Multi-Line Agencies....Looking Towards The Future?

May 1, 2007

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  1. natem2112
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    natem2112 Super Genius

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    I have a feeling that we may have discussed this before on the forums, but how many of you guys and girls think that a multi-line agency has an advantage over being a singular L&H or Financial Planner?

    I think that they do, but that's just my opinion.


    I'd love to hear what the rest of you think about it.


    Here's my stance on the issue, bear in mind this are all preconceived idea's and opinions that I have come up with merely by reading and studying other real life examples.


    This is a reprint from Advisor's Today which outlines the positive rosy side of the multiline approach for an insurance agency.

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    By Dave Willis
    Imagine a city divided. One side is the picture of economic development and prosperity. Down the road, fully equipped office buildings, manufacturing plants, hotels and restaurants sit empty.
    On the other side are people—young couples starting their lives together, with no place to live. Youngsters with lunches packed and backpacks on, but no school to attend. Sick and injured individuals, desperately needing a medical facility. Parents who want to provide for their families, but with no place to work.
    Such a city is hard to imagine for most people, but arguably not for many insurance agents. Proof can be found in the agents’ client file cabinets. Some file drawers—those in the property and casualty insurance agency offices—contain policies covering homes, schools, office buildings, hotels and manufacturing facilities, but not the people who live, learn, visit and work in them. Other cabinets in life insurance agent offices, contain policies protecting the life, health and disability income of newlyweds, families, retirees, students, travelers and others, but not their cars, homes, schools or places of business.
    Cross-selling is a must
    David Gibson, CFP, agency manager for Country Insurance and Financial Services in Morris, Ill., is on a mission to integrate this city. Gibson, who oversees 30 multiline insurance agents in a multilocation agency, says advisors must realize the value of penetrating their existing books of business and getting a greater share of the wallets of their clients. “It’s imperative in today’s insurance business to cross-sell and vertically market current clients,” he says.
    Nothing turns competence into confidence like experience.
    Gibson believes that agents who sell P/C insurance have a certain advantage over those who don’t because in most states, certain auto insurance coverages are mandated. So when a new driver gets his first car and makes an initial insurance purchase, it’s generally for an automobile. As he gets a little older, he rents an apartment and ultimately buys and insures his home—his second insurance purchase. He often does this before he has thought much about life or health coverage.

    When these younger buyers ultimately contemplate life insurance and financial planning, they already have a relationship with the agents who helped them protect their homes and cars for years and are inclined to look to them first for new coverage. For advisors who sell P/C insurance, that’s encouraging news. “It gives them an excellent opportunity,” Gibson says. “They have already established a client with the P/C casualty business.”


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    So what do you think?
     
  2. Crabcake Johnny
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    Crabcake Johnny Guru

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    Is a pediatrician also an ob/gyn? Is a divorce attorney also a criminal attorney? If you own a successful Italian restaurant should you add Mexican food? Show me someone who runs an agency that sells all lines of insurance and I'll show you someone who does not know all the intimate details of all the plans he/she offers.

    You're gonna run an independent agency? You can know all the health insurance plan and underwriting details from the 6 to 8 carriers in your state each offering 4 to 6 different products? Unlikely.
     
  3. Wprice
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    Wprice Expert

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    Mainly because I am in a multi-line agency, I believe that everyone should have a speciality. Have one person who mainly runs auto, one person who mainly runs business liability, one person who runs individual health, etc. Not to say that if there is an inquiry about another product that you have to force it to another person, but specialize. I work for an agency now, my goal is to grow into a niche market, period. I want to either be a homeowners or individual life EXPERT. If I do get asked about other areas I'll find out and write it, but my goal in marketing myself is in one spot not spread out everywhere.
     
    Wprice, May 1, 2007
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  4. natem2112
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    natem2112 Super Genius

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    Maybe a pediatrician isn't doing the same thing as the ob/gyn.....but they work in the same facility that brings the prospects or customers to them.

    I wasn't envisioning so much trying to "do it all"...because that's all I would be doing....Trying...and failing.

    But I've been looking at P&C from the angle of a partnership with another agent, who is already experienced in P&C.

    I know, we've been there on the partnership level.....most of em' don't work out at all and there's friction and the business falls apart ect.


    But IF you could work with another agent or two, and you COULD make a team of agent with their own specialties, then I believe that a multi-line agency benefits more to the consumer as a whole vs getting 5 different agents for 5 different needs.

    Is it not better for the client, if he knows he can walk through that door and get 5 area's of expertise within the same door, perhaps from 5 different agents, but it's the concept of total customer service that I like.

    But it's hard to come up with a group of agent willing to put aside their ego in a partnership like that.

    But that doesn't mean it's impossible.

    Being a success in this insurance industry is probably next to impossible if you went by statistics of the turnover, that doesn't mean it's not possible though.

    I'm playing the devil's advocate on this one.
     
  5. CHUMPS FROM OXFORD
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    CHUMPS FROM OXFORD Guru

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    Multi-Line. I can't tell you how many clients have called me in the last few decades to purchase auto, home, life, health or investment products, because they had one with me at the time.

    But...a caveat (one of those words that is as much fun to say, as it is to type...sort of like sniffle or mucous. Oh sorry. I didn't mean to digress)...it always helps when you have others in your agency that can be your right hand person after you are established. That's a must.
     
  6. natem2112
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    natem2112 Super Genius

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    Exactly.

    From a marketing standpoint, it is a waste of $$ and resources to try to appeal to everyone...unless you're Heidi Klum in a bikini at a bike rally.

    If anyone here has read any of Troy Korsgaden's books, they will see the same focus, different area's of specializing for different agents.

    FYI, he is a Farmers agent in Cali who has built up huge agency using this approach.

    I'm not envisioning a State Farm when you are one producer who is "Supposed to know it all"...people get hurt that way.

    We all know how many times we've run across a health policy that some P & C agent put some poor family on that didn't cover anything at all, that's the sort of thing that is wrong with a multi-line agency.

    I'm thinking from a team approach.
     
  7. Crabcake Johnny
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    But as an agency owner how do you train someone to run auto, life, health, etc...without being an expert yourself? And why would an established expert in any of those fields want to join an agency and take a cut in commissions?
     
  8. natem2112
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    natem2112 Super Genius

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    Unexperienced producer's need not to apply?

    As far as why an agent would join, I dunno.

    Maybe because of easier prospecting?

    Imagine a book of 600 P & C policies....which is small, you can't tell me that it wouldn't grow at a quick rate if you have a 2 or 3 agents specializing and offering outstanding service...?

    For that matter, what area's do you really need to specialize in for the bulk of business?

    Health Insurance
    Which would consist of individual, group,LTC, Medicare supplements, disability ect.

    Life Insurance
    Which would consist of life, buy/sell arrangements, retirement planning, annuities ect.

    Auto & House
    Which would consist of....auto and house.

    Commercial
    Which would consist of commercial insurance for buildings, business liabilities ect.


    I'm sure someone else can come up with a few more niche products that a full service agency would have to deal with, but you get the idea.


    Who's to say that 2-3 capable agents could take care of those needs?

    Most of House and Auto is service work, which can be handled by a licensed administrative assistant, and supervised by a capable agent.

    Health insurance changes so often that you would need a expert for that.

    Life insurance could be done by someone specializing in retirement planning, anyone can write a term policy, but you need to know your stuff if you have a business owner that needs key person or set up a buy sell arrangement.


    I'm sure that if the proper guidelines were set in place, and there was a clear definition of those responsibilities....that little agency's book of business would grow.

    And as far as a cut in commission, imagine a couple of years done the road you have 1000 policies on the books, you have a huge book of business that is bringing in referrals and new business just based off annual reviews....if you did it right.

    If you didn't do it right, then you would crash and burn.
     
  9. LaffAgent
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    LaffAgent Expert

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    I can answer this one first hand as I am a life agent working within several p&c agencies. It's not for everyone, but when it works it's a win win. Yes, the commissions are lower, but you more than make up for it in volume and efficiency of time. By working with an established p&c agency, you have a huge supply of established clients. You are not some strange life guy calling them, you are another service offered by the agency they are already dealing with. In a nutshell, you spend much less time prospecting and much more time selling.

    If you like the challenge of prospecting and are good at it, do it on your own and make a larger commission per sale. If you prefer spending more of your day working with clients and selling, working with an agency is great.

    I don't think one is any easier, they are just two different ways of approaching the business.
     
  10. natem2112
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    natem2112 Super Genius

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    Right on.

    I'm not very good at all prospecting, I prefer to work with people I have had referred to me, who have called me looking for advice or whatnot.

    I've never been that guy who enjoys getting in the trenches and going through the no's to get that couple of yes's it takes to make money.

    Which is why I think that this is a approach that could work for me, not everyone else though.

    Right now I am looking at a couple of opportunities involving Allstate or Nationwide.

    I am selling my house, relocating a closer to a more urban area. So I'm going to take my time looking these both over carefully, if they don't work out, then I'll continue doing what I have done for the past 4 years.

    Both situations are the same on the surface.

    Allstate agency has about 500 policy holders, as does the Nationwide agency, but that's where the similarities end.

    Allstate apparently allows you to sell your book of business, but have a very constrictive contract, nothing but Allstate products for P & C will be sold in an Allstate agency office.

    The Nationwide office has the option of a few other companies for P & C in addition to Nationwide Insurance, including Hartford, AIG, Travelers and a few others.

    Plus it's the only Nationwide office in a town of 400000, so all business that Nationwide generates would be funneled through this office.

    On the health side, I keep all the appointments I already have. So I would own my L&H book of business.

    Not too sure on the details of who would own the P & C book, most likely Nationwide.

    Anyone who has any experience with either of these companies, I'd REALLY appreciate some input....good and bad.
     
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