Five Reasons why Insurance Agencies fail

The past two issues of Rob’s Rants have addressed why producers and account managers fail.  I received many texts, emails, and comments asking me to also address why independent insurance agencies fail.

This is my take based on a number of failed agencies I have coached and assisted in the past few years:

Lack of a Mentor/Coach:  It’s amazing how many insurance owners do not have an executive coach or mentor of some sort.  All the major players in the sports & entertainment world have coaches.  Tom Brady still does.  So does Tiger Woods.

Most of the big hitters on Wall Street have coaches.  So if it works for them, why not the owner of an insurance agency?  8 out of 10 insurance owner/operators do not engage the services of an executive coach. 

Corrective Action:  Network with your business owner contemporaries and interview a few executive coaches who specialize in insurance brokerage firms.  And I am not saying hiring a consultant.  Consulting is totally different than a coach.  A consultant provides you with information and knowledge whereas a coach will take you on a journey of self-discovery and enable and empower YOU to come up with the right solutions.

Failure to embrace technology:  Many small independent insurance agencies are still operating using antiquated agency management systems.  Not everyone likes EPIC, but once you get trained on it and develop some in-house expertise, it can work wonders for you. 

Having the right communications, security, and collaborative work flow systems are also critical so that staff working remotely or on a hybrid basis can be as productive and collaborative as those working in the office.  Many firms, even two years after the pandemic, are still not up to date with the latest systems. 

Not having an easy-to-use AMS will create dissatisfaction and dissension among the staff as well as creating significant inefficiencies compared to your more tech-savvy competitors.  Are your systems up to date?

Corrective Action: Engage with a technology consultant and/or a local contemporary and consider updating your CRM and related reporting systems.  EPIC would definitely be something to consider as most of my clients are very happy with it.

Lack of Clear & Concise Communication:  I visited with an owner/client of mine last week and I asked him to recite his company mission statement so that I could communicate it to prospective candidates.  He had to ask his assistant to locate the statement and then he read it to me. We both laughed.  It was so poorly conceived and written that we spent the next few hours brainstorming and coming up with a new one. 

If the owner of a business doesn’t know his/her mission statement, how is anyone else in the firm going to know it? 

Mission statements and other stated goals related to operations and strategy should be something so short, simple, and concise that it can be communicated to a complete stranger in an elevator.  In the failing firms that I have worked with, most of the people at the top of the organization have no idea what the worker bees are doing and vice versa. 

Corrective Action:  Everyone in the company should be able to describe the company mission statement to a complete stranger in an elevator.  Make sure all-important decisions are communicated up and down the chain of command in your organization through consistent and timely team meetings.

Owners vs. Temps:  Noted billionaire, Robert Friedland, told me many years ago that there are two kinds of people in failing companies: Owners & Temps.  It’s true!

Many failed organizations have this mindset of “owners and “temps.”  Temps are your staff that could care less about the ownership and are largely working for a paycheck.  One of my favorite clients in Tysons describes themselves as “employee-centric” and not “client centric.”  I love this approach. 

Through a consistent and regular 360-degree feedback process they are able to enable and empower their staff on a regular basis.  Happy employees equal happy customers.

Corrective Action:  Implement a review/feedback process whereby senior leadership works collaboratively with the staff soliciting constructive feedback in a formalized process.  This can be done in a once per week online setting or once per week in the office.  People can also submit suggestions anonymously too.

Lack of Empathy: I have found that most failing agencies have owners and executives who are not actively listening to their employees.  They hear them, but are not listening to them.

Employees are people too. 

Unfairly or not, the view from the bottom of an organization is that the owners are making all the money and not sharing the wealth with the staff.  No one wants to admit this, but this is reality.  I know because I talk with account managers and producers every day.  This is a common complaint.  Ever hear of “Quiet Quitting?”  This is what happens when an “us versus them” mentality permeates an office.

Corrective Action:  Leadership should make the effort to spend one-to-one time with their direct reports, ideally, outside the office at lunch or dinner.  Take an interest in not only their work issues, but with their personal life as well.  Ask about family.  Maybe they are going through a family crisis.  Taking a real interest in them professionally and personally will help you more effectively and efficiently lead and manage them in the future.

Thanks for reading.  I look forward to your continued feedback!