The insurance industry has always shared a healthy obsession with the concept of scale, largely predicated on the Law of Large Numbers. When private equity entered the insurance distribution space around 2007, the landscape drastically evolved to the point where today, you can’t open a trade journal, attend an industry event, or read a daily news feed and avoid headlines or advertising suggesting if you’re not already big, you’re missing out. Agency owners are inundated with messaging encouraging you to join something so you can be big too and if you don’t go big, you should just go home.
You’ve likely heard the parable “If you give someone a fish, you feed them for a day. But when you teach someone to fish, you feed them for a lifetime.” Well, there are two schools of thought in the agency partnership, or insurance agency aggregator, space.
Insurance Agency Aggregator Schools of Thought
The first, and usually more prevalent, school of thought is the “givers.” This model is loosely based on co-dependency, keeping members reliant (and contractually obligated) on aggregation. Accordingly, the aggregation provider asserts a firm magically becomes big and instantly relevant to the marketplace through this symbiotic relationship.
The second school focuses on education, empowerment, and mentoring subscribers. Basically, to be big, one needs to play bigger if the agent or broker expects to differentiate and deliver enhanced value to insureds. Dependency on aggregation lessens over time, gain sharing reduces as market volume increases, all while peer exchange and practice groups development. As the firm evolves, or individual leaders emerge within the same firm, so do the curriculum offerings to these members. Both membership and market access are earned and maintained only through managed mutual gain sharing. Any contractual restrictions center around professional behavior and communication requirements.
As opposed to being bigger, playing bigger requires significant effort if it expects to deliver meaningful, well-defined value to a firm’s end-insured. Therefore, joining an aggregator delivering more than the appearance of size creates compelling and impactful outcomes for a firm’s insureds. Ultimately, the financial and cultural benefits firms earn from striving to play bigger are impressive. Firms attracted to educationally based insurance aggregator companies generally reject the ‘bigger is better’ premise, realize size is relative, and understand hard work and constancy to purpose are always required when something worthwhile is built. Playing bigger is very much akin to the belief that leaders learn by doing. They learn to recognize scale has its drawbacks as much as it offers benefits since anything worth pursuing comes at a price.
How to Play Bigger & Drive Growth
Playing bigger shouldn’t require forgoing your firm’s individuality and uniqueness. Growing an insurance agency and learning how to play bigger allows you to emphasize and maximize your inherent differences and clearly define your firm to your targeted audiences.
For agents and brokers seeking to proactively scale their business – you owe it to yourselves to explore options that both challenge and train members to play bigger. These same agents and brokers will quickly recognize that where long-term value creation for the agent or broker is the objective, playing bigger is central to the message.
If you have questions about Today’s ViewPoint, or would like to learn more about how you can drive growth acceleration for your firm through MarshBerry Platform aggregation programs, email or call David Soforenko, Executive Vice President, at 440.220.4101.
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MarshBerry Platform Launches Emerging Agent Initiative
As you look to strategize your approach, think how you can learn to play bigger and win when you are empowered to organically outpace, outperform and outgrow your competition within a healthy and sustainable environment that promotes data-driven insights and proven strategies for success. Through MarshBerry’s Emerging Agent Platform, a refreshingly unique twist on aggregation, best-in-class and high potential Commercial Lines agents or brokers can aspire to be market leaders in their geography. Emerging Agent firms have producers who were bred to actively and aggressively focus on building Commercial middle market books of business but currently have less than $3M in annual revenue. Contact the Platform team at Platform@MarshBerry.com to learn more about driving meaningful differentiation for your firm.