|
Agency-Insurer Productivity "Honed" for the holidays: A resolution you can keep Re-think the joint business planning process with carriers By Scott M. Primiano ’Tis the Season. The holidays make December the shortest work month of the year and, for most, the busiest as well. Chances are good that you won’t be reading this article until January because your time is currently crushed under the weight of January renewals, business planning, employee reviews, holiday planning/shopping, and a host of other competing priorities. Breathe easy, my friend, this too shall pass … until next year. In the midst of this push to the annual finish line, we often are asked to drop what we are doing to participate in or finalize the joint business planning process with our carrier partners. I know, you know, and they know that this meeting or series of meetings is being called to order at the worst possible time; yet here it is again, as it has been for years. Sensitive to your time dilemma but under similar constraints themselves, your underwriting partners propose a squeeze play—squeeze us in whenever you can and we’ll promise to be quick. After all, his or her honor the RVP will be joining the meeting and needs only a little face-time to feel sated. So . . . the date is set and the circus begins. You hastily assemble the key members of your staff for the summit. The carrier team arrives at the appointed time, less one who is stuck in traffic. After everyone is seated and the “how ya doings” are done, the curtain opens and the show begins: Act I: “Our year-to-date results—admission that this has been a tough year for everyone but the fix is in place, which I’ll get to in a moment.” Reminder of this year’s trip, a quick story about an embarrassing moment, and a promise of an even more exotic destination in the coming year. Act II: Person stuck in traffic arrives with apologies. Act III: “Our forecast for the coming year, complete with new products and features, which I’ll get to in a moment.” “How much we love you and believe in the independent agency system.” “New and old stuff that we want you to sell—featuring the new stuff.” Act IV: “How much of it we are planning on you selling.” “Where your agency ranks, how you can do better, and how much we love you and believe in the independent agency system.” “Your commissions, contingencies, and other cutbacks to be countered by more selling of the new stuff.” “Your comments and questions, please.” You respond with … Grand Finale: “First let’s review the three accounts that are due 1/1. We have yet to hear back from the underwriter, the client is getting fidgety, and there is competition.” Commitment received to get right on it and look into it immediately. You go on to say that the new products are not incredibly different from others available, the rate must be competitive, and the underwriting team must do a better job of turning submissions around, understanding the accounts, and responding in a timely fashion. You challenge them to decrease their production expectations, increase their commissions, and open their appetite a bit wider to accommodate business that you know you will place with them if they do so. Beefing up your position, you cite some accounts that could have been written but weren’t and vaguely indicate that a few big ones, perhaps even a book roll, are in the offing if they become more cooperative. You then provide a more realistic number for them to consider, the negotiation begins, they come down, you move up, and a deal is struck—kind of. Encore: Hands are shaken with warm embraces. There is talk of the great year to come, how terrific it will be to work together, another brief reminder of the trip, and an escort to the door. The carrier contingent leaves thinking they have a deal and you get back to work, bracing for the next meeting with the next carrier. In the parking lot, the production underwriter is warned to “stay on top of this one” and they are off to their next show. And so it goes, year after year after year. The same show resulting in the same outcomes. The only thing missing is the elephants that would make this annual circus complete. Notice, we have the clowns, the ringleader, and the high-wire act. It really is time to stop the show, end the charade, and get back to the business of being in business. This is not to suggest that we don’t need joint planning between partners. Quite the contrary; we simply need to make it real and useful. Here are my suggestions for doing so: 1. Cut off the generalized “overall growth” discussion immediately and get down to brass tacks. Imagine if every agency everywhere abided by every commitment to grow with every carrier every year. Imagine if every carrier everywhere made business plans with the assumption that every agency will abide by every commitment made every year. The industry would grow so astronomically each year that we would permanently solve any unemployment problem. Not only is this not likely to happen, it will never happen. So why are our joint business planning discussions often based on this erroneous assumption? I have no idea. I only know that it is a ridiculous charade that in the end leads to false hope, disappointment, and accusations of poor performance. It is also the major cause of adversarial carrier/agency relationships and our “we-they” approach to business. The good news is that you can fix it. The better news is that in doing so, you will help your agency and your carriers become true partners. You first need to determine where each carrier fits within your plans for growth and your core business segments. Go beyond identifying just the market segments by taking the time to divide each into targeted premium ranges and lines of business. Now you have a matrix or spreadsheet that you can use to plug in your “go-to” markets for each specifically defined segment of your business. If you want to really pretty the thing up, you can select secondary and third-string carriers for each segment and assign your producers by name to each one as well. Armed with this spreadsheet, you can quickly define for each carrier where it fits in your agency, what the expected growth rate will be for its assigned segment, and who the key contact in your agency will be. Then go on to identify the support services you will need, and the production, retention, submission, close ratio, and profitability targets you can agree to. Now, my friends, we have a plan. 2. Annual goals are good; monthly or quarterly targets are much better. Ask me today what my production will be at the end of 2006 and I’ll be able to give you a number, but I’ll be darned if I can tell you with any kind of certainty where and from whom it will come. Sure, I have prospects and a marketing plan; however, I am much more focused on the next few months of production and much more in control of these opportunities than I am about the entire year. Yes, I need an annual objective, but I can manage my way to that objective only by focusing on the daily, weekly, monthly, and quarterly behaviors and opportunities that will get me there. We can align our objectives with those of our carrier partners only if we are working together in a manageable time frame. Request that your annual business plans be broken down into quarterly segments, knowing that each quarter’s results will truly set the stage for the quarter to follow. Key in on mutually accountable behaviors and activities that, when executed, should generate the desired results. These activities include co-marketing strategies, agency and client training, cross-selling initiatives, joint client calls, and field underwriting visits. Also include strategic renewal initiatives and timelines for execution so you don’t get caught waiting and wanting. Establish and agree to submission quotas, close ratio targets, and minimum/maximum premium levels, and agree to monitor each other’s performance each quarter. This allows you and your carrier partner to see what’s working, what isn’t, and what adjustments in your plan need to be made as you go forward. 3. Be prepared, even if it means being delayed. Many of your carrier partners have already conducted their 2006 dog-and-pony show—most target October and November for these discussions, and some actually pull it off. The others are calling you right now so they can check you off their “things to do” list. My advice: Put it off until January or even February when you will have the time to prepare as described above and develop a truly meaningful partnership plan. The carrier’s first reaction will be a gasp. Here is where you jump in with your rationale and your ideas for making the ’06 plan genuine. For your carrier partners that have already been out for their visit, I suggest that you request the unthinkable—a “do-over.” Of course, you say it differently. First, you express your love and commitment. Next, you state that you have refined and thoroughly defined your expectations and intentions for a fabulous year and, as your partner, the carrier’s role is critical. Therefore, you would like to meet again with his or her honor the RVP in January or February to review where you are, where you are going, and how you are going to get there together. Be ready to set the date and keep the date. So, what have you accomplished? You have broken down a generalized annual plan into a quarterly, performance-driven plan. You have established accountabilities and targets that can be managed efficiently and allow both you and your carrier partners the time and ability to make any necessary adjustments along the way. You have aligned your agency’s and your producers’ business plans with the carrier’s to ensure that performance expectations are not overstated. You have given the carrier an agency management plan that specifies the carrier’s role and the support you will need. Most important, you have made a cumbersome, antiquated, ineffectual, legacy business practice disappear and replaced it with a partnership agreement that is efficient, workable, and realistic. * Celebrate, my friend. The author |
|