2016 Year Outlook
Bright for Premier Agency Partners! /
Premier Agency Principals,
Something interesting happened in our business last week. The internet search engine giant, Google, pulled the plug on its operations to delve into our P&C space! This action, a mere few years after a leading consulting company predicted the end of brick and mortar agencies over the next decade... Yes, there is more to the story and we’ll get there in a moment, but with this backdrop and this first week of March, being the first week of the power production months in our business, it’s a good time to take stock of where we’ve been together, where we are, where we are going!
Profit sharing and YE commission overrides
The Premier Group - YOU - had another record year – record quotes, record new business, record growth, and record compensation paid to agents. Year end profit sharing checks and commission overrides are not yet all in but we can tell you that The Hartford, Liberty Mutual, and Travelers will be paying profit sharing in Commercial Lines. In Personal Lines, carries that cater to preferred clientele, such as ASI will be paying profit sharing, and Met Auto & Home and Travelers are paying Premier extra commission for full year or partial year ’15 results. Carriers that cater to non-standard risk exposures, such as The General and Legacy, are also paying Premier profit sharing. As the payments come in they will be reconciled and then distributed via deposit in your accounts at commission time in accordance with your Premier agreement and you qualifying, and the carrier criteria for production and/or loss ratio.
Loss Ratio and Loss Costs Outlook
Insurance is not an easy business. Just when Mother Nature gives us a break in 2015 on a macro basis, lower energy and gas costs resulted in drivers driving more and having more accidents and bad accidents at that... Throw in inattention from texting and other distractions and most carriers are seeing auto results deteriorate with frequency and severity rising in trend more than initially anticipated... The leading captive insurer in the country posted more than a $2B underwriting loss in P&C. Another captive carrier took more than $1B in rate! Independent Agency (IA) channel carriers are seeing similar trends in some cases, and in other cases carriers are already rate adequate even with some trend development.... Long story-short, hang on to your hat in the Private Passenger Auto Line in 2016 as well as Commercial Auto. Rates are likely to go up... Explain matters to your clientele. It is recommended they not jump from one carrier to another, as it is quite possible in time that the other carrier will take rate. You will be plenty busy taking calls from shopping captive carrier policyholders in 2016; it is wise, not to spend too much time rewriting what you already have provided with sound consultation you can keep the clientele... FYI, more carriers are increasing discounts for auto and home business together – one way to save the client money and possibly earn more commission as opposed to the sometime less commission paid on mono-line homeowners by some carriers...
Your message sends a strong signal, as you cast your vote for lower commissions!
Some reports suggest that “value” is dying in personal lines as perceived by the consumer and that it is mainly all about price... There is certainly some truth in that if an agency cannot bring value to the client. At Premier we believe value is exponentially greater in the IA channel given the breadth of choice, agent’s consultation of that choice at the point of sale and ongoing, and the customer experience we have witnessed Premier agents providing to clients... Nonetheless, some carriers have come out with lower cost options – which pay lower commissions. Did you know that every issuance of a policy in those lower commission programs is a signal to the leaders of those companies that you cannot sell value, that it is all about price, and that they should continue to reduce commissions to bring about more competitive pricing? That of course is a proposition Premier cannot get behind and will not get behind. Job #1 at Premier is for us to advocate for you – with more market access and with more commission per client. And we are pretty good at doing it given the power of Premier as a group and the value that in turns brings to carriers – a win-win! However, if our collective walk does not match our talk, then the commission overrides you now enjoy shall wither away and be a thing of the past and fast! Please do not write lower commission business when given a choice with the same carrier. They are watching and tabulating - every policy counts!
Advocacy for you – Record Carrier Access & Choice & Record overrides for 2016!
Carrier access and strong carrier relationships are the lifeblood of our business. Go to www.PGIAgents.com, please. There you will see posted under the Carrier Licensing tab a sheet of more than 200 carriers and brokers you may be able to access – most directly, and some through your Commercial Lines Account Executive, to meet the needs of your agency and your clientele.
Are you aware that your affiliation with Premier affords you not only broader market access, but at substantially reduced production levels...? Shawn Walker, Premier’s Vice President, regularly engages in dialogue with carriers on this matter, protecting your access points to carriers. While production requirements are reduced, they are not nil. We encourage you to take carrier stability and the value carriers bring to you into consideration as you plan for 2016 and beyond.
Go to www.PGIAgents.com, again, please. There you will see posted under the Commissions tab a sheet of nearly 50 carriers providing Premier agents with extra compensation in the form of commissions overrides or special profit sharing arrangements. At Premier all agents can qualify if you access these carriers via your sub-code and do qualify as per your Premier agreement and the carrier qualifications. One thing changing is carrier pressure to reduce commissions. We are confident Premier will be able to negotiate special compensation arrangements per say, but not as commissions, over time. As such, we will be amending each existing contract to include a section for supplemental compensation, which must be signed if you are interested in participating in that compensation, to likely come about in 2017. Other contractual updates will also be included in the amendment. The amendment shall be optional.
What else is new? Plenty!
1. Best Practice Checklists coming! The first two months of this year we have spent updating our training materials to in essence bring you “the book on insurance for P&C”. We quickly realized the volume of information was too large to bind or make into a single document. What is right around the corner, coming to you this month, will be CHECKLISTS, in each categorical subject, listing the Best Practices or Do’s and Don’ts categorically for ease of use by you and your staff. In addition, Phase 2 of this will have “web-links” to a deeper dive of the subject matter of your choice, warehoused at www.PGIAgents.com. The contents therein are based on Premier, agent, industry, and carrier information.
2. Premier Only - Agency Sales and Operations Workshops Coming – This year Premier leadership will take to the road with two 1-day workshops in Colorado, California, Texas, Florida and other states to be determined. Two audiences will be presented to. 1.) Licensed CSRs and Producers and another for Principals. Content will include Pipeline Development & Digital Marketing Integration (Google or others will be back....), Sales Training to include – Style Awareness, Identifying Needs, Selling Value, Taking Price Off the Table, Overcoming Objections, and Closing with a new lead for Referral. And Client Lifetime value, aka Retention, through Customer Experience and Client touchpoints and pay plans. For agency principals, we will explore the aforementioned along with employee selection-interviewing-testing-compensation-training-retention-motivation, producer contracts, non-competes, and star producer retention and succession planning, along with critical key agency analytics, financial analytics, and agency operational and errors and omissions best practices. Costs for these workshops will be minimal. These workshops are the result of feedback from Premier’s Agency Council meeting.
3. Commercial Lines – NOW is the time! Premier is fast developing into a power house for commercial lines, as it is with personal lines – bringing forth overrides, special profit sharing and broader access for you...! Premier and your Commercial Account Executive (AE) is charged with training you, if you wish to commit to learning and writing what is often more complex commercial lines, and obtaining direct access for you with sufficient flow... In most cases Premier can obtain several carriers for you with as little flow as $100,000 in New Business annually. Outside of Premier you would be looking at a $250,000+ commitment for a single carrier... We are very bullish on your opportunities for commercial lines and encourage you to explore it for direct access. Overtime the exception will be going through your AE as opposed to the rule. This in turn earns you additional commission dollars. Please look for the emailed training announcements and postings for Commercial Lines training at www.PGIAgents.com for the 4 weeks remaining in March, on each Friday, and with more to come throughout the year! February’s training resulted in 25+ agents obtaining greater commercial lines access.
4. Agency Acquisition Program – While Premier and Premier Agency Principals have grown substantially organically, Premier will now embark on a financing program for qualified Premier agencies having a healthy existing commission stream to acquire books of business outside of Premier and bring them into your agency and into Premier. The advantage to you is Premier’s expertise in “due diligence” to analyze and value a book of business in concert with you and provide you free consultation. Premier can co-finance the acquisition in most cases and with below market interest rates and reduced loan origination fees, far below the standard and difficult to obtain financing for such acquisitions. For more information, please contact Rex.
5. Premier’s own Captive Insurance Company, Finance Company, and Surplus Lines Company Presently we are undertaking cost-benefit analysis on each of these opportunities. The first initiative, of having our own Premier captive insurance company is an exciting one. It may afford interested Premier agencies an opportunity for partial ownership through investing, and possibly with some tax advantages. For more information, please contact Rex or Young for overview information. The other initiatives may develop over time depending on the feasibility outcome.
6. Website Discounts – We are in the final stages of negotiating a formal program for website discounts for Premier agencies. Please complete the survey if you are interested in having a website and do not yet have one.
7. House Code Project – Some agencies access certain carrier markets by house codes. One of the goals for this year is to have enough production by agency by carrier to obtain for you your own sub-code(s) for respective carriers. Advantages to this are many with more administrative and report control in many cases, at your fingertips... More to come on this from Shawn Walker in Q2.
8. Possible Premier All-Agent meeting in Denver in the Fall of 2016 – Many of you have expressed a desire to meet with and engage with Premier agents all around the country. We are exploring the feasibility of such an event. Integral to that would be your attendance. Please complete the survey if you would be interested in attending such a gathering with your travel and lodging expenses incurred by you. With agents coast to coast we expect you attending such an event would be an extremely rewarding and beneficial investment of your time and dollars. We see this as an exciting networking, communal, and business idea sharing event, with special speakers and carriers engaged in the event as well. If the demand is strong enough we will move forward with the exploration. Please complete the survey.
9. Service - Our pledge to you, in all departments, is to get back to your outreach to Premier in no less than 24 hours. Outreach to us by noon shall be responded to same day with a touch point that the matter and solution is being looked into... Outreach in the afternoon shall be responded by the next morning with a similar touchpoint. Obviously training sessions and the like will impact this, but we realize the importance of quick responses to you. This was also a topic at the Premier Agency Council session.
10. Who Does What – Please see the www.PGIAgents.com website for the latest listing of Who Does What with Direct Phone Number listing so you no longer have to go through the switchboard.
Some final thoughts:
Congratulations to 2015’s Top Performers from all across the country, who will be going to Cancun, Mexico this month with their spouses and Premier leadership: Jeff Blichfeldt, Nancy Brockman, Paul Doherty, Steve Ehler, George Gonzales, Mike Gutierrez, Nick Hammer, Mike Maaliki, Terry Marshburn, Ivy Mendez, Josh Martin, Russell Nicholls, Erick Ortiz, Adam Raymond, and Carl Turner.