October 3rd- 5th was SIAA’s semiannual event in Boston at the Boston Marriott Copley Place. The event brought in SIAA members from across the nation. Team members Tony Caldwell, Jenn Fabian, and LeAnn Sanderson, all had a chance to represent OAA at the event.

Overall, OAA was able to witness firsthand that carriers value the relationship between them and SIAA members and look to us to be their flagship partner. Secondly, OAA is on the cutting edge of all the alliance members in the US.

Tony Caldwell had the chance to tour Liberty Mutual’s Solaria Labs and WeWork. SIAA is Liberty Mutual’s first $1 Billion dollar partner. Liberty Mutual Innovation is the “innovation hub of Liberty Mutual Insurance, integrating several initiatives and business teams, including Consumer Markets, Information Technology, and Strategic Ventures”.

This space allows LM team members to think like a start-up instead of a century-year old company (read more), testing new products and services. Caldwell mentioned in an OAA team huddle that he was impressed with LM’s commitment to creating an atmosphere that celebrates trial and error. A few of the photos are below!

Friday night was the Awards and Presentation Dinner. To put a cherry on top a great event, OAA’s Creative team was surprised by accepting the National Newsletter Contest 1st place prize. The creative team of Samantha Cassidy and LeAnn Sanderson have worked hard to ensure that OAA’s newsletter is always packed with engaging content. Congratulations!

Thank you SIAA for an amazing time. Heading toward the end of the year and planning for 2019, the OAA Team is feeling full of gratitude, and also very invigorated for what’s up ahead. Check in on the OAA News page at http://oaaonline.net/news/ to keep updated with the latest on what’s happening at OAA.


In the insurance business, agents sell a lot of things. Distressingly, many sell a cheap price and others sell things like, “service” or “relationship.” Regardless of how you close deals, and what convinced your prospect to become your customer, the most important thing bought or sold is the promise to make someone whole after a “claim” occurs.

What is a claim? For those of us in the business that get frequent calls about wrecks, fires, floods and other kinds of “occurrences,” it is all too easy to think of them as paperwork, losses, problems, extra work or something similar. Something to be “processed.”

To our clients they are huge inconveniences. Disasters. Personal tragedy.

When a claim occurs our client’s lives are disrupted, and often permanently changed. This can mean large, unplanned for, and potentially personally difficult financial costs. It can mean permanent dislocation, or life trajectory changes, or massive pain and suffering. Claims are always a big deal to those they happen to.

My home flooded on New Year’s Eve. At the beginning, it was bewildering to move unexpectedly out of our home into temporary quarters. Then it was maddening as contractors and others made the damage worse, and frustrating and emotionally unsettling as every aspect of our lives from getting dressed and going to work, to what we would do in our free time, suddenly changed. What followed was a period of nothing happening to get our lives back. That made us feel angry. Now we are faced with moving back into our home which fills us with dread at all the work ahead.
Our insurance company has paid the bills and been easy to work with, a not altogether commonplace victory. We’ve heard regularly from our adjuster, not just about money, but about how we are doing. They are building a raving fan customer for life, while fulfilling the promise they made when they bound coverage.

Our agent hasn’t had to even get involved, but how could they have been? They could have called regularly to check on how things were progressing, how we were getting along, asking if we needed recommendations on anything. In short, they could have reached out and, instead of just talking about “service” or “relationship,” demonstrated it, and they would have built a raving fan customer for life.

What do you do when a client has a “claim”?

About five years ago, every insurance company we represent suddenly got focused on something besides new business flow.  They began focusing on something they always knew about.  They knew it was important, but seemingly not as important as sales.  Then I guess they all went to a seminar, did the math, and discovered how valuable focusing on retention is.  Now, I don’t have a single carrier meeting where that number isn’t discussed, in detail.

It’s just as important for agents to focus on and it’s the best way I know of to make a lot of easy money.

Let’s consider an agency with $250,000 of annual commission income, and an industry average retention of 80%.  This agency is losing $50,000 of income every year!  Just to stay even they must have an incredible new business machine.

What if they could move their retention from 80% to 90%?  Obviously, changing this number would increase agency revenue by $25,000 per year, and agency value tremendously.

This was our challenge a year ago with an agency we acquired.  We aren’t there yet, but in one year, we’ve gotten to 89%.  Here’s how we did it:

  1. We focused on it.  That number is reported every month and everyone on our team looks at it.  There is an old business saying that, “what gets reported gets done.”  It’s true.
  2. We did a coverage review on every customer. This has all kinds of benefits, but it drives retention too.
  3. We shopped every customer’s insurance and we do it every year. Let me ask you, “what the hell good is an independent agent that acts like a captive?”  Captives only have one product to offer.  A huge part of the IA value proposition is choice.  But, if you don’t offer that, you’ve thrown away a competitive advantage.
  4. We quit writing monoline business. This business has the highest acquisition cost, the highest turnover, and the lowest profitability.  Why would you do it?  And, if you are going to do the second most important thing to drive retention up (cross sell) you need to lock the door on customers first.  Don’t write monoline!
  5. We aggressively cross sell. Our agency goal is 2.5 policies per customer.  We aren’t there yet, but we measure and report this number every month. Every study since the beginning of time shows that retention goes up when the policy per customer count does.
  6. We increased communication. We contact customers about something every month.  We don’t let them forget us.  The side benefit is there is a much-improved chance they’ll think of us when they decide they need some other kind of insurance.

What are you doing to drive retention, agency income, and value in your business?

I’ve written about the critical importance of cash flow, and the difference between that, and profits, before. These two things, and understanding them, are critical to the new business’s survival.

Critical to its continued growth is a healthy balance sheet! To revisit Accounting 101, the balance sheet is the other half of any business’s financial statement. Their report shows the assets of the business, its liabilities, and how much equity the business has.

Obviously, it’s important to have more assets than liabilities at all times, but there are a few other things every business owner should measure every month:

– Quick Ratio. This is the ratio of current assets to liabilities. The ratio should always be greater than one. If it isn’t insolvency on the horizon, you should be taking immediate action to collect or generate cash! Target a ratio of 1.25.

– Days of Working Capital. This is simply how much cash you have (some include short term receivables, but I don’t recommend this as you may not be able to collect when you need to) divided by your monthly overhead. In other words, without taking expense reduction measures, how long can you stay alive if you don’t receive the income you expect in any given month? Everyone has a different risk tolerance, and new businesses never have enough cash, but I recommend a minimum of 30 days. You’ll sleep better with 60 or more.

– Debt Coverage Ratio. When you apply for a loan, your banker is going to calculate this before he gives you an answer. If you want the answer to be yes, make sure you have free cash flow (not profit) for the last 12 months, and preferably 36, equal to 1.25 times the proposed debt service.

If you have Agency Bill businesses, or other receivables, I recommend 25% for 30-60 days, 35% for 60-90, and 50% for anything uncollected between 90 and 120 days. If you have receivables older than that you’re kidding yourself if you think you will ever collect. Write them off.

I find a shocking number of new businesses owner’s don’t have a balance sheet or don’t understand what it means. If that’s you, find an accountant to help you, and explain to you what you’re looking at and show you how to do these simple calculations. They will keep you safe and keep you growing!

“We choose to go to the Moon in this decade and do the other things, not because they are easy, but because they are hard; because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one we intend to win…”
– John F. Kennedy


Moonshot thinking changes the world. By setting our minds to seemingly impossible ideas – much like landing on the moon – we push ourselves to our greatest potential, break new ground, and open a wealth of opportunities for ourselves and others. We are proud to say that OAA (our team members, members, insurance company partners, incredible entrepreneur partners, and SIAA) is comprised of individuals dedicated to audacious goals – we hope you all will join us at the 2018 Success Conference and Celebration, as we reach new heights together.

Mark your calendars for May 16th, 2018, to attend one of the largest gatherings of independent agencies in the region! The conference will take place at the Embassey Suites by Hilton in Norman, OK. You will have the opportunity to sit down with representatives from Safeco, Travelers, The Hartford, Mainstreet America, Metlife, OGA, and more. We look forward to seeing you as we celebrate the success of another year, as millions and millions of dollars go to OAA members.  Stay tuned for registration details.  

This Wednesday, OAA hosted Foundation Academy IV, at OAA’s Training Center. Ten new members joined us in discussing all the ways OAA and its partner carriers, along with SIAA, will help these new agents become Agents of the Future. OAA is here to support all our members, and ensure they stay “ahead of the curve” in the insurance industry. Whether that be taking advantage of up-and-coming technologies, maintaining strong partnerships with carriers, or keeping open lines of communication between all agencies, OAA is here to develop and cultivate success for years to come.

Truly, our experience, team and influence in the industry cannot be matched by any other partner in the nation. We are so excited that these new agents chose to join OAA, and are witnesses to the enormous potential the future holds for us all, individually and as a community. We are looking forward to the next Foundation Academy!



One of the things that always provides amusement, for older people, is to hear children plan to do something difficult and complicated.  Their plans are always simple and underestimate the difficulty and time required.  This is because children are natural optimists!

I find that insurance agency entrepreneurs are also optimists, and occasionally share the lack of understanding of the difficulty of doing things that our younger selves did.  This is a tremendous advantage for them because it allows them to try things, and become successful, when others are fearful.

For example, the successful personal lines producer, who sees greater opportunity and income in commercial lines, often underestimates the complexity of the business, and thus, the time required to master it.  The good news is that mastery isn’t required for success!  As I noted last time, mastery seems to take about 10,000 hours of practice, which can take many years.

Proficiency is required to achieve success.  While less costly in time and money to obtain, it isn’t cheap or inconsequential.  Proficiency can be defined as, “a high degree of competence or skill.”  To acquire proficiency in anything requires effort.

I spoke to a highly intelligent and driven young man, several years ago, who wanted to immediately begin his career in insurance as an agency owner specializing in commercial insurance.  I pointed out that all professionals require a great deal of training and usually a lengthy form of apprenticeship before being able to competently work in their field.  As examples, I pointed out doctors, lawyers, and engineers, all of whom study for years, and then work under close supervision for many more years before working independently.  Only when they achieve proficiency are they free to go their own way.

In my experience, commercial insurance is similar.  A talented person can make a living in commercial insurance from the beginning, even though they aren’t skilled or proficient, just as a young doctor can earn a living doing simple tasks while learning the complex.  The difference is that the doctor is supervised in his lengthy training by other doctors whereas the young insurance agency owner may only be supervised by his unsuspecting customer!

Our business is a profession, and requires that we exercise due care to calibrate our business to our knowledge and ability, not to do harm to our customers through unnecessary mistakes.  As we gain proficiency we can work on increasingly complex risks, but we do our own development, and our customer’s finances harm, when we work outside our own proficiency.

Expertise in the field of commercial insurance takes at least 10,000 hours to develop.  Proficiency in a limited area of the field may only take a few dozen hours.  Luckily, we can build an income, and a business, by being proficient in limited ways until we are able to become expert in many!

I can remember watching TV commercials as a kid featuring Ron Popeil and his amazing kitchen gadgets, and commercials for Ginsu knives with fascination.  Not only were the products amazing they also seemed a bit unbelievable.  They did so many things for so little money.

Of course other people were suspicious too and that was why these products always offered “free gifts”.  The free items were there to enhance the already incredible value.  But they were also there for an even more important reason: risk reversal.

One of the problems all marketers face is how to get potential customers to take the risk to buy the products they are selling.  People don’t want to waste their money and they are skeptical.  One of the smart marketers deal with this is to reverse the perceived risk by not only offering money back guarantees but actually making people better off, even if they don’t like their purchase, with items of value they get to keep.  Thus, “if you don’t like it return it for a full refund – but keep the knives as our gift” tag line of all those early TV commercials.

This is powerful!  The question is how can insurance agency owners make use of it?  After all rebating premium, or giving gifts worth very much, is usually against the law.

One way to do this is to develop a basket of services, or inexpensive goods, that you provide to new customers that come with every new account.  Even if the customer is unhappy later they get to keep those things.  I’ve seen this work as a real value add in agencies.  You don’t have to spend a lot of money to put things like iTunes gift cards, electronic devices, vouchers for restaurant meals and similar things in your basket.  Promote its value and let people know that even if they try your agency and don’t like the experience they can “keep the knives”.

There are lots of ways to reverse risk, and it’s still an important psychological marketing tool even to today’s sophisticated consumers.  What ways can you think of to reverse risk?

When I started in the insurance business, I needed to create income.  All of my career since then, priority one, has been to create income!  The problem is always forecasting and planning.  It’s very hard to try to manage “sales” because when you do that you’re trying to manage the small end of the sales funnel.  The simple way is to manage what goes into the top of the sales funnel, and that’s activity.

What I do is determine three facts first.  They are:  what is my average premium, what is my average commission amount, and what is my closing (or “hit”) ratio.  If I know these three facts, I can back into a sales activity rate that will give me the results I need.

Let’s start with average premium.  This is easy to obtain from your management system or, if you’re new, your marketing reps.  Average commissions are obtained the same way.  Your closing rate you need to determine by looking at the number of quotes you have done (or your producer has) and divide that by the number of sales made.

What we do with these facts to determine activity needed for a given result works like this:

  • Determine Income Needed
  • Divide income goal by average commission amount
  • Divide that result by closing rate

So, if we need to generate $50,000 and our average commission per account is $400, we need 125 sales.  If our closing rate is 30%, we need 417 prospects who will let us quote.  As a manager, I can focus myself or my team members on finding 417 prospects to quote.  I can manage the “activity” required to get those 417 whether it is cold calling, asking for referrals, a mail program, or something else.  I can ignore the peaks and valleys of sales and just focus on generating the activity required to get in front of 417 people.

Managing activity is much easier than managing sales.  You can establish weekly or monthly targets for the activity and measure actual results against it.  If you don’t see the necessary level of activity, you can adjust easily and much earlier than if you wait to measure sales.  This helps you get and stay on track to reach your goals and gives you the ability to make any needed corrections more quickly.