While traveling in one of the world’s most beautiful cities, I saw several people camping in doorsteps, trying to stay warm in freezing cold weather.  I did not realize it at the time but the same cold weather, half a world away, had just made me homeless, too.

The difference was that I have insurance, and even more important, I have a dedicated insurance agent, employees, and friends.

Due to extremely cold weather, a fitting attached to my heating system in the attic of my home burst, probably while most of the world was celebrating the beginning of a new year.  Undetected for perhaps a day, my house flooded. Water ruined walls, flooring and furniture.  Luckily, Ashlyn Mehdipour who works for a company called LifeSquire, which helps us with all sorts of things in managing our lives, came to check the house and discovered the leak.  Ashlyn called LifeSquire owner Valerie Riley who dispatched Katie, Liz, Jae, Ally, Allison and Hayder to come help get the mess under control and begin the process of getting professional help.

When LifeSquire called us to tell us what had happened, my first call was to my assistant Ashley Andrews, who can always be relied upon to use great judgement and take care of whatever needs to be done.  She called my agent, Stephen Silver with Synergy Insurance Services, to turn in a claim to Chubb Insurance and she and Stephen headed to my home to help where they remained in a complete disaster area for 12 hours, until at 4 a.m. when the situation was under control.  Ashley also called my contractor and friend, David French of DH French Construction, who immediately began coordinating water remediation and cleanup efforts.

When we got home, 24 hours later, our home was a wreck.  Tired, stunned and overwhelmed, we learned that we could not live in our home for at least six months.  The number of things that must be done to return life to normal is staggering.  The confusion of what to do is endless.  It’s still early in the process, and my wife and I are busy finding a hotel, an apartment, clothes to wear, movers, and cleaners.  We’re talking with adjusters, contractors, and estimators, and we both run businesses we’ve been away from for two weeks, so there is work to be done.  We’re too busy to be emotionally drained – but I know that’s coming too.

I thought I’d share all of this, and how it all turns out, over the next few weeks.  It seems useful to me to learn what our clients go through when disaster strikes.  Perhaps that will help all of us to be better equipped to help them.

For now, here are just a few thoughts; we are tremendously grateful, we had a beautiful home, and thanks to our friends and our terrific insurance company, we will again.  We’re homeless but we’re not on the streets.  We have much to be grateful for.

Having insurance is just an expensive nuisance until you need it.  Having an agent who understands your life and protects it with expertise, so that you have the right kind and amount of insurance, is critical.  Thank goodness we have someone with Stephen’s and Ashley’s dedication instead of an 800 number!  This is the time when great agents make clients for life.   Having people on your team, whether friends, employees, or service companies, who care about you, understand your values and can act in your stead is an unbelievable blessing.  Having a great insurance company like Chubb, with great people like our adjuster Adrian Bond, (who was there almost immediately, who I hear from practically every day, and who knows my cell number when I call), is much more important than the lowest premium.

Next time, I’ll try to describe more of what all this feels like.  For now, I need to go figure out where I’m going to live for the next six months…

In 1938 the world was plunged into a war from which many countries did not survive.  Virtually all were changed forever.  In May 1940 the French stood confidently behind the Maginot Line knowing that, while many would die, their country could not be overrun.  By June of that year their illusions were gone, France was defeated and a vassal state of Nazi Germany.

What happened?  The Maginot Line was built as a modern defensive bulwark against invasion putting to use all that France had learned in World War I.  Unfortunately for them Germany fought a new, and different, war using tanks and airplanes and their Blitzkrieg swept the Third Republic into history.  There is an object lesson in here for insurance companies…

I had dinner with the president of one of the nation’s largest carrier’s personal lines business about a year and a half ago.  He was concerned about the rise of digital insurance companies.  His own business has tens of thousands of smart people saddled with hundreds of legacy systems.  Their “state of the art” has placed them in the front rank of insurance companies for a long time but he knows the next war will be fought differently.

At that time this gentleman was in a small minority of insurance company executives who saw the coming battlefield accurately.  While still in the minority, many of his peers are awakening to their peril.  According to a recent article in “Digital Insurance”, available here:  https://www.dig-in.com/news/two-in-five-insurers-expect-major-turnover-in-the-industry, two in five insurance company leaders recently surveyed “foresee a major turnover at the top of the industry”.  Over a third think that we’ll see “substantially new companies” and 44% say “current players will have to adapt or die”.

Since my dinner with the president I’ve seen several of the country’s largest carriers announce new venture capital arms created to attempt to marry newly created technology to their millions of years of human experience.  That’s progress in the right direction.  But I’ve also heard several senior executives elatedly discussing the decline in venture capital investment in insuretech over the last twelve months.  I’m nick naming these folks Andre’ Maginot after the architect of France’s disaster.

For agency owners who plan to survive and thrive in the future understanding what your allies are thinking and doing is critical.  Now is the time to align with carriers who, while they may not see the future clearly, understand that the battlefield is going to change and are on the cutting edge in getting ready for it.  If the “Digital Insurance” article is to be believed many insurance carriers won’t be here in “five to 10 years”.  It’s incumbent on the agency owner to ask his partner carriers hard questions and be prepared to align his business with those who are working to build the future, not defend the past.

In the last few weeks, I’ve been again making the case that the insurance distribution, and even the insurance manufacturing business, is going to undergo a radical and rapid series of changes in the next several years.  I’ve given examples of how the technology and business models are already in the midst of sea changes, which will fundamentally change the way agents and their employees, not to mention their carrier partners, do business.

I’ve tried to communicate my excitement about the opportunity this brings and give some suggestions as to how to prepare for it.  I’d like to give you a checklist of things to take action on to virtually guarantee your future success.  Everything on this list is here based on my belief that relationship with clients is the key and that having relationships, lots of them, is the key to a long lasting business.

Understand and know your client.  Really know them deeply and not superficially.  Know what makes them tick, what they worry about, what their dreams are.  If you know them that well it will be hard for a digital human or algorithm to displace you.  Quit selling on price!  But understand that low price is table stakes.  You must have that, of course, but you must offer more to survive.  Use technology to make this easier.

Offer your client everything they could possibly need in the way of insurance or financial products.  Make it completely unnecessary for them to ever go anywhere else.  Build, buy, broker or buddy with others to solve all your customer’s needs.  Use technology to expand your capabilities.

Define your business differently.  Most agents operate in a tiny slice of geography.  Use technology to expand your reach.

Control your costs.  Its clear compensation is going to continue to head south.  It’s also obvious that the future requires investment.  You can’t plant a future if you eat your seed corn.  Focus on efficiency now to prepare.  Use technology to drive expenses down.

Increase the number of clients each person in your agency has a relationship with.  By creating multi person relationships you make them stronger.  By using technology to be more efficient you can have more relationships, and those can be at a higher revenue level.  Use technology to help accomplish this.

Work on your business, not just in it.  This is trite I know but it is more critically important than ever before.  You must set aside time to educate yourself and stay on top off, or in front of, coming changes.  Use technology to gather the information you need to stay informed.

Make sure that everyone you employee is selling or marketing all of the time and that their compensation is tied to that.  Service is over.  You can outsource that.  But skilled relators and convincing sales people will be worth even more in the future.  Use the vast amount of technology now available to help you hire smarter, train more efficiently and reward for results.

Align with innovative insurance companies committed to staying at the forefront.  Ignore lip service and look for investment.  Abandon carriers who don’t offer state of the art assistance with Social Media, Service Centers, 100% pass through rates, rapid market adjustments, minimal input rating systems, etc.  If a carrier’s technology isn’t state of the art get rid of them.

Partner with those committed to your success.  Dan Sullivan says you can’t be more successful than your five closest relationships.  Now is the time to partner with others who are focused and driven to win in the future and who are putting their time and money into it.  OAA is one of those companies.

As it always has been, the future is there for the taking.  But many will be taken down instead.  Which kind of agent are you?  Your actions over the next twelve months will begin to give you the answer.  With that thought I wish you a tremendously successful, and Happy, 2018!

The insurance agency has people who sell policies, and those who service customers.  The latter, called CSRs or CSAs, are the backbone of the business. As we know them, CSRs or CSAs are dead men and women walking.  The traditional agency customer service person has no long-term future.

The traditional tasks of providing transaction oriented service to customers like policy changes, endorsements, certificates, claim reporting, and the like, can now be faster, more convenient, and far cheaper by insurance company service centers.  Consider that service centers can react to customer needs 24/7/365, are never sick or on vacation, never on break, tied up on the phone and speak whatever language the customer prefers, among other advantages.  They have no reluctance to ask for additional business, and have made a science of account rounding.  And they do it very cheaply.  Service centers cost agencies about 13% of revenue, compared to about 25% of revenue, for an agency service employee.

If that isn’t convincing enough, please click https://www.youtube.com/watch?v=khr-eWGhTSI to see the CSA of the very near future.  Using computer generated graphics, artificial intelligence, and machine learning “digital humans” can now perform all the tasks of a CSA in an almost indistinguishable way for a human being.  Who needs to pay for office space or manage the issues of human service employees?  Who needs a call center full of telephone operators for that matter?  By 2020, you can have your service people loaded on your laptop.

This is truly amazing.  But, it isn’t the future, it’s now.  These robots can handle complexity far beyond what is required by agency service people.  You can read more about that in a recent “FastCompany” article.

Insurance agency owners may not be the most forward-thinking people, but they already get it.  According to most respondents, to this Safeco’s survey on the future agent, the role of CSR and Producer are merging (read about it here).  That’s because it’s obvious that service will continue to be automated, and the role of agents and agencies will be focused to an increasingly high degree on sales going forward.

This does not mean these valuable people will all be wasted, only that their role’s, and their daily work must change.  They must become proactive nurturers of relationships, instead of processors of transactions.  They must master cross selling to deepen relationships, and they must be competent creators of new business.   I believe those talented, skilled, and experienced people, who make the transition to new roles, have an even bigger future.

Those that do not, will need to begin to think about a career somewhere else.

Last time, I wrote about two facts that call into question the continuing value of insurance agents in the sale of insurance.  One impacts their utility for carriers and the other customer.

To read that blog please click here.

These two facts ought to disturb every agency owner.  But, do they mean the end of the business?

I don’t think so.  The fact that insurance companies can do a better job of predicting loss based on an algorithm rather than an agent’s knowledge isn’t news.  The idea that you can drive growth with advertising is also ancient history.  The fact that an insurance customer will shortly be able to get a quote in nano seconds, by typing their address in a Google search window, doesn’t mean agents are obsolete.

It just means agents must change what they do to continue to create value.

The task bar search and quote capability are exciting to me.  As a commercial insurance agent, it means that I can eliminate 5 to 10 hours of work for myself and a CSR to get a quote done for a prospect.  That will potentially free up hundreds of hours a year!  I can spend that time prospecting for even more customers, or I can spend that time really getting to know the customer.  Isn’t that what relationships that last are built on? Both things will help me make even more money, by helping more people in the future.

I remember 1982, when personal computers first started becoming widespread.  There were many predictions that massive unemployment would be the result.  The outcome was massive productivity gains, followed by rising incomes.  I believe these new technologies offer the promise.

Are agents worthless to insurance companies, in a future where algorithms give better underwriting results?  I think they are worth more.

The biggest value agents have always represented is putting the business on the books.  As agents have more time, due to automation, they can drive even more business, as I describe here, for their carriers.  To pay for the new technologies, carriers will require ever more revenue, and this plays to the agent’s advantage, if she uses the freed time to be an even better prospector and relationship builder.

However, agents who don’t adapt their business models very quickly will find that they have no place in the very near future.  Agents who are slow to change, won’t be just left behind, they’ll be left to die.  For entrepreneurial, risk taking, experiment making, agents we are preparing to enter a gold rush.  For everyone else, the golden days are now officially in the past.  Which kind of agent are you?

I’ve been writing about the future of insurance distribution here for some time. My goal has been to help agency owners think about the future and prepare for it. I’m not interested in doom and gloom, and in fact think the future has more possibility than the past. Putting my money where my mouth is we’ve created two new agencies this year, with different market focuses, and hired 20 new team members.

In the November 6, 2017 issue of the, “Insurance Journal” Chris Burand (who is an industry financial analyst and consultant) writes that insurance companies have now reached the point where they no longer need agents to do their front-end underwriting for them. He points out that carriers, who do not use agents, who spend more on advertising get better growth rates. Not surprising. But what is shocking is that apparently, they get better underwriting results as well.

That is huge.

If agents can’t deliver better underwriting numbers than a computer, and if it’s cheaper and more effective to boost advertising instead of paying agents to sell, why do insurance companies need insurance agents?

I recently saw a demonstration by one of the country’s largest carriers where typing a business address into a search bar, resulted in an instantaneous quote for most of the business’s coverage needs. This is done by applying the same smart underwriting algorithms Burand refers to in his article with software that pulls in the aggregated data collected by third party data providers (in case you don’t know virtually everything about everyone is known, tracked and for sale). This technology is estimated to be mainstream within 24 months.

If customers can get a quote for their complex business insurance needs, why do they need an insurance agent?

Some agents still believe these developments are far in the future. They aren’t. They will be impacting agency operations in the next couple of years.

Is there a future for agents? I’ll look at that next time.

In my blog on September 8, 2017, I talked about the commitment of time required to become an “expert”.  As you may recall I quoted Malcom Gladwell, author of, “Outliers” who says that extensive research shows it requires 10,000 hours of practice to achieve expert status.

Michael Simmons, serial entrepreneur and author of the blog, “The Mission,” has an entirely different take on this.  In fact, he believes that, “deliberate practice may help you in fields that change slowly or not at all, such as music and sports.  It will help you succeed when the future looks like the past, but it’s next to useless in areas that change rapidly, such as technology and business.”

The insurance agency industry is in the midst of rapid change.  No one can deny that.  In fact, according to many observers, more change will occur in the next five years than has in the last fifty.  So, should we be focused on 10,000 hours of practice, or as Simmons says, “10,000 experiments?”

Simmons argues that all successful entrepreneurs, and he cites examples from Edison to Zuckerberg, owe their success to constant tinkering, experimentation and innovation.  He points out that instead of maximizing time, we should be maximizing experiments.

Of course, in mature industries like insurance, and insurance agencies, there is a strong bias against change.  In, “CounterPoint,” an industry magazine, published industry mergers, acquisitions and management consultant MarshBerry pointed out that there has been no investment whatsoever in “insuretech,” by anyone in the insurance distribution (agency) industry.  Up until very recently this was also true with respect to insurance carriers, but they are now rapidly making investments in technology, startups, and other experimenters, because they now believe that experimentation and innovation are increasingly important to their future success.

As our industry rapidly changes, due to technological disruption and fast moving consumer changes, I think that Simmons has an important point for all of us.  In my own company we have adopted an attitude that failing forward (the process of rapid experimentation and declaration of victory when we are either successful, or have learned something valuable even in defeat), is the key to our future success.  I see in our agent partners an increasing willingness to step out of business norms and try new approaches.  I find this encouraging.

If you’re interested in reading more about Mr. Simmons viewpoint you can find it here:


Tyler Asher, the new President of Safeco Insurance Company, made the headline statement in his speech to SIAA’s semiannual meeting in Boston.  His comment was made in the context of a listing of things his company is working on to sustain their growth and prepare for a future insurance market, much different from today’s.

If you just take the statement at face value it makes a lot of sense doesn’t it?  Of course we must all prepare for a bigger future if we want one, and an oak is a great symbol of strength and stability.  I was immediately captivated by the idea.

But, where the analogy breaks down for me is that it takes a long time to grow oak trees, and the future is coming upon us with breathtaking speed.  Do we really have time to grow oak trees?

Then I thought again about Jeff Bezos’s quote I wrote about recently where he says, he is more concerned about what stays the same the next 10 years, than what changes.  I’ve decided that it’s the intersection of Asher and Bezos where we as independent agency owners need to focus.

For example, it’s estimated that 60% of the employees in our industry will retire in the next 7 years, and if you believe “Outliers” author, Malcom Gladwell, it takes at least five years (10,000 hours) to train an expert in anything.  I believe, channeling Bezos, that customer service and person to person selling will be as important to agency success in the future as it is now.  So, how are we going to replace the oak trees (people) in our industry fast enough to secure our future?

I don’t have an answer.  But, it’s an incredibly important question for anyone who plans to continue to make this industry their career in the decade ahead.  In our organization we are creating a streamlined training curriculum coupled with third party courses and old fashioned apprenticeship to meet our needs for new blood.  Frankly, it’s expensive to do this.  But the only other options are to hire other’s problems (which is getting harder and more expensive to do) or go out of business.

The need to invest in new people comes while commission compression and new competition, in the form of online sellers, are beginning to stress some agency income statements.  As Tyler Asher points out, you must prepare for the future if you want one.  Viewed in this way, the spending on new employees is an investment, not a cost, and the promise of the future is a profitable business built for the long term.

As virtually everyone in the insurance industry knows, insurance carriers have been taking a bath in both commercial and personal auto, during the last year.  In several recent meetings I’ve attended, the message that rate increases are going to continue into the foreseeable future, has been loud and clear.

While losses are still developing (and growing worse) for 2016, the early results for 2017 do not look better.  Depending on which set of statistics you review, combined ratios for the industry are running somewhere between 107% to 111%.  Given that carriers need them to be 92-95% or lower, to make a profit, you can easily see the premium increases must continue.  In fact, one analyst opined that we need 25% to get out of the hole, and even with double-digit increases that we should expect to see, combined ratios continue to run 103% or greater for at least the next three years.

The drivers of these results are: increased frequency due to low gas prices, distracted driving (texting), and a dramatically increasing cost of repair (those back up cameras and computerized cars are expensive to fix).  It doesn’t look like there is much in those cost drivers that are likely to change.

As agents we experience and share in our customer’s pain. We certainly have a difficult task ahead to continue to explain these realities to frustrated or angry customers. Profit sharing is taking a hit for many agencies, too.  That’s the pain part.

We also have a lot of opportunity because of the auto market’s condition.  In the first place, agents are all getting a pay increase in the form of higher commissions, and smart agents are locking in customer loyalty by getting ahead of the PR battle and helping customers understand and cope with what’s happening.  Now is a great time to show how you’re different, with great, personalized, advice for each customer.  For independent agents, it’s time to increase market share against captives with greater choices to offer (and the stats bear out that this is happening).

So, auto market conditions are a mixed blessing, but on balance, good for good agents!  The one caveat I offer is, with increased commission income on existing business, comes the risk that prospecting for new business will get ignored and poor retention practices will get camouflaged.  I’ve seen this a lot over the years. It bears remembering, in our industry what goes up, doesn’t forever, it comes back down too.  Also, if you’re not growing PIF, you’re not really growing.

In my last blog, I quoted Jeff Bezos, CEO of Amazon, regarding the future. Taking a cue from him, I expressed great optimism in the future of the insurance agency business! And I’m putting my resources behind that belief by investing in brand new insurance agencies: 25 so far this year.

As optimistic as I am, I also strongly believe that agents, and agencies, will need to be much different over the next decade than they are today to survive and thrive. I’ve written here a lot about what I think that looks like (please feel free to use the search feature for blogs on this or other topics). Safeco Insurance Company has recently released a white paper based on their research about what it will take to be successful as an agent in the future. It’s available for download here:

Read Safeco Insurance’s report: What it Takes to be an Agent for the Future, by clicking on this link.

Here are some interesting, and salient, points raised in the report:

– The responsibilities of producers and CSR’s are merging. CSR’s will be less involved in routine servicing and more involved in selling (which implies a different set of skills will be needed).
-CSR’s will need to be able to sell multiple lines of business and answer questions without passing a customer to someone else.
-Agents will need to embrace online account management and self-service (two of the top demands of millennial customers).
-Owners need to learn how to effectively hire and manage millennial employees (58% of all new agency hires are millennials).
-A growth focus will be required. Agencies that define themselves as “service” organizations as compared to “sales” organizations will have more difficulty.
-Agents are embracing technology: 60% use e-sign, 61% provide online quotes and 60% text with clients.
-Technology is critical to hiring millennials (81% say the kind of technology offered by an employer affects their decision making according to a Dell study).
-Agents need to rethink their position on after hours and weekend availability as only 56% of agents plan to offer what customers are demanding.
-17% of the U.S. population are Hispanic and this segment is growing yet only 14% IA’s surveyed by Safeco believed that this growth could have an impact on their business.

There is a lot more and I encourage you to read the full report. More importantly, though, I encourage you to think about how the business and consumer are changing and the strategies you want to employ, in order to continue your success into the future. No agent has to do everything, and none of us has to do it all at once. The key is to pick one area to improve, make it a focus, add it to your business and then pick the next one. What is your first step into the future going to be?