BOOST AGENCY VALUE BY WINNING THE WAR FOR TALENT by Bobby Reagan

In this document, Bobby Reagan tells you why the future of the agency/brokerage business belongs to those who are capable of attracting and retaining the most qualified and capable producers.

There are plenty of “best practices” that can greatly enhance agency values, but probably none more so than the ability to recruit and retain talented employees.

We all know that in a service business, people are the most valuable asset. Although there are a number of valuable people assets in an insurance agency or brokerage operation, clearly the sales staff and producers — the key to maintaining and creating value — are your most valuable asset.

We've all heard about the lifetime value of a customer. However, the value of an individual customer pales in comparison to the lifetime value of a producer capable of generating and maintaining dozens, if not hundreds, of customer relationships. Their value is huge.

Recognizing this fact, the future of the agency/brokerage business belongs to those who are capable of attracting and retaining the most qualified and capable producers.

This means that we can predict where future success will be achieved by following the flow of talent and identifying the organizations that are capable of creating and providing an environment where the best and the brightest producers want to be.

If you track the flow of talented producers during the past five to 10 years, it has been heavy and largely in one direction: Several of the national insurance brokers have lost a lot of talent in their production ranks directly to a fairly limited number of independent regional and semi-national brokerage firms.

There are a number of reasons that this has taken place and will probably continue for years. Many of the producers who've moved would suggest that, for the entrepreneurial producer capable of generating business, the quality of life at several of the national brokerage houses has deteriorated.

In an effort to improve profitability and control business more effectively, these firms have been institutionalizing books of business, dissociating producers from their renewal books, and centralizing the placement of business.

Also, consolidation at the top has cut the size of producers' prospect lists. All of this is creating a less appealing environment for producers and reduced their earnings potential.

At the same time, risk managers and insurance decision-makers at larger accounts have become aware of the capabilities of some of the larger independent regionals and are now considering them as not only viable but attractive options to the national brokers.

Corporate insurance buyers have seen this flow of talent to the regional brokers. They've also found that the regional brokers have capabilities and service offerings that not only rival those of the national brokers, but in some instances can provide these services more efficiently, effectively, and less expensively.

What's more, producers have changed because they can produce more business, make more money, and generally get some type of signing bonus or equity kicker to offset the expense of making a move and to recognize the value of what they're bringing — or are capable of bringing.

Producers who are considering changes today also have the benefit of witnessing the success achieved by many of the folks who made a change in years past.

Agencies that have been most successful at recruiting producers: 

  • Recognize the value of producers 
  • Understand and can communicate how they can improve the quality of life for producers 
  • Are willing to make the effort to actively recruit them 
  • Will spend the money to attract producers and help offset the cost required to make the change 
  • Have been willing and able to create a culture and an environment in which top producers can prosper 

Some have questioned whether this trend will continue — whether we've evolved into a “free agent” market in which top producers will continue to move around, or whether we might see these same people move back in the direction of the national brokers.

I wouldn't anticipate that we'll ever see an active flow of producers from the regionals to the national brokers, unless producers can't sell and need the institutional muscle and name to support their sales efforts. Lateral moves among the regional brokers are a possibility, but would be unlikely due to the significant disruption and cost of making a move that provides limited additional benefit.

Based on what we're seeing, all the factors are in place to suggest that the flow of talent will continue — although it might slow due to the fact that the talent pool has been drained. The national brokers are large organizations; to their credit, they've demonstrated their ability to hire and develop talent and will continue to do so

Even so, the flow of producer talent there will probably continue. If you want to know where the future of the industry is headed, take a look at where that talent is landing.

Bobby Reagan is president and CEO of Reagan Consulting, an Atlanta-based financial and management consulting firm that works with insurance agents, brokers and financial institutions. Reagan Consulting developed and produces the “Independent Insurance Agents and Brokers of America Best Practices Study.” Reagan can be reached at bobby@reaganconsulting.com. This article originally appeared in The National Underwriter and is reproduced by permission.

 

Please contact us with any questions or feedback at (505) 603-5503