You are currently viewing Why Your Agency Is Losing Value And What You Can Do About It | Part 6 of 10

Why Your Agency Is Losing Value And What You Can Do About It | Part 6 of 10

*This article is part of a continuing series about how to maintain and grow the value of your insurance agency so it will hopefully be worth more tomorrow than it was yesterday. In this entry we cover the importance of Procedures that agencies should have in place and how they impact value.

The phone rings one day at a typical insurance agency, the caller is an existing client who wants to cancel a policy, CSR#1 takes the call and says, “Okay, I’ll get that canceled right away.” The next day a different client wants to cancel a policy, CSR #2 takes the call and says, “You need to fax us a letter and sign it, then I will cancel your policy as soon as possible.”

The day after that another client wants to cancel a policy, CSR #3 takes the call and says, “I’m sorry to hear that. What’s the situation that is leading to cancellation? I see, you found a better rate with another broker. Did that broker match the same coverage you have on your existing policy or did they quote you lower limits? Well, let me make sure we have the right information and price for exactly what you need so you can compare apples to apples before cancelling.”

Why would the staff at this agency have three different responses to the exact same situation? Because in the absence of defined, documented, and trained procedures, the response from the individual staff members is left completely up to chance. And that means the experience for clients is also left completely up to chance.

Standardizing procedures among everyone in your agency is extremely important in helping your agency grow more valuable.

When you walk into a bank and ask to open a new checking account, don’t you think they have a procedure for exactly how that should be done, regardless of whether Betsy, John, Suzanne, or Eduardo happens to be working in New Accounts that day? Or do you think they just leave it up to each employee to decide how to handle it, based on how they did it at their previous job or because another employee told them, “that’s how we’ve always done it here before”?

I know that sounds ludicrous reading it here, but now you might want to take a look around your own agency at the dozens of daily activities, issues, and opportunities that have never been standardized in a defined procedure that was trained to all of your staff to ensure they all do it the exact same way. What’s the first thing you say to a prospect who wants a quote? Problem with a carrier bill should be dealt with how? Client just had a fire at their business and needs to file a claim? What if I need to cancel my policy? These are just a few minor examples of everyday situations that will only get a consistent professional response from your staff if you have taken the time to put procedures in place and train them.

And putting forth the best possible customer service response in order to impress and retain your clients is just one reason to have standard procedures in place. There are numerous other reasons why procedures are going to add value to your agency:

  • Errors & Omissions: The first thing a plaintiff’s attorney and your E&O carrier is going to ask when some problem arises is, “what is your documented procedure for handling the type of situation my client came to you with”? If your answer is, “Uhhhh….”, then get ready to pull out your wallet to settle or pay double for next year’s E&O premium.
  • Hiring and Firing: You won’t need to spend weeks of your time or another employee’s time sitting with a new hire or being interrupted by endless questions, if you can simply point them to the documented procedures that should address the majority of situations they will face each day. Likewise, try terminating someone for not doing something “the right way” and get that call from their HR attorney saying, “my client tells me you had no documented procedures, is that true?” Reach for your wallet again.
  • Multiple Locations: You’re scratching your head trying to figure out why your largest office only needs three agents but your satellite office with a book half the size also needs three and they’re constantly complaining about being overworked. Chances are, the satellite office isn’t doing things the same way your largest office is, and that’s because no procedures exist outlining the best way to do things.
  • Best Practices: In the example at the beginning of this article, wouldn’t you want everyone in your office to handle a cancellation the way CSR #3 did? Of course, but that won’t happen until there is an effort to understand all of the different ways things are being handled today and choosing the best method to define a procedure around.

Another benefit to establishing procedures is maximizing your staff’s productivity by identifying redundant activities or activities that don’t require a licensed agent to work on. For example, in handling a carrier memo for a mailing address typo, the procedure might be to contact the insured to verify the address, correct it in the agency management system, correct it on the carrier’s system, and respond to the carrier memo that it has been completed. None of those things require a licensed agent, whose time would be better spent trying to cultivate new business or performing other “revenue generating activities”. But you won’t be able to identify those productivity gaps or gains until you define some agency procedures.

Defining consistent procedures for typical agency activities, documenting them, and ensuring all staff are trained on them, is fairly easy to do and will add considerable long term value to your agency in numerous ways. Just start with one, something easy like “Telephone Answering”, get feedback from your staff, choose the best practice that everyone should be following, document it, and make sure everyone understands how to do it. Now you just created your first procedure and you’re on the way to making your agency more valuable.

About the Author: Jerry Pickett is VP of Mergers & Acquisitions/Client Consulting with Agency Acquisitions – an Astonish Results Company ( Agency Acquisitions works with agency owners to help maximize the value of their agency, perform agency valuation analysis, and handle all aspects of acquisition transactions for sellers and buyers of insurance agencies. Contact Jerry @ 614.859.9606 or email:

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