The Big “I” 2020 Best Practices Update is out with timely insights to help agencies successfully maneuver through the business impacts of the pandemic. Each year this joint report from the Independent Insurance Agents & Brokers of America (IIABA) and Reagan Consulting provides financial and operational insights based on the best practices from hundreds of leading agencies.
Independent agencies and COVID-19
In addition to the report’s anticipated benchmarking, the 2020 study includes an extensive section on how agencies can "re:think" their business strategies in the face of COVID-19 and beyond.
At the start of 2020 independent agencies were seeing their fastest rate of growth in a decade. That all changed in March. Now, many agencies are “just trying to hold their own and avoid giving up their pre-COVID-19 positions.” However, many best practices agencies are using the pandemic’s disruption to rethink “business as usual” and find new ways forward. This proactive, innovative mindset can help agencies weather the current crisis and create a path for success long after it has passed.
Agencies can benefit from evaluating their business approach in four areas:
1. Agency finances
If solid financial practices are key in the best of times, “the importance is magnified in times of stress and uncertainty like the COVID-19 pandemic.” The report notes that now is the time to examine cash flow, debt and expense management, and financial planning. Best-practices agencies are taking the opportunity to:
- Protect their balance sheet by tightening their account receivables practices, considering smart debt to enable strategic growth, and creating a financial reserve.
- Get creative with financial forecasting by planning for a variety of potential financial situations. Planning for best, worst, and most likely cases ensures agencies can quickly respond as situations develop.
- Rethink “essential” expenses such as office space to client entertainment—expenses that agencies once took for granted prior to the pandemic. Now’s the time to look at everything from office size to travel and advertising.
2. Management, culture, and staffing
The report notes that virtually overnight the question changed for most businesses from "should we embrace remote work?" to "how do we do remote work successfully?” To make a successful shift to remote work, independent agencies should look for ways to:
- Be intentional about culture and communication. Reinforce shared values, keep employees connected to company goals, and celebrate wins. Encourage interaction with regular team meetings, use surveys to gather candid feedback, and ensure employees have channels for one-on-one discussions. Agencies should also invest in tools that facilitate real-time communication, like Slack and Teams.
- Consider the benefits of a virtual workforce. Agencies willing to embrace remote working are finding they now have “access to a broader, deeper talent pool.”
- Support productivity and accountability without micromanaging. Equip producers with the right tools and resources for prospecting and address issues quickly.
3. Book of business
Independent agencies can benefit from taking a close look at their client base and growth drivers to identify opportunities and potential pitfalls in their book of business. An action plan should include:
- Industry and line-of-business analyses. A deep dive into these areas can highlight “exposures in industries that are significantly affected by COVID-19” or a lack of diversity in lines of business that can impact an agency’s profitability.
- Individual account reviews. Looking at the profitability of individual accounts can expose their true ROI while informing an agency’s big-picture business strategy.
- Connect regularly with clients and use a Customer Relationship Management (CRM) system to track efforts. Client communication is more important than ever. It takes a dedicated effort. Agencies should use, or implement, a CRM system to monitor interactions and results.
4. Rethinking the future
The events of this year have created historic disruptions for businesses, but as the report notes, “insurance agencies are resilient businesses and will continue to be incredibly important players in the U.S. economy for the foreseeable future.” Successful agencies will keep their eye on these trends:
- The increasing emphasis on data, artificial intelligence, and technology
- A need for visionary leadership to navigate the changing business landscape
However, there are some key areas that the report projects will remain central to the success of independent agencies during the next decade:
- Insurance is driven by personal relationships. Clients may want more digital options to management business, but they also still "want a real human they trust and relate to.”
- A focus on an agency’s four key constituents: clients, staff, carrier partners, and their community.
- A growth mindset.
Vertafore celebrates Best Practices Agencies
Vertafore is a proud sponsor of the Best Practices Study. This important industry resource is based on the performance of nearly 270 participating agencies selected from more than 1,000 nominated agencies. From this elite group, each year the report identifies the best performers. This year, we’re thrilled to celebrate the following Vertafore customers for being the best of the best in their revenue categories:
- Gillman Insurance Problem Solvers (revenue $1.25M – $2.5M)
- Holman and Company (revenue $2.5M – $5M)
- Blanchard & Calhoun Insurance Agency (revenue $5M – $10M)
- York International Agency (revenue $10M – $25M)
- Parker, Smith & Feek (revenue $25M+)
Congratulations to these and all IIABA Best Practice Agencies! The full 2020 Best Practices Update is available to Big “I” member agencies.