Soft Market or Soft Economy

Let's talk about what's keeping you up at night.

"MarketScout: P&C Rates Rise for Second Straight Month in December"

"Marsh: The Two Speed Insurance Market"

"Moody's: Measured Rate Increases to Continue, but No Hard Market"

"Berkley: Market is Hardening; Good Companies Can Seize Opportunities"

"Best: 2012 Insurer Market a Mixed Bag"

Is the soft market finally turning? 

If you've been watching the industry press for the last couple of months, you may be optimistically confused.  Most sources seem to see signs of price increases, but the extent of the shift and the timing are uncertain, at best. Selected classes and lines of business look better than others. So when you ask, "Is the soft market finally going to give way to a hard market?" the answer is going to be, "It depends."

But, so what? What will that mean for your customer? What will it mean for your business?

Regardless of how the market shifts – hard or soft – your success depends on the effectiveness of your sales organization, your skill, your expertise, your value-add, your competitive advantage. And if your competitive advantage isn’t clear, a market shift won’t help you attract more customers and retain the ones you have.

Competition is the new normal. If you’ve successfully grown your business over the last few years then you’ve had to sell through the soft market, around the soft market, in spite of the soft market.

Regardless of how high prices go, for your customer, it's still about finding the best protection for the best price. Since the consumer has learned so well to shop for the lowest price, you’ll work hard to try to keep the cost down in order to retain the business.  And if the cost of insurance goes up faster than the state of the economy, the trade-off for the insurance buyer may be coverage.

When the insurance company describes their pricing structure and willingness to underwrite in terms of "fear and greed," as in the Berkley article, it's easy to see why the typical insurance buyer doesn't understand why his price soars or drops regardless of whether there have been claims or not.

You have to understand where the market is. You have to be able to offer cost-effective insurance coverage to protect your customers from financial loss. And you have to be able to bring appropriate customers for the carriers you represent. You can’t control the insurance market any more than you can control the economy.

So what if the market is getting harder? Will you be sleeping better because of it, or in spite of it?

Customer Satisfaction in the Insurance Industry

According to NU Online News Service, December 15^th, the most recent American Customer Satisfaction Index shows property and casualty companies get higher satisfaction scores than life and health insurers.  The survey lists scores for the five large direct writers, i.e., State, Farm, GEICO, Progressive, Allstate and Farmers. The factors cited for causing better results in the P&C companies: lower premiums and, get this, fewer customer interactions. 

So, in order to keep their customers satisfied, large direct-writing insurance companies should strive to keep customer contact to a minimum. Fewer contacts mean fewer conflicts. Less frustration.

Well, I guess that makes sense. Have you tried to do business with a large company (of any kind) lately? Automated voice trees that delay and confuse. Sales and customer service representatives reading from scripts. No one with the knowledge or authority to make a decision.

Seems to me that the survey just emphasizes the value added by the independent insurance agent. And the huge competitive advantage this gives you if your sales and service models have an emphasis on personalized, professional relationship building.  

Retention & New Sales

Let's talk about what's keeping you up at night.

We need more new sales. Retention has been better than expected, so we stayed almost flat, revenue-wise, but new sales are harder than ever to make. No one wants to change and there are no new accounts. How do we get back on a positive growth path?

Start by asking yourself a few questions. The answers can tell you what you're doing right and what you could do better.

• Why did your toughest account renew their account?
• Why did you lose that great account?
• Why did your newest account move their insurance to your agency?

If you can answer these questions, thoroughly and analytically, then you know what your competitive advantage is. And that's the key to sales success - leveraging those things that you do better than the competition. If you can't answer those questions, then your sales team - in fact your entire business - is at a disadvantage. 

Business and personal insurance buyers have a lot of choices. And there is always someone who is willing to provide a lower price. When you can demonstrate that the lower price comes with a cost and you can provide added value in terms of something important to the customer, you have something to sell.

For growth and profitability, it's all about competitive advantage. Make sure every member of your team is able to talk convincingly about why customers buy from you and stay with you.

If you don't know what sets you apart from your competition - if you can't answer those critical questions - let's have a conversation. 

Planning for A Tough Year Ahead?

Let's talk about what's keeping you up at night.

2011 has not been a good year. Business is slow. Customers and carriers are not optimistic about the future. And it looks like more of the same on the horizon. How do I get ready for the third tough year in a row?

Don’t!  Get ready for a better year in 2012! It can be, but it’s up to you. Your carriers won’t make it so. And the stock market won’t make it so. Certainly the government won’t make it so. It will be up to you. The big question you’ll need to ask yourself – and your team: “What can we do differently in 2012?

As November 1st approaches, start by asking:  “What can we do in the next 60 days to make a positive difference?”  60 days doesn’t seem like a long time – and it isn’t. If you could do one or two things during the next two months, in amongst all the usual madness of holidays and year-end, what would it be? One change – big or small – that will make you or your business more productive. Maybe the thing you decide to do is to stop doing something unproductive.

Use the remainder of this year to position your business for a productive next year. If you’ve already completed your planning cycle for next year, take another look at both where you’ve been and where you want to go. If you’ve given up on planning because it all seems so pointless, maybe that’s the one thing you really need to do.

For a powerful start to the new year, identify – and execute – on one or two things you can do to end the current year on a positive note.

More about finding and keeping great employees.

People do things for their own reason. I never run out of opportunities to remind myself and others that this is true. Frustrated business owners tell me, "My staff just doesn't care."  The unstated part of that is "...about my business the way I care about my business."  Well, of course not. But there are things they care about. Plugging into those things is how you keep people engaged. I'm not talking about personal things. Most employees don't expect the boss to try to solve their personal problems. I am talking about the kind of things that make work feel like accomplishment. From BNET, here's a neat little story that makes a BIG point about what motivates people. 

Planning for Improvement

If you and your team are hunkered down waiting for the market or the economy to turn around, you may have a long wait. Now is the time to look for opportunities. You can have your best year ever! 

Focus! Focus! Focus!  Plans often fail because too many issues are addressed at one time, not because there is anything inherently wrong with them. How does the coyote eat the buffalo? One bite at a time! There is always a lot to do. So to ensure that you and your team stay focused, identify those things that are imperative to fulfilling the vision of your business. Ask, “What conditions must exist for us to be who and where we want to be?” Think in terms of necessary and sufficient. Concentrate your efforts on the most important issues or Critical Success Factors. Tackling your goals one at a time, you will find your business plans much easier to achieve. 

For most businesses, Critical Success Factors center around people and product. What about your organization – your staff – is critical to your success? What must they be able to do well to ensure your competitive advantage? What about your customers is critical to your success? What are their expectations and how can you exceed them? What about your product/service is critical to your success?  If insurance is just another commodity, what sets you apart? A clear understanding of what is most important makes it possible to set realistic, achievable, smarter goals.

Success breeds success. Improvement generates more improvement. With every achieved goal, your (and your team’s) confidence grows. These incremental successes will inspire and encourage you and your team. You have the knowledge, experience, drive and enthusiasm to achieve your vision. You can have your best year ever!

Finding & Keeping Great Employees

Is it a buyer’s market for employers when unemployment is in the double-digits?  Is finding and keeping the best employees easier when so many people are feeling vulnerable? No. And no. 

Challenge the assumptions. Now more than ever, it’s important to take good care of your employees. You might be working with fewer numbers, so your team needs to cover more territory. If somebody leaves, you want it to be the right people who stay. 

At bare minimum, to engage your employees in your business, you need to ensure your employees have meaningful work to do, and a vision for how that work fits into their world in a meaningful way. Good employees also need the tools to do the job, which includes more than just hardware and software. And good employees expect and deserve respect. 

Of course, you need to pay a fair wage. Don’t assume that you’ll be able to hire quality people for below-market salaries. Don't expect your best employees to help you achieve your financial goals if you're unwilling to help them achieve theirs. It's disrespectful. But it’s not just about the money. Take this fun quiz to discover what is important to your employees. 

Don’t get lazy.  If you are in a position to hire, does this seeming employee glut turn into a bonanza of qualified help for you? No. And no. The best and the brightest were not the ones downsized. So it will still be challenging to find the best qualified people the personality and skill sets to fit into your culture. If you are looking to hire, you’re going to have to put forth the same sincere and diligent effort you always have to find the right individuals.

Again, challenge the assumptions. Individuals who have performed marginally in other organizations will most likely be marginal in yours. Assuming retreads have the experience and job knowledge you need is a mistake. Now may be the right time to look outside the industry for your next producer or account manager. “Hire for fit and train for job knowledge,” is solid hiring advice. All the insurance knowledge in the world doesn’t ensure sales from someone without the fire to sell, or quality customer service without a customer orientation. Sales and customer service are required in most industries. So you may be able to take advantage of the fact that there are good people looking for work. It’s not a buyer’s market, though. Finding and keeping great employees presents the same challenges – and provides the same rewards – regardless of the market or the economy.