If an agency is looking to grow in 2024, it must be focused on areas of opportunity in the commercial sector, not personal lines, according to Steve Tombarelli (pictured), SIAA’s SVP, programs and services.
“From the conversations we’ve had with our carriers, they’re still trying to get great adequacy [in personal lines] - they’re still not at a point of opening up for full growth and new business appointments,” Tombarelli said.
“Instead, one of the things agencies should be focusing on is understanding where the carriers are opening up for commercial lines, what their appetite is and what classes of business they’re looking for.”
The SVP also believes that agencies need to invest resources into niche marketing in order to attract clients looking for specialized solutions.
“It’s better to be a specialist than a generalist right now,” he said.
Additionally, agencies need to be more deliberate with what business they decide to take on, rather than just trying to accrue as many insureds as possible without doing diligent background checks.
“They should take business based on whether it’s a good opportunity for their agency to have a long-term client, not just to take somebody in that will be leaving next year with their distressed business and a ton of claims or other issues,” Tombarelli said.
“If a commercial account comes knocking at your door looking for coverage, that is almost always a sign that they’ve been looking elsewhere because they aren’t a viable client.”
In an interview with Insurance Business, Tombarelli spoke about what technologies agencies should employ in order to perform better in the marketplace, how to keep client retention high when scaling upwards and some common misconceptions about trying to expand one’s business.
Understanding the insurance marketplace is paramount to growing an agency, but modernizing internal processes through technology can also help create a more efficient and proficient business.
While most, if not all, companies use some form of Agent Management System (AMS), many have not tapped into all the capabilities within these frameworks, according to Tombarelli.
A CRM to help enable automated marketing is crucial so that an agency can make contact with its clients, know when to reach out, and sort through its insureds.
“Having that CRM is a great way to drive all the information around the client for a company to create their marketing efforts,” Tombarelli said.
For commercial lines in particular, the SVP recommends that agencies investigate research advisory businesses, which can help profile clients that an agency may want to pursue.
“A number of search parameters can be set, such as number of years in business and how many employees a company may have, and those results can be filtered through and added into a CRM to have an active marketing platform,” Tombarelli said.
Finally, for bigger companies in particular, data analytics and data mining platforms can also be a beneficial business tool.
“Having the ability to mine data can result in cross-selling opportunities and upselling opportunities, which is another smart way of increasing business with an existing clientele,” Tombarelli said.
“There’s a lot of different data points to look at so a company is making sure that it is maximizing the touch points with a particular client – and more touch points can equal better retention.”
Growing a business, whether in insurance or not, should not come at the expense of glossing over existing clientele.
“One of the things that a lot of agencies struggle with is time management,” Tombarelli said.
“Especially for smaller agencies, a producer is not going to have the time to also be worried about servicing an existing clientele while they continue to search for new business opportunities.”
Instead, an agency needs to have a plan in place to keep customer morale high and lead to more retention.
“It can be an internal function like relying on staff, or external, whether it’s virtual assistants or working within a carrier partner’s service center,” Tombarelli said.
While bringing in technology and outsourcing certain functions can improve business prospects and productivity, agencies must not lose sight of their underlying call to action - relationship building, especially in establishing long-term clients.
“Having those personal touch points, such as picking up the phone or scheduling a video call to get updated on how a client’s life has changed over the past year, shows that an agent cares and can also open up new coverage options/modifications,” Tombarelli said.
“You can’t lose track of this information or outreach opportunities and become lazy.”
When markets turn hard, many agencies may want to focus on servicing their existing clientele where business is guaranteed, which can result in an increase in money as rates escalate.
“An agency can’t lose sight of how these market conditions will eventually turn at some point in time, which is why keeping an eye on their PIF count is crucial,” Tombarelli said.
Additionally, just because the insurance industry may be going through a hard market, does not mean that growth opportunities are stifled.
“If an agent knows what the carrier wants to write in their area and they have a good marketing plan in place, they will be able to find business in some capacity,” the SVP said.
Another thing to be mindful of is rate hopping at renewal time and making sure the customers an agency has gained will be around for the long haul.
“You want to be careful that you’re not just bringing in clients that are coming in solely based on price,” Tombarelli said.
“Instead, you want to bring in clients that will understand the value you add to their business or their personal insurance services.”
