balance sheet’.  Many of us use it today.  I call it my ‘pros & cons’ list.  It is a simple exercise that can serve us well in many aspects of life, not just in business decision making.

In its most simple form, take a piece of paper and draw a line down the middle, listing ‘Pros’ on one side of the line and “Cons’ on the other.  Apply this process when you are trying to decide the best option between two choices.

In a business example for an insurance agency principal:  “Should I join the ‘Smith Premium Aggregator Group’ or The ‘Jones Premium Aggregator Group’?

Do a separate sheet on both groups.  List the pros and cons of each, as Ben’s decision making tool indicates.  After the pros and cons of both are listed, weight each one in terms of level of importance to you.  (I use a 1-5 rating scale, with 1 being the least important to me.  However, you can also use 1-3 or whatever scale you choose to apply.)  Add them up and while it isn’t a perfect system, if you do it carefully enough, it should give you a pretty good idea of which insurance network group you should consider joining, based on the values of each of their respective programs’ characteristics, as they relate to your agency.

It will also help you identify issues that may not be clear to you and require that you ask additional questions of the insurance network group representatives, so that you are clear on everything.

Obviously this simple approach can be used to make decisions of all types, both personal and business related.

Thanks, Ben!

Insurance Agency Network Groups – Questions

They have a lot of names within the P&C world:   Agency Networks, Agency Groups, Clusters, Premium Aggregators, Agency Franchises, etc. They serve a very important role in the P&C industry, in particular. One or more of them could provide a solid base for an agency to succeed. These organizations can be a very viable way for an agency to acquire markets and services that might otherwise be difficult or not likely attainable in this marketplace.

However, when evaluating any of them, you need to ask a number of critical questions.  Believe it or not, here is one that I often see ignored in the course of an agent’s due-diligence process.

Who owns the business that I produce as a member of your Network?   

Obviously this question is critical but I have known agents who have joined Networks without asking for clarification about it and have paid the price, as a result.

Make sure that you are totally clear and comfortable about all of the circumstances regarding ownership of the business before you sign a contract.   Your business future may hang in the balance!