Myth Busters: Why You Should Think Differently About Organic Growth
Old reliable. In many ways, the insurance industry can be characterized this way—consistent renewal business gives most agencies a comfortable cushion to rest on, no matter what the market does. The challenge is, firms have a false sense of security—why fix what isn’t broken? Sure, renewal income helps maintain business, but what about driving growth?
If you think that no news is good news, we invite you to read on as we bust four myths about growth, talent, operations and technology.
Myth #1: No (Growth) News Is Good News
What’s wrong with steady growth? It’s certainly better than shrinking, and we’ll agree that maintaining revenue is a sign of stability. The problem is, many agencies view flat growth as a sign of a healthy business—nothing’s broken, everyone’s staying the course. This mindset is fueled by dependable renewal income that gives agency producers a cozy security blanket. There’s little motivation to change or evolve when you can do the minimum and maintain renewal business.
On the other hand, agencies with motivated producers who are incentivized to hunt and sell new business—who drive for better performance—can move the growth and profitability needle for their agencies. And this is critical, because a firm that wants to double revenues in five years needs to achieve 20% new business each year.
Myth #2: Hire for Industry Experience
When firms only want to hire producers from within the industry, this tells us those agencies are not invested in training and development. It’s easier and less expensive to onboard producers who already have insurance experience. But a warning—just because a producer has worked in the insurance industry for a few years does not mean it’s a plug-and-play hire. It does mean that you’ll likely get more of the “same old.”
We’ve been banging this drum for decades: Hire for talent, train for skills. Look beyond the industry for producers who have the resilience, energy, drive and desire to learn and push forward. Producing new business is hard work. It takes grit—and it requires ongoing sales training, mentorship and coaching. It’s a team-effort, where veteran producers must step up and teach—and compensation must reward talent that is achieving goals.
Myth #3: InsurTech Is for Investors
InsurTech is bringing technologies to the market that solve problems, address client demands—tools that are highly specialized, data-driven, progressive, mobile and efficient. InsurTech includes telematics, analytics to assess risk, and comparison shopping tools. Technology could allow for digital claims processing and systems to make carriers more efficient. It’s all about improving customer experience—providing new ways of doing traditional tasks.
Agencies are watching InsurTech—not necessarily jumping on board, but considering how technologies might impact the way they conduct business in the future. And that’s smart! Because, if we look at the financial industry and “fintech,” there are tech tools that are now so mainstream we can’t imagine life without them. (Think: mobile banking.)
While we see private equity looking at systems and processes to improve carrier efficiency, in the future we believe these investment and technologies will evolve into the broker and agency spaces. Whether it’s improving claims processing or underwriting, there’s a place for InsurTech at agencies and forward-thinking firms are considering how these technologies could drive performance, reduce cost and, ultimately, propel profit.
Myth #4: Steady Profit Proves Our Value
What is value, really? When we look holistically at an agency, value is measured by growth and profitability—and by talent and culture. There are the numbers side of value, and the “soft side” that encompasses the work environment, training and development—the mojo. When a firm produces consistent profits, this speaks to the value of the firm.
So, does flat growth and profitability mean that agencies are proving their value? Yes, and no. While there is value to consistent, profitable growth—there is even greater value when an agency produces a track record of increased profitability year over year while enhancing growth. It means they’re working hard inside, developing a culture of motivated, energized team members who are pushing to reach goals.
Thinking Ahead, Growing Forward
It’d be easy to accept these myths as truths and continue business as usual. Following a year of relatively flat growth and profits, and an overall feeling of playing it safe, the tendency is to stick with what’s comfortable. But this temptation can be damaging to a firm in the long-term. Think of this steady, consistent growth period as an ideal time to take stock of your operation and consider its strengths and weaknesses.
How could you tune up training and employee development? How could you cast a wider recruiting net to find talent that’s driven to sell—and not used to a comfortable recurring income model? How could you infuse energy into the workplace to inspire your people to push for more than average growth?
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