As part of an article I recently wrote for Benefit Selling regarding trends to expect in 2016, I solicited help from a handful of friends I consider among the smartest professionals in the industry. Due to article length constraints, I wasn’t able to share everything, however, they are graciously sharing their ideas here on our blog.

Our next guest blogger in the series is Karen Kirkpatrick, owner of On Your Mark Consulting. She helps HR and benefit professionals with compliance, regulation and execution, empowering sales professionals to grow their business and enabling employers to maximize efficiencies.

In Karen’s own words

Karen Kirkpatrick Insurance agency managementBrokers must manage their business as a business. Seriously!!

Agency hiring and compensation

Agencies that are serious about their business need to hire a skilled Business Manager to help develop and run effective insurance agency management practices. This person should:

  • Have executive experience
  • Oversee compensation structure and approve any producer offers or acquisition of books.
  • Be involved in all hiring, firing, job changes and performance reviews.
  • Be selective; don’t hire anyone that fogs a mirror.
  • Make sure the agency has adequate E&O-seriously!!
  • Create compensation structures to grow the business, not cripple it. Reward growth, not stagnancy.
  • Create commissions for support staff, measuring metrics that reward behaviors you want to encourage, such as with compliance, client retention, cross selling, increasing participation, wellness and technology support. 

Agency revenues

Every other business that sells a service has a sales/product book with line items and associated costs for everything conceivable that they could offer the client. I don’t believe their entire price matrix says “Take what we get in the initial fee and make it last for the whole year. Any other services the clients might add, time they might use, or additional staff we might need to service their account is all on us.”

Agencies need to be looking hard at the fee-for-service model. Scary? Yes—to someone who has no idea how much they’re making per hour or what they’re worth. For these agencies, clients aren’t in a partnership with them at all, unless you can consider allowed-leaching a partnership.

Be selective. Research your clients, run credit checks, and have a contract with them outside of BOR.

Agency value proposition

Part of this discussion is finding a client industry niche. You can’t be a jack-of-all-trades and convince a client that you “know their business.” You might know the benefits business, but you clearly do not know theirs, otherwise, you would have the lion’s share of their lines of coverage, great participation, great referrals, and you’d have their total attention, commitment and action when you make recommendations.

Another part of this discussion is providing a service model that is difficult for an incumbent broker to match. You should not give stuff away for free to increase retention, but rather support the employer’s needs by wrapping your tentacles into serious parts of their processes, technology, etc. Now, that would be painful to unravel.

Part of this discussion is also knowing what ACA (et al) information is relevant to share with your clients. They don’t need to understand 100% of all the pages of regulations; they need to know what is relevant to their business and what will help them be compliant and grow. For example, don’t present the Monthly Measurement Period to them if you know the Standard Measurement Period is hard enough for them to administer. Don’t complicate the complicated for them.

You should know their business better than they do in terms of how you can prove yourself invaluable to not only them, but to everyone in their network of like-industries.

Photo by Mark Alexander.

7 insurance agency trends in 2016