You are here:HomeNews CenterThe Partnership News2007True Partnerships Will Help Agents Win in a Challenging Market

True Partnerships Will Help Agents Win in a Challenging Market

With the tremendous challenges, intense competition and market pressure of the recent past expected to continue for the foreseeable future, insurance companies and independent...
October 3, 2007

Marita Zuraitis, President of The Hanover Insurance Group's Property and Casualty companiesBy Marita Zuraitis
President of The Hanover Insurance Group's Property and Casualty companies

With the tremendous challenges, intense competition and market pressure of the recent past expected to continue for the foreseeable future, insurance companies and independent agents face more challenges than ever as they work to build successful, profitable businesses.

While none of us knows exactly how market conditions will develop going forward, we can be certain of three things:

  • Carriers and agents will react to market conditions in very different ways, based on their current positions and their philosophies about the business. However, winning agents and strong carriers will grow profitably regardless of market conditions.
  • Financially strong agents and carriers that are focused on providing value-added products and services will thrive.
  • True partnerships are more important than ever. Agents need to partner with companies that can offer superior products, knowledgeable, local underwriters and responsive service. And, companies need to partner with winning agents - those who are strategic-minded, growth-oriented and truly willing to participate in real joint business planning, where tangible goals are set to maximize the value of the agent/carrier relationship.

A Not So Quiet Storm

While industry earnings have been good in recent years, legacy issues continue to distract many companies, particularly larger ones, and geographic concentrations and exposure management are creating lasting changes throughout the industry.

Aggregation issues and reinsurance costs are placing more pressure on primary insurers, and ultimately agents. As a result, larger carriers are shifting and spreading their surplus differently, sometimes exiting markets altogether. At the same time, smaller, single-state carriers are struggling and sub-scale companies are slowly shrinking. Countrywide, this pressure is forcing many of the regional carriers to look outside the state to grow their businesses - leaving agents to wonder who they can really count on.

In addition, the independent agency channel is faced with the increasing pressure from large advertising campaigns sponsored by captive and direct writers.

The Value of True Agent/Carrier Partnerships

In this environment, we believe the most successful carriers and agents will be those who are committed to developing mutually beneficial relationships.

While direct writers and captives gained market share during the 80's and 90's, the market dynamic is different today. The independent agency channel as a whole has outpaced that of the direct channel, and significant agency consolidation has been driven by winning agents. Consequently, winning agents are growing at a rate three times that of the overall market.

As a result, independent agents control 80 percent of the commercial lines market and 40 percent of the personal lines market. This commanding stake is a clear indication of the confidence consumers and business owners alike have in independent agents as advisors.

In order to sustain that momentum, growth-oriented independent agents must do what they do best - deliver value. A clear majority of customers place a premium on value-added services. In one recent survey, for instance, nearly three-quarters of customers indicated that they appreciate value added services, with the most important drivers of customer satisfaction being responsiveness, relationship, and coverage advice.

But, even the best agents can't go it alone. They need companies they can count on - companies that are built to last, committed to their markets, offer high-quality products and underwriting capabilities, and are easy to do business with. In addition, independent agents need to look to companies that are 100 percent invested in them and, as a result, are making investments to help grow and develop the independent agency channel.

The power of this combination of winning agents and strong companies cannot reasonably be overstated. Without question, winning agents and strong companies can achieve great things together.

The Hanover's Approach to Partnerships

We understand independent agents have choices, and that they tend to split companies into two distinct buckets…what we like to call "go to" markets and everybody else. We work hard every day to earn the right to be one of those "go to" markets - a company that independent agents view as a true partner.

With that in mind, The Hanover began a journey four years ago to be the best partner for growing independent insurance agents in all of the regions where we do business  - helping our agent partners to profitably grow their businesses as we grow ours.

Today, that journey toward an even more successful partnership continues. The Hanover is proud to partner with PIA by becoming a member of your group that embodies the enhanced agency-carrier relationship, The Partnership. And we demonstrate our commitment by also joining the PIA Branding Program, our industry's premiere grassroots agent advertising and promotional initiative.
With input from our agent partners, we have transformed our company to offer what we like to call the "Best of Both," which is the commitment to delivering to agent partners and their customers product and service capabilities on par with the best national carriers, together with the local market knowledge, accessibility and responsiveness of the best regional carriers.

As a super regional company we have been working closely with the best agents in our respective markets to build strong, mutually beneficial partnerships.

At the center of those partnerships is our dedication to understanding the needs of independent agents better than our competitors. We do this by working with winning agents to develop aggressive joint business plans and, most importantly, soliciting from those agents' honest expectations and feedback, making our relationship and business better every day.

Our strategy is succeeding. We have strengthened our company on every dimension. We have improved our excellent financial position, and achieved above-average growth in both of our businesses, while generating 20+ percent growth with those agents who have formed deep partnerships with us.

We have assembled one of the very best teams in the industry, adding even more depth and experience to our field teams countrywide. Today, we have a full complement of local sales people and underwriters on the ground to accommodate our growing presence. And, as we continue to grow our business with the best independent agents, we will continue to build our local resources, as well.

We've also broadened and enhanced our product portfolio and underwriting capabilities in both personal and commercial lines and expanded our specialty capabilities, while improving the service we provide, making it easy for our agent partners to do business with us. As a result, we are ranked among the very best companies on the Goldman Sachs annual service survey.

Winning in a Competitive Environment

At The Hanover, we believe competition and market pressure are good things and will ensure the health of the industry going forward. These challenges foster discipline and stimulate innovation. They demand that carriers and agents are thoughtful and work hard to distinguish themselves, and they require the kind of partnerships that will benefit carriers, agents and customers in any market conditions.

While some companies look ahead with trepidation, we do so with confidence - prepared to partner with winning agents to deliver the kind of value-added service their customers demand and that will help our agent partners and our company grow profitably together.

PIA Connection

This article originally appeared in the September 2007 issue of PIA Connection.

Filed under: