Independent insurance agencies are facing many challenges, but is a complete overhaul the answer? A look at the downsides of making major business changes.

Changing Your Independent Insurance Agency May be More Shocking Than You Think

September 18, 2017

You hear it all the time – Change your agency! You’ll go the way of the Dodo bird if you don’t! You’ll have to sell your agency and work for someone else! You’ll lose your independence! Start making changes today to save yourself!

But is that actually good advice?

There are a lot of downsides to making a major change that would move your business from “insurance broker” to “consulting firm.” Changes are not for everyone and not everyone needs changes. Let’s explore some of the downsides to change.

Known model

Working with insurance carriers to broker their policies to employers is a known business model; it’s been successful for over 100 years. Change takes effort and everyone on the team may not be up for the changes required. And as we’re talking about moving to a model that isn’t a known quantity and clearly spelled out by someone like the carriers, it requires a new kind of creativity and perseverance to implement the new ideas and make it happen. Work like that has not been required in the known model of the independent agency.

Risky business

Expanding beyond insurance and into areas that would be considered consulting may be risky. Clients may not like your additional services or think they are relevant to your health insurance advice.

Or they may like the idea and the advice and take you up on the consulting offer. If that happens, you’ll either need to figure out how to charge fees to cover the extra work you do, or you’ll need to do the work for no additional compensation. Either way, you’ll find yourself with a financial conundrum to resolve.

If you’re going to move into consulting areas, you’ll need to talk to your commercial insurance broker about additional liability coverage you may need. And you’ll need to review your state laws about charging fees. This may lead to having to establish a separate legal entity to run the consulting part of the business.

All aboard!

When you move from running an operation that gets quotes from carriers, creates comparative spreadsheets, and provides front-line service to running a business that reviews client operations and provides advice to influence results, you’re going to need different people on your team. Hiring a different type of person may prove difficult to find the right fit. You may make some wrong hires. It may upset your current team to have these new people on board who think and work differently. You may lose some people. You may have infighting.

Where are we going?

With major changes, people will be confused. Team members won’t know what’s happening with the company and will understandably become fearful for their jobs. They’ll talk among themselves and create imaginary scenarios that are far worse than the reality. Some will start job hunting just to cover their bases.

Clients will be confused. Prospective clients won’t understand who you are and what you do because your sales conversations won’t match your website. They’ll expect a conversation about health insurance and you’ll be talking about strategy, engagement, and long-term planning.

To get a handle on all this confusion, you’ll have to spend a lot of time talking to people and sharing your ideas with them. Repeatedly. You’ll have to write down your vision of the “new” company and talk to your team about it until you are sick and tired of talking about it.

You’ll have to create new marketing messaging and re-think your overall marketing efforts. And you’ll need to spend money on marketing – like building a new website and developing new ways to interact with prospective clients. You’ll need to spend money to make money.

Who’s selling what?

Your sales people will be confused because they are comfortable talking about policies and finding the best price. Now you’ll want them to talk about other things. And you’ll want them to ask a lot of questions and be curious. Like genuinely curious.

Some sales people won’t like this. They’ll threaten to quit. You’ll have to decide if this is the new company model that you really want. If you do, you’ll have to hold your ground and those sales people may quit. Or you’ll have to decide this change is not worth the effort, keep the old model, and the keep the old sales people.

How committed are you to changing?

These are a lot of significant things that must be addressed if you’re going to undertake an effort to change your business model. And like I said, change is not for everyone. Just because other people are forging down that path, doesn’t make it right for everyone.

Making a commitment to change takes a strong desire to be on the other side of the wish list. If you don’t want it bad enough, it will be an exhausting effort that will just frustrate everyone along the way. Think seriously about what challenges you need to face and undertake on this change journey, and ask yourself for a very honest answer: How badly do I really want it?

Photo by RyanMcGuire

Insurance Agency Marketing Assessment

 

WHAT CAN WE HELP YOU FIND?

SUBSCRIBE TO THE AGENCY BLOG