The hard market, E&S pressures, an aging workforce, hiring/training, and changes in carrier strategy.
The past few years in the insurance industry have led to both challenges and opportunities for insurance agencies that think and plan strategically. As an example, some agencies have seen premium growth while also seeing a reduction of policies in force (PIF). But was that part of their strategy or just a result of market conditions?
With all these forces coinciding, insurance agencies face the dual challenge of addressing immediate business needs while planning for long-term growth. Many agency owners are so engulfed in daily operations that strategic planning takes a backseat. This oversight can hinder the potential for growth and limit the agency's ability to adapt to market changes.
We asked Eric Kuhen of MarshBerry for insights on innovative strategies that insurance agencies can deploy to break away from the cycle of day-to-day demands and focus on forward-thinking growth. Insurance agencies can create a sustainable, adaptable, and profitable future by implementing these strategies. The following are some of Eric's thoughts on a "new" approach.
"Plan to Plan" and Be Nimble
Strategic growth begins with intentionally setting aside time to create a plan. Establishing dedicated planning sessions helps ensure that long-term objectives are addressed amid daily tasks. Being agile means creating flexible plans that can adjust to unforeseen circumstances. This approach allows agencies to pivot quickly in response to evolving industry trends and client needs.
Set Objectives
Clear objectives provide a roadmap for growth. These objectives should align with the agency's mission and vision, focusing on both short-term wins and long-term success. When formulating objectives, consider factors such as market expansion, customer retention, and technological advancements. Consider strategies like those found in our Benchmarking Statistics to help you with planning. Knowing your numbers are a critical component to successful planning. Ask yourself what the answers are to the following questions:
- What's my firm’s revenue (Not premium)
- What's is my revenue per employee
- Revenue per Producer
- Revenue per Service Professional
Then create a plan around desired numbers or goals, and execute a strategy to achieve those numbers.
Establish Specific and Measurable Goals
Goals mean something if you have a plan to achieve them. However, you have to establish concrete, measurable goals. These goals should be specific, achievable, and time-bound, offering a clear path to achieving the broader objectives. Regularly reviewing and adjusting these goals based on performance metrics ensures alignment with the agency's strategic vision.
Culture and Accountability
A thriving agency culture radiates energy and excitement. Such an environment fosters innovation and productivity among employees. Building a culture of accountability ensures everyone feels responsible for achieving strategic goals. Encourage open communication, transparency, and a shared sense of purpose among team members. Take a look at what we've found to be some of the data on the "Largest Commission Growth Challenges for Agencies" in this chart:
SOURCE: MarshBerry Market Pulse Study, May 2021
The referenced survey was done with agency leaders. It’s easy for leaders to hold others accountable, but who holds you responsible if you're an agency leader? It’s interesting to note that of the agency's hundreds of leaders surveyed, only 4% think leadership is the largest challenge they face when it comes to agency growth.
Develop Current and Future Leaders
Investing in leadership development is critical for sustaining growth. Identifying and nurturing potential leaders within the agency prepares them for future challenges and responsibilities. Offer training, mentorship, and advancement opportunities to cultivate a pipeline of capable leaders. Establish an "education” budget for your team and give them time to enhance their skills.
Get Uncomfortable
Growth often requires stepping outside of one's comfort zones. Challenge your agency to explore new markets, adopt innovative technologies, and redefine traditional practices. Spend time mentoring new producers and send them to sales training that focuses on the insurance industry. Get rid of the " always done it this way” attitude and adopt new ideas for growth. Avoid being stagnant. Agencies can uncover new opportunities and differentiate themselves in a competitive market by pushing boundaries.
Overcoming Roadblocks to Success
Identifying potential roadblocks to growth is vital for developing effective strategies. Common challenges may include market saturation, regulatory changes, and technological disruptions. Proactively addressing these obstacles with strategic foresight positions your agency for sustained success.
Sustainability and Control
A forward-thinking agency takes control of its future rather than being reactive to external forces. Creating a sustainable growth strategy involves balancing profitability with long-term stability. Focus on wealth creation, owner return, and reinvestment to ensure the agency remains a valuable asset.
Insurance agencies' path to strategic growth involves careful planning, adaptability, and a commitment to fostering a dynamic culture. By setting clear objectives, establishing measurable goals, and cultivating leadership, agencies can overcome challenges and seize growth opportunities. This is great if you’re ready to hold your team and yourself accountable.
For insurance agency owners seeking to drive forward-thinking growth, now is the time to implement these strategies and position your agency for a prosperous future.
