ACG - Agency Consulting Group

The PIPELINE

A national monthly newsletter for agency principals dedicated to agency management topic

HELP, HELP, The Sky Is Falling!!!

We have all been experiencing the same economic conditions, but we may not all see it in the same light.

Last night my wife and I went out to dinner. As we were walking in the parking lot, I noticed the lot was full of late-model cars. As we entered the restaurant, the hostess said the wait will be approximately an hour. While we waited, it appeared to me everyone at the restaurant was spending between $20 and $50 per person for their meal. I noticed the capacity of the restaurant would 150 patrons comfortably.

As my wife and I were seated, I overheard a number of conversations about the terrible economy. And while overtones of, “the sky is falling” were buzzing through the air, it occurred to me that a normal mid-level restaurant on a weekday evening is going to generate over $14,000 in dinner revenues. Perhaps the sky is not falling as rapidly as might be suggested.

Over the last six months we have been handling a record number of calls from agents seeking help hiring producers, teaching new and experienced producers how to build relationships instead of simply quoting, and figuring out how to increase productivity to offset reduced revenues. These are rational desires. Adding producers makes sense because the more people we see, the more clients we can attain.

We are more than happy to assist all of the agents who are looking for positive solutions to today’s problems, but we find an awful lot of agents who have succumbed to the media madness and are spending a lot of time running in circles chanting the title to this article. While it may be popular to be sympathetic about the condition of our clients’ and prospects’ business condition, but it is also condescending. If we bemoan our own business problems, the clients look upon us as being no better off than they. Would you really want to do business with someone who is having the same problems making ends meet as you?

Here’s the reality of 2008 that will continue into 2009.

1. The insurance market, tailing the overall economy, is and will continue to be SOFT. That’s not a BAD thing. It means that all of our carriers will be hungry for new business and will need to save their current clients - at least until the reinsurance market dries up.

2. The business economy is in a recession. It may get worst depending on when the banks start lending again.

3. People still own homes, cars and businesses and most must have insurance to keep their risks of catastrophic loss in check.

This last point is the most important one for us. INDIVIDUALS AND BUSINESSES WILL CONTINUE TO SPONSOR INSURANCE! Our jobs are to make the acquaintance with more individuals and business owners and build relationships based on common-sense and their rational need for protection for their assets.

So, Buck Up, Sparky! The sky is NOT falling. The weak businesses may not weather the current economic slowdown, but the strong businesses who are responsive to their customers will survive - and so will the strong insurance agencies. We have experienced a record number of mergers and acquisitions of (formerly) price-driven agencies whose producers can’t cope with everyone having soft rates and declining premiums. However, the relationship driven agencies are surviving and are generating new business through referrals and additional marketing for growth.

If you ever ask an agent, “How’s Business?” and you hear the response, “Never Been Better!” they are probably one of Agency Consulting Group, Inc.’s clients. Insurance clients want to associate with successful professionals, not with pitiful souls whose businesses are suffering as much as their own. Prospects figure that successful business people have the keys to progressing in a slower economy and will put their faith in those agents who celebrate success in a difficult market.

The economy in the U.S. is a “head game.” It is based on perception and the public’s lack of confidence fed by the politicians and the media. Unfortunately, these charlatans don’t realize the impact they have on the U.S. public. Tell them the earth is heating up often enough and public believes it. Tell the banks they MUST loan money to folks who have no way of repaying the loans and then crucify the banks for placing bad loans – they are an easy target. Force the auto manufacturers to grant excessive benefits or face union strikes, the end result is bankruptcy that can only be allayed by our funding their bailout.

Then tell the American public that the “economy” is in a recession. We’re not in a recession. We’re in a CONVERSION. The 2008 year, is on record, as the coldest year in the last decade. Most banks did not get greedy with sub-prime mortgages and they will eat up the few hundred who were gullible enough to believe the government when they were assured that nothing would happen if they gave bad loans to people who couldn’t repay them. And we WILL bail out the American auto industry because we can’t afford to lose 5 million jobs. Meanwhile people will continue to work for the foreign auto industry in other parts of the country that are managing a profit on lower costs. They will provide products and services to the industries in peril and to the rest of us. And we will insure those companies and individuals.

Stop ducking those falling pieces of sky and start marketing to an ever-growing number of individuals and businesses that desperately need your help and counsel regarding safeguarding their assets at a manageable cost.