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3 Reasons Producer Validation Rates Are So Low

Agencies can improve producer success by focusing on technical training, specialization and mentoring.
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3 reasons producer validation rates are so low

Attracting, developing, and validating producers is a challenge for agencies both small and large. Across agencies of all sizes, 57% of producers validate, according to the 2020 Best Practices Study from the Big “I" and Reagan Consulting, and for some agencies the numbers are far worse. This isn't a small problem. In fact, it is a huge one. The cost of a failed producer to an agency can be in the hundreds of thousands of dollars when you factor in recruiting costs, salary, training, and lost opportunities.

If agencies are going to successfully develop the next generation of talent, a change in course is critical. The number of seasoned producers nearing retirement is on the rise. For agencies to perpetuate they need talent, which is an issue for over 50% of agencies that say their biggest challenge is finding and retaining talent, according to a recent survey by PropertyCasualty360°.

Improving producer validation rates is a critical first step in addressing the talent crunch. But as the numbers show, few agencies do it well. To improve outcomes, agencies must focus their energies on developing a more robust producer development model, with a curriculum that will challenge participants and help them be successful in today's complex insurance marketplace.

Here are three reasons why producer validation rates are so bad and how to address them:

1) A lack of technical acumen. It wasn't that long ago that producers were told to just go out and build relationships and be friendly, the strategy being that people buy from people they like. This lasted until the book “The Challenger Sale" was published in 2011. In the decade since, few have embraced the shift exposed in the book, which encouraged salespeople to offer a new perspective to their prospects and never shy away from conversations about money or going in for the close.

Why? Because change is difficult. To compete at a higher level, and disrupt a buyer's status quo mindset, producers must demonstrate leadership, create healthy tension and learn how to lead commodity buyers to a new way of making decisions.

Many agencies still train producers to focus on the features and benefits of products and services instead of helping buyers self-discover business risks and threats, which lead to deeper and more successful sales relationships.

Leading buyers to a new way of thinking about making risk management and insurance-buying decisions takes not only an effective sales process, but also insurance technical acumen. That is a big challenge, not only for agencies who can be impacted by errors & omissions claims, but also for clients who wrongfully believe their insurance program is both accurate and adequate.

Technical training has been jettisoned to the side. Many consider technical training merely an obligation to maintain licensure. Insurance technical acumen is not only critical to prevent claims, but also to act as a powerful differentiator. Producers who possess strong technical skills are able to identify business risks that an incumbent may have missed and use them as a way to disrupt the buyer's mindset.

Producer development programs must prepare producers to embrace complexity, data analytics and the technical insights necessary to help large, sophisticated buyers identify and address business risks. Technology is doing this for smaller, less complex risks, but it's only a matter of time before InsurTechs will go upstream and compete for these prized accounts, too.

2) Perpetuating a generalist mindset. Generalist versus specialist—it's a debate that has been ongoing for several years. Yet, it is clear specialists have an advantage in sales. Producers who specialize have greater success, are viewed as a source of business value, and can speak directly and with confidence about the challenges facing their clients and prospects.

Too often, producer development training steers newcomers toward becoming generalists, in the belief that the exposure they receive will help them sell and service accounts. That may have been the case in the past, but today's commercial insurance buyer no longer wants to engage with someone who doesn't have an intimate understanding of their business and industry.

For producers to gain a competitive advantage, they must narrow their focus and fill their pipeline with prospects from a maximum of two to three niches. Focusing their attention will help new producers develop the insurance technical acumen they need to be successful and aid them in developing a compelling value proposition that will resonate. 

Agencies that perpetuate the generalist mindset will suffer, and so will their new recruits. Guiding new producers to select an area of specialization will help reduce producer failure.

3) A scarcity of mentoring and coaching. Developing producers takes commitment. The typical validation schedule is three years, during which time producers are expected to achieve certain revenue milestones. Frequently, they are paired up with an internal, more seasoned producer whose role is to be available to answer questions and provide insight and advice.

However, the problem that often occurs in these relationships stems from the lack of training these mentors often receive. Being a mentor can be exceedingly rewarding. However, it's also time consuming. Given that most mentors are successful producers, their time is already limited by closing new business and servicing high-value accounts. This leaves little time to help new producers build the skills necessary for their growth.

To gain traction, agencies must rethink what it means to leverage internal producers as mentors and coaches. Mentors and coaches must not only have the time, but a curriculum to follow and goals to meet. If seasoned producers are unable to commit their time and resources, agencies may want to explore engaging external resources to augment internal peer-to-peer relationships.

As agencies grow, and aggregators acquire, it is becoming increasingly difficult to compete for talent. Developing a structured producer validation program is critical to the long-term health of the enterprise. Those that are successful will have a compelling value proposition and win the talent war.

Susan Toussaint is vice president, Growth Solutions, U.S. with ReSource Pro. For over a decade, Susan has been training, coaching and developing programs to help insurance professionals overcome barriers to organic growth. In 2006, she started Injury Management Partners, and in 2009, she co-founded Oceanus Partners with her partner, Frank Pennachio. Today, she is a full-time trainer and consultant focused on developing products and training that help clients attract, acquire and retain profitable, right-fit business.

Friday, October 29, 2021
Recruiting, Hiring & Training