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Growing Your Insurance Business

Growing Your Insurance Business

The insurance industry provides the opportunity for insurance agents to offer an endless variety of products and services to many different client groups.  There is often a temptation for agents to try to do everything for everyone.  It is simply impossible to develop the expertise to professionally service clients if an attempt is made to work on too broad a scope of products, services, or clients.

What I have found is that agents tend to have a client base of ones.  One doctor, one lawyer, one pension plan, one business, etc.

Taking your business to the next level begins with narrowly defining the business and market you serve.

Target Market

Choosing a target market makes a business much easier to manage and establishing a reputation for having outstanding knowledge and expertise in certain markets.  Successful agents have become known as the key person to go to in medical areas and very specific specialty medical practices such as anesthesiologist.  Each focus allows the agent to become part of the group, part of the golf outings, part of the conventions and a recognized expert that knows the culture, industry developments and special needs of people and companies in a specific market.

After choosing a target market, it is important to focus on selecting the right clients.  Agents must clearly understand which clients they can best serve.  The right accounts are first and foremost people that need what you do.  Given the limitation of time that an agent has during working hours, the number of clients is limited to the total aggregate amount of time needed to properly serve each client.  An agent’s income is a function of the number of clients that can be properly served and the average premium of each client. The biggest mistake that I see agents make is opening too many accounts and the wrong accounts.  They spend the rest of their career, trying to get these clients off their plate.

Building Your Team

Precise structuring of teams and assignment for team members is critically important.  Too often agents have formed teams by bringing several people together without systematically designing how the team will operate, be compensated or make group decisions.

Define specific roles – When a team is formed, it is important to understand all of the expertise and functions the team will need to provide outstanding service to clients.  It is the fulfillment and execution of these roles that the team structure should deliver.  Each team member should have a written description of their responsibilities and how they will be judged for their performance of these duties.

Professional development – The insurance industry is continuously changing.  It is critical if a team is to stay professional and competitive, that every member of the team engages in continuing professional development.   If a new product or service is to be offered to clients, the team must make sure they have the expertise and authority to offer that services.  As the business changes every team member will have to continue to update and sharpen their skills.

Compensation – Compensation structures are critical for a team’s success.  Too often a couple of agents get together to form a team.  Decide on a split and go to work.  The value of different services changes over time and need to be adjusted as the value of the individual contributions change. 

Percentage allocations to agents and support staff are usually not a good idea.  If the team grows, more people will be added to the team and with a percentage allocation; existing members of the team will have to give up part of their allocation.  Support staffs seldom react positively to giving up any of their allocation so the only result is that the distributed percentages have to come out of the managing director’s allocation.  The second problem with percentages is that allocation decisions are made before the year begins and are based on anticipated contributions rather than actual contributions.

Paying competitive salaries and putting everything else in a pool that can be distributed after performance evaluations is more fair, more accountable, more easily evaluated and allows for changes and additions to staff. 

Business Development and Marketing

The next step in the business development process is an honest analysis of your existing business, “Where are we?”  A detailed list of where a business is, where are we now must be listed without a notation of discussion of whether it is good or bad.  The process is to get all the information on the table.  The second step is to define what the business should be in three to five years.  The future goals, based on revenue, allow for you to decide on which four to five revenue generating activities the business will focus. 

Once the target market, products and services and business development steps have been identified, a detailed marketing plan should be created.  A marketing plan should be structured around one or more of the following approaches depending which is appropriate to complement the previously described goals:  strategic marketing, niche marketing, social prospecting, community marketing and reciprocity marketing.

Business Management and Managing Clients

Managing a business encompasses; having the right business plan, having the right people, having the right skills, having the right compensation program, the right leadership, and the right communication system. 

Rules of Engagement

Every agent and every client must establish a written set of “Rules of Engagement”.  Rules of engagement specify how the client and agent will work.  These rules encompass:

  • The client must be honest with the agent and not misrepresent facts about their situation, total assets, objectives and risk.
  • The agent must be candid about their expertise, experience, how they are paid, their background and what kind of clients they can best serve.
  • Rules of engagement will govern how they work together including type of information, meetings, reviews, contact disciplines and all manners of how the client and agent work together. 
  • If the team is involved, the clients must be apprised of each member’s responsibilities and who to contact.

Managing Clients

The primary way to keep clients happy is to fully understand their needs and expectations and to then exceed those expectations.  The second element of keeping clients happy is to under promise and over deliver.  Expectations must be managed.  You cannot let clients dictate or set unrealistic expectations beyond your ability.  To be able to exceed client expectations the standards should be jointly agreed upon.

Commitments are at the core of any relationship.  For a successful business with each client the agent must make clearly spelled out commitments about what they will do to properly service the client.  At the same time an agent must ask clients for commitments to be able to properly service the client.  Commitments to and from clients are frequently built around and in addition to the “rules of engagement” and for the client to support the agent by being available, adhering to decision making rules and by supporting the agents business by making referrals.

The final piece of the puzzle is client recognition.  Supporting clients community activities are appreciated and most helpful to the agent being introduced to people that they may be able to serve.  One thing I have seen be of particular success is sending clients articles, books or other information about non financial things that are important to the client. 

Building a successful insurance business requires a lot of work, organization and a focus on the long-term.  Following the steps listed in this article should help you take your business to the next level.

About Jason Lampa

Jason Lampa
Jason Lampa is the Managing Director for Charter Consult, an asset management firm which provides insurance professionals and their clients access to alternative investment strategies focused on absolute returns. In addition, Jason provides strategic marketing and practice management consulting for agents who are serious about taking their practice to the next level. In 2010, Jason wrote his first book, entitled Favorable Mutation: The Rise of Unified Managed Accounts in Financial Services. Prior to Charter Consult, Jason held senior-level positions at Citigroup, OppenheimerFunds and New York Life. During his tenure at the aforementioned firms, Jason was responsible for raising more than $3 billion through mutual funds, hedge funds and annuities, respectively. Jason has an MBA in Finance from Seton Hall, in addition to holding the Series 6, Series 7, Series 63 & Series 65 Securities licenses.

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