As the economy and business environments move out of the pandemic, what kind of changes should insurance agency owners invest in to support agency growth? According to recent research, there are four critical areas to focus on.
The past few years of pandemic conditions have affected insurance agencies in different ways. While personal lines saw more muted impacts from COVID, commercial and specialty lines were more vulnerable when their clients experienced instability.
Overall, as small businesses themselves, many agencies had to change their business models to adapt to pandemic realities. Offices went remote with employees working from home. Virtual operations became the norm, and new and existing technology helped agencies respond to client needs.
As the economy enters recovery mode and the business environment moves closer to normal, agency owners are taking stock of operational changes they made over the past few years. Many are responding to new client expectations around agent accessibility and customer service. Change demands change, and what agencies learned during the pandemic will launch valuable innovations that can strengthen and build agencies in 2022.
So what kind of changes should insurance agency owners invest in this year to support agency growth? According to recent research, there are four critical areas to focus on: technology, hiring, marketing and acquisition.
Technology for Internal Operations and Client Outreach
According to a recent study by Deloitte, investment in digital technology can offer improved customer service and help everyone in an agency work more efficiently. When the world went virtual in 2020, agencies adopted technologies that allowed virtual “face-to-face” interaction through video conferencing, providing the human touch when in-person meetings weren’t possible. Software that offered digital recording of customer interactions and account changes also made the virtual transition easier.
AMS and CRM systems are critical tools for both office-based and remote workers. If these systems are outdated, upgrading them will improve prospecting, sales, marketing and operations. Such upgrades will increase agency productivity and, ultimately, agency value.
In today’s business environment, agency responsiveness and client relationships are critical for success. New client-centered apps and platforms are allowing personalized, timely service and 24/7 accessibility. These technologies supplement and enhance the traditional in-person client outreach that agencies were built on, and reinforce (but never replace) personal relationships. An investment in technology and the training needed to operate new systems can really pay off for your agency.
Attracting and Retaining Talent
People are the lifeblood of any agency, a fact that was reinforced in the pandemic when personal dedication and creativity saved the day for many agencies. The “Great Resignation” that our country is currently experiencing, however, is very real, and many employees are considering a job change or retirement, a fact that can disrupt and even derail agency operations.
In today’s highly competitive job market, insurance agency owners are investing in ways to retain existing staff and connect with prospective employees. According to a recent article in Insurance Journal, “As the Great Resignation continues, agents are upping their recruiting and retention game. Thirty-six percent are using new channels to connect with prospective employees; nearly 29% have enhanced their compensation and benefits packages; and about 18% have expanded their talent search beyond their immediate geographic region.”
It’s less costly to retain talent you know and trust than to search for, hire and train new people.
To keep existing employees happy, ongoing investment in training will increase staff tech fluency and expand their skill sets. Since COVID began, employees have become accustomed to working remotely, and many now expect to maintain at least a hybrid work arrangement. Remaining open to intangible benefits like remote offices, flexible work schedules, and other perks can make your agency more attractive to both current employees and prospects.
We’ve also learned that producers can excel anywhere if they have access to up-to-date technology and a skilled, trained back office. Embracing remote employment, where people can live almost anywhere and still be part of an agency’s team, opens the geographic candidate pool for agencies and helps retain existing staff who might be considering relocation. Many insurance agency owners have reached out beyond their immediate geographic area for recruitment, and are considering candidates who work untraditional hours, from remote locations, and/or have little or no insurance industry experience (but are trainable).
Finally, if you’ve decided to add new product lines or just don’t have certain expertise in-house, you can often get the skills you need by hiring part-time talent or freelance consultants. Skills don’t always have to come from full-time employees.
According to a new survey from Aon Programs, the pandemic has modified marketing approaches and investments for insurance agencies, their products and services. Webinars and virtual events that were so important during the pandemic are being replaced by video communications, social media marketing, and attention to website SEO. More traditional marketing tools like email and direct mail are making a comeback, and influencer marketing and audio/podcasts are also growing in popularity.
While many of these marketing tactics are relatively inexpensive to execute, time and money should be invested upfront in the content you’ll share. By clearly defining your agency’s value proposition, you can stand out from the competition. While most agencies promote their commitment to clients, authenticity, responsiveness and innovation, insurance agencies that dig deeper and explain the points of difference that distinguish their agency from the crowd can truly stand out. Investing in a relationship with a marketing expert can help an agency effectively tell its story and differentiate itself from others in the market.
Expansion and Acquisition
Still a major industry focus for agency growth, mergers and acquisitions have started to slow a bit. Larger equity firms that have been actively acquiring agencies over the past few years have contributed to what has become a highly competitive seller's market, though. With low inventory and elevated valuations, it’s been challenging for some insurance agency owners to locate and successfully purchase an agency or book of business.
Owners of small to mid-sized agencies are seeing more opportunities to invest in like-sized businesses. The focus is now on finding agencies that are the right strategic fit. It’s critical to identify your search criteria upfront, and not waste time by jumping at any available opportunity. Acquisition can be a smart and effective growth strategy if agencies seek out synergistic prospects that will expand their niche product offering or increase the markets they can serve.
Acquiring an agency is a big decision that requires vision, strategy, persistence and patience. Each step in the process comes with a checklist, timeline, expectations, and potential pitfalls. Having a trusted advisor to assist you can be invaluable in offering insight, keeping the process on track, and ensuring your best interests are represented.
Finding Expert Guidance
If you’re looking to grow your agency now, focusing and investing in technology, hiring and retaining employees, marketing, and acquisition can set your business on a successful course.
At Agilecap, we understand small to mid-sized insurance agencies because we’ve worked with hundreds, providing millions of dollars in capital funding to support growth. Our industry insights and knowledge can help your agency achieve its business goals, whether you’re contemplating expanding through acquisition or need funding to invest in your agency and people.
For those agencies seeking funding, we offer industry knowledge and experience, helping you determine how much you can afford to borrow and providing a solid understanding of the long-term value of an investment in growth. When it’s time to look for funding, we offer fast turnaround, flexible terms, and competitive rates.
For agencies interested in buying an agency or book, our experienced acquisition advisory services can provide an edge in a competitive market and help you find the right synergistic fit for your agency at the right price.
If you're thinking about growing your agency in any way this year, contact us today to talk about your growth and funding needs.