Battling Our Competitive Threats

I went to a continuing education class the other day and finished up my Kentucky requirement a month early. I enjoyed the subject matter, but the best part of the class was seeing a large group of friendly competitors.

As I left the meeting, I noticed how many nice cars were in the parking lot. It made me realize just how good this business has been to me and my family and how lucky I am to be a part of this sales force. I’m very proud of this industry, but lately I’ve seen several things taking place that concern me as an independent agent. I consider them real threats to how we do business.

I am not a fan of service centers. The very thought that we should transfer our clients to a faceless person located far from our office just doesn’t make sense to me. I have heard all the arguments in favor of these operations, but I keep coming back to the fact that my customers have chosen to do business with our agency because we offer them something unique. We should be able to provide the service and advice that clients seek without turning to a company center to do our jobs. We have taken on more of the workload for companies with little, if any, change in compensation. I refuse to believe that a service center can do a better job for my clients and that I have to give up commission points to participate.

Second, I cannot understand why profit-sharing agreements between independent agents and companies are still under attack. The recent settlements several companies entered into are astonishing. Bid rigging and illegal business placement is abhorrent to all of us. Those companies that participated should make restitution to harmed clients and probably should pay fines. But to accept provisions that, in effect, allow incentive programs and profit sharing agreements to stop if certain conditions are met is ridiculous. We fought the good fight and won the initial battles with regulators and the public by pointing out that rewards for sales excellence are an integral part of the American sales culture. Now we are seeing that elected officials have circumvented our arguments by using legal maneuvering and, frankly, some of our companies have thrown in the towel. It disappoints me and I see this as a threat to our way of doing business.

Direct writers’ increase in advertising volume will always be a threat to our way of doing business. Two of my previous “Presidents Voice” columns addressed the need to brand our distribution force in order to bolster consumer recognition of independent agents as the source for all insurance products. Our brand Trusted Choice® now has more than 6,100 participating agency locations. Only through a common brand will we be able to grow into the future.

I consider agencies that style themselves as “independent” but do not belong to this association as threats to the way we do business. Agencies that do not value the ability to influence regulation or guide the industry into the future do not deserve to use the term “independent agents.”

Agencies’ lack of recruitment and perpetuation planning is also troublesome. The Big “I” and its state associations offer excellent Young Agent programs that help your new employees gain confidence by interacting with other new agents learning the business. Our company partners look for perpetuation plans and agencies that move young people into ownership positions to gain ownership stakes. We must find ways to make ownership affordable and available to future generations.

Finally, we have to establish sales cultures within our agencies. The primary threat to our existence is lack of growth. It is difficult to grow in a soft market. But agencies that recognize sales accomplishments from both existing and prospective business can withstand competitive threats. Building a business that provides a warm and nurturing environment makes employees want to work harder and succeed.

Independent agents have infinite possibilities to enjoy all the things that success brings. To maintain this standard, we must learn to deal with threats from many different sources. Look no further than the Big “I” for help.

Bill Stiglitz
President