How insurance agencies can attain high rates of organic growth

Growing an insurance agency organically doesn’t just mean adding a few new faces to the sales staff. High growth agencies achieve success by bringing in new business and developing existing accounts as they outpace the agency average, according to MarshBerry’s 2018 Organic Growth Check-Up.

In 2018, organic growth for the average agency comes in at 5.3% compared to a peak of 7.7% back in 2014. By contrast, the MarshBerry report revealed that high growth agencies reported an impressive 19.5% organic growth rate, and they exceeded the threshold needed to ensure that growth outpaces attrition, writing new business at more than 20% of the previous year’s commission and fees. The agency average meanwhile sits at around 11% for new business production, indicating a drop from previous years.

“It just continues to be a struggle for the average organization that is not focused on new business first,” said Nick Kormos, vice president of organic growth solutions at MarshBerry and an author of the report. “We tend to be a very service-oriented organization and not a sales-oriented industry.”

As a result of that mindset, many producers first make sure they’re doing everything to keep their current accounts happy, and only fit in time to look for new business around that top priority.

“Producers are then by that virtue able to dictate when they want to go and generate new business, and when they can just be comfortable retaining their current book,” explained Kormos, adding that there’s often a lack of accountability for driving new business production.

There are strategies that agencies can implement to drive organic growth and one of those starts long before new producers walk into the agency for the first time.

“Recruiting is a laborious process, and we know that because we have an entire team that is doing nothing but sourcing and vetting and interviewing candidates all day long for our clients,” said Kormos. “It is very tedious, but you have to be active and visible on social media, you have to be showing what it’s like to work at your company. Millennials and the next generation are looking at more than just compensation as a means for evaluating their employer.”

Posting an opening for a position on a few job boards and reaching out to a handful of contacts doesn’t cut it in today’s workforce, where unemployment rates are low and competition for talent can be fierce. The insurance industry also doesn’t have the same draw for people who aren’t already in it as opposed to other industries, said Kormos, which means people rarely think to check out the world of insurance and seek out opportunities within it. Agencies then need to be consistently searching online for candidates, instead of just having one team member focused on passively sourcing candidates.

“You have to be looking at connections of connections,” said Kormos. “The most successful hires come from people that are not necessarily looking to make a change, but are convinced by the value proposition you bring to the table.”

Once an agency hires new producers, effective training strategies can enforce sales behaviors that lead to high rates of organic growth.

“One thing that I cannot stress enough is the mistakes that I see that are made by giving them books of business and trying to validate their income. They are handed certain leads or certain components, or they get to feed off the owner of the agency, who is a rainmaker,” said Kormos. “That doesn’t teach people self-reliance and it doesn’t teach them the ability to hunt – it just teaches them the ability to be there to catch business from retiring producers and catch business from the owner.”

There are four key components to creating growth in sales culture, according to MarshBerry:

• Sales management, which outlines what’s expected of someone with the title of producer in an organization and sets out what happens when those goals aren’t met
• Sales training, which should be an on-going event that communicates and reinforces the value of an agency’s different products
• Sales coaching, which should be individualized to each producer, and helps identify what they’re doing well as well as where they could improve
• Sales mentorship, which highlights people in the office for trainees to emulate

“Those four components are like puzzle pieces that go together and one doesn’t really work without the others,” said Kormos. “If you just do training and that’s it, it’s going to fail because once they get out of the training, then they have to be responsible for applying it themselves and they’re not being coached.”

Look out for more tips from MarshBerry on how agencies can grow organically, exclusively on Insurance Business.