Improving Market Relationships
By Bill Schoeffler

Back in the old days the company side drove agency-company relationships. It used to be that
the companies were the aggressive party in courting the agent -- this is no longer the case.
Today the agent must take the active role in developing and maintaining insurance company
relations.

The key to any good relationship is communication. It is imperative that the agencies have a well-organized plan to communicate with each carrier. Some insurance companies communicate better than others do so the independent agent needs to take full responsibility to ensure a dialog occurs.

Agencies need to take a proactive approach to managing company relations. Good relations
cannot be allowed to stagnate, and weak relations must be built up.

Agency owners need to evaluate which companies they should do business with to meet their
needs for competitive, responsive markets.

Both parties need to grow, and relationships of the past may no longer meet the needs of today,
especially if either party has targeted certain classes of business that aren't of interest to the
other.

Companies continue to limit the number of agencies they do business with, often to better utilize
their resources and to reduce costs. Some companies differentiate between the services they
provide their preferred agents and their regular agents. It is usually worth the effort to achieve
the "preferred" agency status with as many companies as possible.

The "preferred" agent may receive better underwriters, quality target/niche marketing programs or exclusive programs. The "preferred" contracts usually contain enhanced profit-sharing
agreements, value-added services, interface capabilities, training programs and financing of
various items such as producers, acquisitions and perpetuation.

Establishing the Action Plan
So how do you become a "preferred" agent? You need to focus on better management of your
company relationships. The first step is to assign an individual or two from the firm to each
carrier. This person would be that carrier's "relationship manager."

Responsibilities for the management of the firm's top carriers should be divided up among the
owners and/or a key non-owner producer or CSR, depending on whom has the best relationship
with each carrier. Overall carrier relationship management should always be a major focus for all
owners; however, dividing up the duties with others in the firm will insure that the steps are
implemented.

A specific action plan should include job assignments, planned visits, information and data to
communicate, and a budget to implement the plan.

Keep in mind, it takes time and money to nurture a successful company relationship. It's
important to keep track of the plan and make sure it is followed. Even a strong relationship will
eventually die if it's neglected.

The collection and presentation of information and data is a significant step since it will set the
tone of the communication. Agencies that are prepared and well informed will create an immediate interest in the company representatives, since unfortunately, most agencies fail to do their homework.

Review Your Markets
Learn about the agency's relationship with its markets. Make a list of all your companies and
include three years' worth of the following information: written premium, earned premium,
commissions paid, contingents received, number of policies, average commission per policy,
number of submissions, number of quotes, hit ratio and loss ratio.

Write down what targeted classes of business that the carriers seem to be interested in and which ones they are competitive in. Create a report card for the company based on staff input.

Determine the carriers' perceptions of your firm by asking them to fill out a report card on the
agency. Ask what the firm should do to improve the existing relationship in order to write more
business.

Find out how the agency can take advantage of the value-added services offered by the carriers,
such as financing, training, etc.

The next step is to create a profile of the agency (see insert). Agencies, like people have their
own unique personality. Agencies that know who they are and their strengths and weaknesses
will be in a good position to communicate their needs to the carriers. How can agencies expect
the markets to meet their needs when they don't know or understand their needs themselves?

(editors note: create insert for this segment)

Agency Profile Package
Create a package that contains information about your agency that you can share with the market representatives. The more detail and openness displayed in the package, the easier future
communication will be achieved. The following is a list of some key items that should be included
in the Agency Profile Package.

*A cover letter to the carrier explaining the agency's objectives and goals with that insurance company.
*The agency mission statement or an overview of the firm's philosophy.
*The agency history, organizational chart and resumes of key employees.
*Copies of agency brochures and general marketing material.
*A copy of the agency strategic business and perpetuation plan.
*Details on the agency's sales and marketing approach.
*A breakdown of the lines of business written by the agency including an overall summary of the number of accounts and commission by line of business.
*A list of the main types of businesses and the average size of account written by the agency and each producer for personal and commercial lines.
*Details on any niches or programs the agency may have.
*New premium written last year by each producer.
*A description of the producer compensation plan.
*Details on the agency's automation capability.

In addition to the above information, it may be useful in the quest for new markets to include the
following in the package:

*Summary of company experience with premium and loss ratios for each major carrier for
the past five years.
*Financial information including most recent P&L and balance sheet.
*Copy of agency's E&O policy.

(End of Insert)

Go to the Companies
Take the agency profile package and the insurance company evaluation directly to the market
representatives. Set an annual meeting to discuss agency goals and future opportunities. In this
annual meeting, the agency principal in charge of markets and the relationship manager should
meet face to face with the regional vice president or branch manager of each contract company
and the main underwriter assigned to the agency.

There are three objectives for this meeting: 1) inform the company's management about the
current status of the agency and future plans; 2) find out where the company stands now and its
plans for the future; and 3) discuss how the agency and the company can do more business
together in the future.

There should be follow-up meetings to discuss progress on the agency-company game plan on at least a quarterly basis.

Both parties need to be open and frank. The agency profile and the company evaluation should
be reviewed and discussed at the meeting. Reasonable goals and commitments for future
business need to be established. Relay the highlights of the meeting back to the agency staff.

Plan ongoing carrier "schmoozing" activities to enhance the relationship. It is easier to develop a
relationship if parties meet often, and social visits are especially effective. The whole agency
needs to be involved with fostering good relations with the markets.

Summary
Now, more than ever before, it is extremely important for insurance companies and owners of
agencies/brokerages to build partnerships that are responsive to the business plans established
each year by each party. Building improved relationships needs to be a two-way street, so the
agent cannot be passive.

It is easy to get this relationship-building program underway and it really works. Responsibilities
for this program must be shared and communication needs to be flowing within the firm, within
the carrier, and between each other. Improved communication and a focus on improving relationships will save time and will make both parties more money, guaranteed.