Independent agents/brokers posted a 56 percent success rate in producer hiring in the past five years, although the hiring performance of the top and bottom firms varied widely, found a new study from Reagan Consulting.
Another key result of the Reagan Consulting Producer Recruiting & Development (PR&D) research was that only 35 percent of producers were hired from outside the insurance industry (including from college), Reagan Consulting reported.
“‘Troubling’ is the best word to describe the industry’s producer hiring data over the past five years,” commented Kevin Stipe, president of Reagan Consulting, which provides strategic consulting, valuation, and merger-and-acquisition services to the independent insurance distribution system.
Gathering baseline data from 562 firms and covering 4,641 producers, Reagan’s newest research measured success and identified keys to effective producer recruiting and development among independent agents and brokers. In addition to the baseline survey, 112 firms that hired 1,505 producers over the past five years completed a follow-up supplemental survey.
Perhaps the biggest problem identified in the study is that 55-60 percent of firms within our industry are “under-hiring” — they are not hiring enough new producers to achieve their growth objectives or allow them to successfully perpetuate their business.
Making matters worse, experienced producers — “free agents” moving from one agency to another — were by far the largest category of producer hires, representing 55 percent of the hires over the past five years.
“Is there another professional services industry that hires so few from outside the industry or from college?” asked Stipe. “In light of the fact that our industry is aging, and that nearly half of a typical agency’s business is handled by producers age 50 or over, this is alarming. Is the industry facing a perpetuation crisis?”
The PR&D research discovered the bottom 25 percent of firms averaged a 22 percent success rate in hiring and developing agents. The top 25 percent enjoyed an 84 percent success rate.
Reagan uncovered six critical success factors for recruiting and development based on its in-depth industry study:
- Defining hiring needs. It’s common for agents/brokers to be in the dark about how many producer hires their business requires.
- Determining whom to hire. Agents/brokers are often opportunistic recruiters, pursuing available individuals rather than being intentional about the producer profile that best fits their firm.
- Building the candidate pool. Lacking a strategy to increase the pool of producer candidates, agents/brokers are limiting their options and capacity for hiring.
- Elevating the ability to select winners. Many firms don’t have an established process to evaluate candidates, yielding mixed results in evaluating talent and selling the opportunity.
- Maximizing success for those hired. Most producers “sink or swim” on their own. While agents/brokers have options to assist newly hired producers, many firms are deficient in an intentional approach to training and development.
- Owning and leading the strategy. Those that establish a strategy and plan, and appoint a key executive to “own” the strategy tend to be the most successful.
Reagan Consulting’s study not only reports results, but is prescriptive about how agents/brokers can take positive steps to achieve these critical success factors.
“With this study, we aim to provide insurance agents and brokers with encouragement, motivation, insights, perspectives, processes and strategies,” explained Tom Doran, senior vice president of Reagan Consulting. The PR&D study:
- Provides tools for agents and brokers to accurately assess their hiring needs today and in the future.
- Explores the entire producer recruiting and development process, and identifies success factors of top-performing firms.
- Looks at multiple variables such as age, gender and experience, recruitment and screening techniques, post-hiring training and mentoring, specialization and team selling and their impact on producer success.
The Reagan Consulting study was sponsored by: Amerisure/Agency Business Solutions, Chubb, Cincinnati, CNA, Hanover, The Hartford, and the Council of Insurance Agents and Brokers. These sponsors can be contacted for copies of the study.