Visualization

In my column this month I want you to do a little visualization with me. Imagine you’re a young person just graduating from college. It doesn’t matter if it’s a two year degree program through a community college or a four year degree from a state or private college or university. Maybe you didn’t go to college but you’re an intelligent young person looking for an opportunity to create a profession or career. Your interest lies in business or marketing and you wan to create your own business. Your desire to own and operate your own business has been fueled by all that you have read and seen about big corporations and the impersonal nature of being an employee at one. Maybe one of your parents was recently laid off after many years of service with a company and you see how hard your family has had to struggle because of it. Your heart breaks having to witness your father or mother out looking for a job in their late 40’s or early 50’s and not being successful. You promise yourself that you are not going to let that happen to you. You’re going to create a business, run it in a very socially conscious way and be the master of your own destiny. As you explore the various business possibilities you can pursue you start to explore opening an independent insurance agency. Maybe you were lucky enough to have been involved in an InVest class in high school and you remember the exposure to the insurance industry and you remember one of the people in the program talking about what a great business opportunity it was to become an insurance agent or broker and open your own agency. Whatever the reason you sincerely start to look at what it would take to be an independent agent or broker. You need to get a license but the 90 hours of classroom work and taking the test doesn’t scare you. You’re pretty comfortable that you can master whatever is needed. You realize that once you have the license in hand you can create your agency and start to grow it.

Because it is your own business you intend to work very hard as you realize that you are making an investment in yourself. You recall President Obama during his election campaign and even after he was elected talking about how the entrepreneurial spirit that leads to creating new businesses would help fuel the country’s eventual recovery. Owning and running your own agency is looking more and more like the right thing to pursue. As you start to create your business plan you realize that you have a real advantage that you can capitalize on. Your research shows that there is a huge gap in the number of female, minority and ethnic agency representation in the insurance industry. As a member of one or more of these groups you see an opportunity to grow your agency by aggressively marketing to consumers in those particular groups. What may have been a disadvantage at previous times in your life now actually may be a significant advantage and opportunity. It may not only be your affinity with the group you plan to market to and may also be your ability to effectively communicate with them in their language.

You start to approach various organizations looking for information and help in pursuing this opportunity you have decided to focus on. In reading information you find about the industry, and reviewing the websites and corporate information of the associations and insurance companies, you realize that the insurance industry is significantly invested in attracting new young talent. During your research you determine that the insurance industry is due for a major shift in its workforce and that is one reason they are aggressively looking to attract young people to the industry. You also find that certain insurance associations and most of the insurance companies are actively involved in creating diversity in the insurance industry. They have special programs and are reaching out to assist people who will further their goal of diversity in the industry. On several major insurance company websites you read information that comes from the company’s President and CEO indicating they are committed to diversity and will do what is necessary to make it happen. This just further confirms your decision to pursue opening a new independent insurance agency or brokerage.

With all this positive information you have developed you move forward aggressively in setting up your business. During your research you determined that in order to run an independent agency or brokerage you would be required to purchase professional liability or E&O insurance. Luckily one of the major insurance associations worked spent time with you explaining the need for the coverage, how the coverage worked and getting you the most affordable policy possible so you could take care of this requirement.

The only issue left to be addressed was getting contracted with several companies that you could place your client’s coverage through. That shouldn’t be too hard based on how the companies and the industry were aggressively looking to attract young talent. It should be even easier for you because you also offer the opportunity for increased diversity being a female, minority or ethnic agent. So you confidently reach out to several carriers asking to get appointed and that is where the dream of opening your own agency becomes a nightmare! You find many company marketing folks won’t even return your call. The few that do don’t seem to be interested that you are your, female, a minority or ethnic. Matter of fact you get the distinct feeling that may actually be working against you. During the few conversations you have with company marketing staff you’re told that they don’t appoint new agents. You need to have some significant existing volume before they will even consider you. That’s the Catch 22 you can’t get appointed without existing volume and you can’t get existing volume without getting appointed! You can’t believe this! You wanted to be an entrepreneur and open your own insurance agency or brokerage. You got the license and the E&O coverage and have set up an office. You have a marketing plan and know who will be approaching to write insurance. You have a distinct advantage because you want to work with female or minority clients or within your ethnic community. The prospects you intend to approach feel more comfortable buying insurance from someone they can communicate with and relate to. Your ready to work hard and grow your business and now you can’t get company appointments. The more you push the more you’re told that in order to write business you will have to go through someone else. This will put you at a distinct disadvantage with the other agencies and brokerages you will compete with. You may not have binding authority. You’ll have to share your commissions. You may not be able to service your clients directly. The ownership of your business may not be protected or you may have to go through litigation some time in the future to prove it. You still won’t be creating a book of business that you can use to secure an appointment in the future. You even get the feeling that some existing agents and brokers are not happy that you can get access to certain carriers through the programs you can use. You’re told that those agents believe your getting access to certain companies dilutes the value the get from representing those carriers. It doesn’t make any sense. Why would they be afraid you could write your client with a company they represent? Aren’t having more independent agents and brokers doing business a good thing? Are they afraid of the competition you might bring if you get access? How did they start their agency? You can’t believe this is happening. You only wanted to open an agency and write insurance. You have the license, the E&O and are ready to go. You’re willing to work hard and do a good job for your clients. You want to work hard and create a successful agency. But no one will appoint you! This must be a dream.

Unfortunately this is no dream. This is what new young agents and brokers go through every day. Candidly I work hard to try and help this folks as do several other people here at our association. As an industry we say all the right things but the reality is it’s just a dream. Occasionally things do click and we find a market for a new agent or can get them the access they need but this is the exception not the rule.

We need to mean what we say when we are encouraging young people to come into our industry as well as when we talk about diversity. We need insurance companies to appoint these new agents. We realize that new agents need to learn, get experience and grow but they can’t do that if no one will give them a chance. Let’s quit making hollow promises and actually provide the opportunity that so far has just been good PR.