28. The 3 Experts for Your Multiline Insurance Agency
Simplify Your Staffing, Hiring, Onboarding, Compensation, Training & Firing by Running Your Agency with 3 Primary Roles
- Staffing the agency with the right experts in each role optimizes profit and creates a more automatic agency.
- Different sales require different experts, so it is important to avoid mismatching roles.
- Retention experts maintain & service the book of business, reduce lapses, and set appointments for multiline experts.
- P&C Acquisition & Growth Experts GENERATE business for the agency with networking, marketing, & calling activity.
- Multiline experts focus on selling additional products and ensuring the best coverage for clients.
Full (Edited) Transcript
Hey, everybody. Hope you're doing great today. We're going to focus on a very basic conversation, but a critically important one that I find a lot of insurance agency owners don't have a handle on, and it's understanding the three experts for your insurance agency. If you're a multiline insurance agency owner, there are three primary roles that you're going to want your team members doing that's going to make your life simple, that's going to optimize your profit, optimize your free time, and really allow you to create as automatic of an insurance agency as possible. Very often when I work with insurance agency owners and they go from working 70 hours a week or 60 hours a week or 50 hours a week, and they reduce that by 10, 20, 30 hours or more, they often cite understanding this information as the main reason they were able to do that. To give you a basic conversation starting place, what we want to do is make sure that we are having the right people and the right seats on the bus. If you want to word it a different way, if you were starting an airline, you want to have a certain number of pilots, a certain number of flight attendants, a certain ground crew, a certain number of people doing ticketing administration.
And if you get those numbers incorrect, you're either missing out on opportunities or you're wasting money on paying extra salaries. To keep it real simple, let's think of it in terms of apples, oranges, and bananas. Let's say you have a farm and it sells three products and they make this income. You have apples, oranges and bananas. The apples account for 60% of your income, 20% of your income comes from oranges, and 20% of your income comes from bananas. And you've just inherited this farm. Somebody gave it to you and said, Hey, I've got this farm, it's a family member. I want you to run it. You take care of it. This is where the income comes from. If you had to staff this farm and the person said, Look, it's going to take you 10 people to run this farm, you'd think, Okay, well, if I'm going to do this, if 60 % of the income comes from apples, I probably need six out of these 10 people to be apple specialists. I need two out of ten to be orange specialists, and I need two out of 10 to be banana specialists. Now, of course, they can have knowledge in different areas, and maybe some of them know all apples, oranges, and bananas, and that would be great.
But if we're starting out and we want to make sure people can do at least the basic core items and tasks, we'd want to make sure things are very simple. I've got apple specialists doing apples, orange specialists doing oranges, banana specialists doing bananas. And yes, as the business owner, maybe I understand all three and maybe some of my management or one or two people understand that, but I don't need to invest the time it takes for all 10 of my people to understand all these things. And what it really comes down to is that different sales require different experts. If you could avoid it, you would not want to have your apple expert selling oranges. You wouldn't want any mismatch. You'd want it to be that the people who know the thing best are the ones making the sales. And so in order to make this as profitable as possible, you would hire and develop experts for every position. You'd force people to decide what type of expert they wish to be, and you'd say, Look, you can be an expert in multiple areas, but you can't just be a generalist. You can't just know a little bit about fruit.
You need to specialize. And you'd eventually let go of non-experts because they'd either cost you too much to train if they wanted to know everything and they weren't yet at that level where you needed that, or they might just have generalized knowledge and it might not fully help you. Now, if we take that analogy and apply it to your insurance agency, there are retentions or renewals, there's growth and acquisition, and there's multiline sales. If 60% of your income comes from renewals and 20% comes from new business or gains, and 20% comes from multiline sales, let's say those are your ratios and yours might be different, then how would we staff an agency if you needed 10 people? We'd want six renewal experts or retention experts or service people, whatever you want to call them. We need two acquisition people or P&C growth specialists, and we need two multiline experts. This is where a lot of people get screamish to say, Wait, no, I need everybody in sales. Hold on. If a person comes to you and they buy an auto policy once, you're calling that a new sale or a sale. If that person comes back a year later and buys the same auto insurance policy, is that not a sale?
It's a renewal sale. It's a different skill set to retain business than perhaps acquire business. So yes, I understand that. So your green role or your green person here might have initially gotten the business, although technically the business might have walked in and your red person might have written it as it walked in the door. But we don't necessarily need a green person to keep it coming back. And that is a sale. When you go to the grocery store, have they ever asked you if you're paying with first year commission money or renewal sales commissions or company bonuses? I've never been asked that. So what we want to do is make sure that you have the expertise available. Now, to keep this in reality as well, I don't need six that have to be renewal only and know nothing else, and two that know growth and know nothing else. I'd probably have some hybrids. I'd probably have some people that do some retention or renewal and have evolved into growth experts. Ultimately, I'd want everybody to know retention on some level, but as far as the use of their time and their time investments, this is how I'd want to invest my time and my money.
And so many agency owners, when we talk about compensation, their bonus plans for their team members, get so caught up in the exact details on their bonus plans, which maybe accounts for anywhere from 5-15 to at most, let's say, 25 % of team members income in most agencies. Now, in really well structured agencies, it's about 50 % of their income, but at least 50-60-80 % of their income for a team member is usually coming from renewal sales or base salaries, and yet agency owners don't get too focused on that. That's where the majority of the profit in your agency is either made or not. It's like that concept of when you buy a stock or real estate, you usually make money, whether you bought it low or at a good price or not, not as much when you sell it. Well, if you're staffed properly for renewals, then you're going to make money, even if you don't hit your company goals. And if you're staffed poorly, you're going to be working your tail off no matter what your first year sales or first year commissions to keep up with these things. So now if we took this agency and said, You know what?
There's only five people I need in this agency, and I have this same breakdown of the book of business. Well, we do the same concept. We'd say, Okay, well, then you need three renewal experts, one growth expert and one multiline expert. Again, to be precise, you might really actually have two pure renewal experts and one person who's part-time renewal expert, part-time growth expert. And you can have hybrids of this. But in essence, as far as total labor, three out of five, excuse me, or 60 % of your labor is going to probably go towards renewal sales. And that's not. If you go to McDonald's and you see a sign, if they still have them, that says, what is it? 300 billion served or whatever it might be. There's only eight billion people on the planet. Most of those sales are renewal sales, they're repeat sales, they're residual sales, whatever you want to call them. So again, those are sales. If we wanted to staff an agency of two and a half people, then we might say, Look, I actually have a full-time retention expert or renewal expert. I've got a part-time renewal expert who also does acquisition.
Or maybe part of that is the agency owner, so maybe you're doing some of that. And again, I just want to make sure that in order to do each of these roles, you need to do them competently. To go back to the pilot example, if you can fly the plane competently, and then after you fly the plane, you can take the luggage out of the plane, maybe like a private jet, airline pilot, then great, you can do both of those roles. But if you can't do both, I can't have you in that role. Again, we're going to employ experts. Just like in the farming example, we're going to hire and develop experts for every position, force people to decide what type of expert they want to be, and they can be multiple experts, but they have to nail down one and then build upon that, and we're going to let go of non-experts. The three roles in your agency, the first one is the retention expert or the renewal sales specialist. And usually, about half of your customers are going to work with this person or these people, because about half of your customers aren't even going to go anywhere into multiline sales conversations.
They're not going to talk about life or health or annuity or disability or whatever it might be. And so that person's responsibility is to service and maintain the book, to keep the clients happy and minimize the customer defections or customer lapses, and to keep the business on autopilot for you. Ideally, they're helping you get a 90 % retention rate or a 10 % lapse rate, which leads to a 10-year client. They're helping you pay the salaries and the bills. They only require, in total, about one day a week of your time, about hours or less, that's the most profitable part of your business, and it creates the long-term stability. We need these people. These people are often the rock of your agency. These are the people that make it so that you're a business owner that you can take off for a day or a week or two weeks at a time and not have to worry about if work's getting done or if the doors are still going to be open. This person's focus is to build deeper relationships, reduce lapses, and set appointments for multiline experts. They might be making outgoing calls, things to check in to say, hey, how are you doing?
Is there anything I can help you with? Are you getting all your discounts? Would you like to take a look at that? Would you like to make sure your income is protected? And that, of course, would be disability insurance sales and life insurance sales. You want to make sure you're getting the best coverage for the best price without paying for duplicate coverages or paying for stuff you don't need. Again, these people are the glue of the agency and they help make things go in a very simple way when things work. The second role is your P&C growth expert. This is your acquisition person. This is the person that makes it come in the door. Very different from a person who order takes. Look back for a moment at the definition of the P&C retention expert in the red box, P&C order taker and retention. So if the orders are coming in the door, I don't need a growth expert for that. I can have a retention expert take the person that walks in the door and says, I want auto insurance or I want home insurance. The P&C growth expert, if you have one, is the person that makes sales happen.
They solicit quality sales, educate the client well, and they help you avoid costly business. We want them writing business that most of it 85 % plus stays on or don't write in the first place. They're going to pivot to home or to commercial from the auto or vice versa. They're going to work their leads, their centers of influence, avoid price-only business, grow the owner's business. Bottom line, we want them writing business that they believe is going to be here five years, 10 years, 15 years from now. If they think the customer is going to be shopping us in six months, don't even write it. This person has this focus. Then the third focus is the multiline expert. They're going to focus on generating and doing multiline reviews, full-blown reviews of Auto, Fire, Life, Health, Disability, Annuity, Bank, whatever it is you have. They're going to multiline existing clients and retain through relationships. We want them to be multilining about 20% of the time. So if they write 10 P&C products, with those 10 P&C products, we want two multiline sales. And when I say multiline, I specifically mean life, health, disability, bank, annuity, retirement. So even though technically auto-to-home is a multiline type sale, I'm talking more in the sense of what some people also call non-demand products or financial service products or life insurance, health insurance, disability, that stuff.
That person usually can take care of about 1,800 families as a multiline salesperson. They're not doing the retention work if you have specialization. They're just doing the multiline sales. Hopefully, they're doing at least 20 full multiline reviews per month. If they're doing 20 multiline reviews a month, that's anywhere from in 10 months, 200 reviews to in 12 months, 240 reviews. And if they're doing that, they're going to help hit your company goals for your life, your health, disability, annuity, and so on. And they're going to help you hit your company bonuses. The multiline review expert helps your customers that want a trusted advisor. The customer that says, I want to make sure my income is protected so that my loved ones are protected. I want to make sure that my insurance portfolio is balanced, that I'm using my money in the right way, and that I'm also planning to meet my future goals for retirement and so on. These people help customers balance their insurance portfolio. A lot of customers have a portfolio like what's on the left where they've got a lot of auto insurance protection with liability and uninsured motorists. They've got some home insurance protection maybe through the home and the liability.
Maybe they even have the health insurance, but when it comes down, they very often have a small amount that they have to work or nothing and they have no disability. A more balanced portfolio, if the person had to compromise some of the coverages to make sure that they got the other ones would be looking at auto fire, life, health, disability, and making sure that person's fully covered. These people are the ones that go over questionnaire processes or multiline review processes with customers to find out what's most important to them. And so in this case here, this is one of the tools we use in our questionnaire process to find out and let the customers tell us what's most important to them and have us make sure we're not missing anything. Usually, we find that customers are going to raise their hand for up to three things that they want right now help with, and about three things they want in the near future to have help with. We're going to help do discount reviews for these people, help them find the money to save for their future and afford the coverage that they want and look for the discounts that we can get them.
Are they able to save money by raising deductibles? Do they have duplicate coverages? Do they have any Dud coverages that are not very powerful? Can we help them look at how they're restructuring their debt the way they manage that to free up some money? And are there some expenses that they could be dropping? Then finally, we can also help them look at their income protection plan. Are they protected in the case of disability? In this case, we're looking at what does this person want? What do they have and what's the gap? Based on that gap, what do they want to do about it? That's just both for the husband and the wife here. And then what's their plan and what do they want to do about that? Similar with the life. What is their situation for their family? What do they want? What do they have? And if there's a gap, what do they want to do about that and when? In addition to that, some of these customers are going to want to have help optimizing their assets, looking at their assets and liabilities and their income and expenses and making the best decisions to help them grow their finances and also take care of their loved ones.
With these three roles, the key is to first understand them and make sure that the people you have in the roles are doing their roles so that when you're not getting good retention, let's say your customer defection rates go high, your lapse rates go high, you want to know who do you talk to about that. If you're not acquiring enough P&C business, you want to know who do you talk to about that? Well, you talk to the green person. If you want to know who's responsible for the fact that the multiline sales are doing phenomenally or they're not doing great at all. That's your multiline expert. And of course, you as the agency owner are very often playing somewhat of the green, somewhat of the blue role at different times, and maybe in the red, just more acting as that VP of retention or just overseeing the whole business. And maybe you have a retention team leader and somebody who focuses more on that so you don't have to be doing all of this. And so if this is your agency split profit-wise, then this is probably how you want to have things happen. If 60% of your total income is either renewals and/or order taking P&C sales, then this might be something what your split should look like.
Some agents have 70 % of its P&C or even as much as 80 % of its P&C. That's fine. That's great. Just make sure you have a team that's staffed to be able to take care of that for you. With each of these roles, we want to make sure that their roles, their time investments in their compensation are reflective of their role, that the retention expert is really focused on renewing business, keeping happy clients and freeing up the agency owner's time. The growth person is soliciting quality sales, educating the client and avoiding costly business. And again, 80% of their time is spent there. And that the multiline person, 80% of their time is generating and doing multiline reviews, multiline existing clients and hitting the agency owner's sales goals. And so when we look at your agency, the question then becomes, how should your agency be staffed? How much is it costing you in lost opportunity or overpaid salaries to not get this correct. That's the question that a lot of agency owners don't have answered, and a question that's very important for you to be able to answer. And so the action plan is to determine how many team members should you have for each role in your agency?
Should you have a certain number of retention experts? What's that number? Certain number of acquisition or growth experts? Certain number of multiline experts? And where do you fall in that continuum? So if you need help with any of this, you can always listen deeper to some of the episodes that we have on our video blog and podcast. And you're also welcome to schedule an agency performance review with me to help you look at your overall situation and see how many roles you should have, how much it's costing you. Do you have the right people and the right seats on the bust? And then going back to some of our other calls, are you staffing for optimum profit? How much should we be paying for base salaries? And are you making sure that your agency income is turning a profit for you every month? I hope you find this helpful. If you have any questions on this, please let me know. As always, I look forward to helping you impact more people and make more money and less time. Do what you do best so you can fully enjoy your family, your friends, your freedom, and your life.
Thanks so much for listening.
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