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4 of the biggest challenges facing the insurance industry (and how to overcome them)

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The opening general session at NAILBA 34, which began November 18 and ends November 20 in Orlando, Fla., got off to an energetic start. NAILBA 2015 chairman David Long spoke about the association’s partnerships, community outreach, the challenges the insurance industry is facing and more.

Long stressed that the insurance industry faces life-changing challenges such as:

- the importance of recruiting new talent to the industry;

- regulatory changes, including how the fiduciary rule that is being cooked up by the Department of Labor (DOL) will raise the barrier to entry;

- how to put insurance into more Americans’ hands;

- the importance of repopulating salesforces.

Before leaving, Long stressed once more the need to create the next generation of insurance professionals that will drive the future of the industry.

Afterward, a panel of four independent brokerage agents took the stage. Among them: Christi Daughenbaugh from Borden Hamman Insurance Marketing; Larry Herman from Herman Agency, Inc.; Ryan Pinney, contributor and owner of Pinney Insurance Center; and James Wong from Partners Advantage.

How an “aha” moment turned a business around

Each agent had their turn to talk about the successful programs and initiatives that they have been implementing in their practices. For example, Wong recounted an instance of how he had a moment of clarity back in 2010 and how that has shaped the current way of doing business for his agency.

“I was reading a trade publication and a staggering number shot off the page. The headline read ‘50 percent of the distribution will be out of business in 10 years.’ This was in 2010 and we’re half way through that. That made me concerned,” he explained. Wong then detailed how he kept thinking about how they could change their business in order to service. “We decided to take a different approach. We departed from the inside-out view of our business and value prop(osition) and decided to reverse that and go back and say, from the outside-in, what do we really want to be? That’s how we arrived at the train first philosophy,” Wong said.

To achieve this, Wong provided access points to top-shelf training, and invested money into podcasts, webinars, videos and, above all, study group sessions. “Knowing where you want to end up really helps,” he says, in regards to succession planning, too.

Moving from transactional to relational

On the other hand, Larry Herman explained that his own agency experience has been quite different. “I’ve been in the independent brokerage side of the business for 20 years,” he said, going on to explain that, being a practicing attorney, he thought he had the skills necessary to stand out from other brokers. What he found was that his practice was mostly based on transactions, rather than building relationships with clients.

“We found that high-end investment advisors and group benefit firms have a common denominator, which is that they have trusting, established, client relationships. We’re not doing point of prospecting anymore. We’re doing point of sales. And even more than that, I kind of consider that as a point of implementation, or what happens after the client says ‘yes,’” Herman explained.

What really stuck out from Herman’s experience was the fact that he kept repeating the phrase: Don’t become a desk pile. He explained that this means moving away from having a transactional model in your agency, so that it becomes simpler: “You don’t need as many people and the overhead goes down. You don’t need so much management. You have less office politics. The stress of running an office melts away, and when that happens, it really becomes fun,” he recounted.

Balancing and controlling production

Next, it was Christi Daughenbaugh’s turn. She explained that even though their agency is barely five years old, they had already seen that the current way of doing business wasn’t going to last very long. “What can we become?” she asked herself. “We began to put together a four-prong strategy and one of them was to basically control distribution: How do we train agents, how do we put them in a call center type of environment and how do we get into retail.”

She explained that having a call center in-house is a difficult task. “We quickly discovered that one of the challenges when it comes to going directly to the public or having agents in-house, is how to find and get your leads,” she retold. The issue of timing, too, kept coming up. One of Daughenbaugh’s real challenges has been figuring out how to maximize productivity and timeliness.

It’s all about managing leads

And while Daughenbaugh’s challenge might be where to find good, qualified leads, Ryan Pinney from Pinney Insurance Center found himself drowning in too many leads. “Managing the leads is a bigger challenge for us today than finding them. In the beginning (back in 2001), we literally had someone handing out sheets of color paper with leads. We currently have two call centers: one for agents and for application fulfilments that we do,” Pinney explained. And, technology has been a challenge. Pinney said that it always takes longer to build technological solutions that work and costs more than you initially think it will.

Pinney also mentioned that there are more mergers and acquisitions coming down the pipeline because the current agency system is shrinking rapidly and partnering. “A lot of producers aren’t going to like that you’re in the direct marketing space, which is why you have to bring much more to the table. We have a vastly underserved middle market, where less than 50 percent of the households don’t have insurance. We have a problem with distribution and until we figure that out, we are in jeopardy. And once we are under more compliance, we are changing the game,” Pinney said with a sense of urgency in his voice. “From my perspective, it is an opportunity. I don’t want the DOL to pass (the fiduciary rule), but there’s nothing we can do to stop it.”

Working online, are we really safe?

An audience member asked what are some of the measures that these independent brokers are taking to safeguard their client’s information from cyber security hacks. Pinney explained that getting hacked is a threat that “you have to contend with daily. The question is not when you’re going to be hacked, but how bad it’s going to be when it happens,” he said.

He also recommended that people with serious online security concerns should have a tech-savvy person on staff that is the sounding board for data security and asks the important questions to companies that provide online solutions, such as:

- Is the company using industry standard like SSA16 compliance, NIST?

- Does the company have processes and have penetration testing, and how often do they test?

- How is the data security on site and on the cloud, and who hosts their services?

Check our full coverage of NAILBA 34 here.


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