One or Two – It’s Your Call
One or Two – It’s Your Call
Independent agents and brokers face many challenges today. In the personal insurance arena competition is fierce and the choice that dealing with an independent agent provides also creates its greatest liability, as working with multiple companies creates increased agent/broker costs, workflow issues and a lack of carrier support that is not shared by captive agents or direct response companies.
This creates significant challenges in satisfying many of today’s consumers who expect their insurance protection to be provided instantly and as low priced as possible. Agents and the carriers they represent need to streamline the new business process allowing it to match the speed and effectiveness currently available directly from carriers or through a captive agent. They also need the carriers they represent to provide their customers with today’s technology allowing those customers quick and effective service similar to what is available now through their competition.
Insurance carriers need to look internally at their own operations improving workflow and making cuts to their overhead that drive down operating costs without affecting service. Agents can no longer bear the cost for ineffective systems and procedures that also puts them at a competitive disadvantage.
Agent compensation has not been increasing. If anything it has been going down at a time when agencies are being asked to take on more of the workload associated with servicing their clients. Outdated, unnecessary and ineffective regulation and laws add cost and time to agent’s ability to properly service their client’s needs. These laws and regulations need to be changed for the system to operate in a cost effective manner.
Getting carriers, regulators and legislators to make needed changes is significantly bolstered when the maximum number of independent agents and brokers work through one organization with a focused agenda. That organization must be run efficiently to be as effective as possible. It must be led by a board totally representative of the constituency it serves. It’s only purpose should be to advance the performance and success of independent insurance agencies and brokerages in New York.
In addition to lobbying for the changes noted above, this organization must offer services to agents that help them run and improve their businesses. Independent agents are consummate entrepreneurs, responsible for every facet of their business. Because of the complexity of running an independent agency today most agencies need assistance in meeting the myriad needs of their agency. The current trend of baby boomer retirees leaving and very few new young workers being attracted to the insurance industry is just one example. Technology, human resources, employee training including CE, workflow management and branding are some additional examples of areas where independent agents want help. One strong agent focused association, operated by experienced, knowledgeable and dedicated staff could provide the best resources to meet these needs. We’ve seen it time and time again across the country.
As I mentioned earlier, agent’s commissions have not gone up and most agencies have to be very careful when they spend money to make sure they are getting the most value for what they spend. Having one association that effectively answered all members’ needs and requirements would allow independent agents to get the best value for their investment. The redundancy of cost associated with having two competing associations is counterproductive financially. Two separate associations are also not able to offer the maximum constituency necessary to effectively deal with carriers, regulators and legislators.
Independent agents understand the economic logic here because it is the same logic that causes agents to merge with or acquire other agencies. Combining entities makes the resulting firm more able to meet whatever need and gives them the influence of their larger size with carriers. The new agency can choose to retain the very best talent from the pool of employees available. Based on their increased size many times the new agency is able to more effectively align duties and improve workflow. The elimination of positions where there is redundancy immediately creates additional revenue that can be used to improve the overall operation.
IIABNY has long held that one association representing the interests of independent insurance agents and brokers is the best way to advance their interests. I understand that conventional wisdom would suggest that I would be against the creation of one statewide independent agent association in New York. Its creation would totally disrupt the lives of me and my co-workers. It would cost some of us our jobs. Although that is true I honestly believe agents in New York would be better served and more effectively represented by one association. If we really want to push forward our mission to advance the performance and success of independent insurance agencies and brokerages in New York, than a merger makes total sense. I’ve heard a few people indicate that competition is good and forces both parties to work hard to keep their members. We believe very much in competition. Given today’s circumstance agent associations already compete with the internet, small business groups, clusters, other industry groups and more, so competition among agent/broker groups is not necessary.
The idea of a merger is not new. It has happened in a number of other states already and it’s been discussed in New York many times before. The decision lies with independent agents who must decide whether their future would be better served by having one trade association in New York.
