Agency Revenue Tools

Asa Pike sees the future for independent agents and it spells p-e-r-s-o-n-a-l l-i-n-e-s. The independent agent and worksite marketing strategist says he has the solution to capturing this market. The key is worksite marketing of personal lines with a twist-multiple carrier choice.

In the past, most worksite marketing programs by agents involved a single insurer looking to increase its personal lines market share and not the full spectrum of carriers represented. Given the different personal lines-homeowners, automobile, disability and life insurance-and a mass of employees wanting different levels of coverage, a multiple carrier solution was elusive. No longer. "Agents will win the personal lines market if they can get in front of prospects armed with an array of competing insurance solutions-the carrier choice that independent agents are prized for," Pike says.

In April, Pike's company-Fryeburg, Maine-based Agency Revenue Tools LLC-unveiled a hosted software system called Worksite Marketing Manager that leverages multi-company marketing of personal lines insurance to employee groups. More than 50 insurers have agreed to participate in Pike's plan, which combines mass marketing, payroll deduction and multi-company choice into a compelling employee benefit. "Typically, you don't see more than a 15% participation by employee groups in personal lines programs, and the agent commissions paid are meager," says Pike, CEO of Agency Revenue Tools and president of Pike-Conway-Dahl, an insurance agency also based in Fryeburg.

"Since the insurer does all the administrative and enrollment work and agency control is virtually nil, the 3% to 4% commission rate is understandable," he explains. "However, if the agent controls the process and offers multi-company choice, the group participation rate would be more like 50% and the commission would be a standard 14% to 16.5%. That's what we offer."

Worksite Marketing Manager is a software product developed and hosted by Stroud Water NHG, a Portland, Maine-based software developer. Agents pay $2,500 to install the software and receive training. In return, they get the ability to sell competitively priced personal lines insurance marketed by multiple carriers as an employee benefit. Employees pay for the insurance products via monthly payroll deductions taken by their employer.

The software does all the work-determining how much each employee's annual premiums are for multiple insurance policies, deducting this amount from each employee's payroll check and then adding them up into a single dollar amount paid for by the employer to the agency. The software then takes this amount and divides it into the respective premiums owed each carrier-all behind the scenes.

"It's the old-fashioned way of doing business in a high-tech environment," says Alice Cameron, assistant director of property and casualty marketing at Seattle-based Safeco Insurance Cos.

"We bill the agents for the premium, as opposed to billing the customer," Cameron explains. "The software consolidates all the bills from the different insurance companies and manages the whole process. It generates a statement to the employer and, when the employer pays the agency, produces an account current for the agency to pay the carriers."

Master of Control
Since agents are in charge of this personal lines marketing strategy, they are in a position to demand standard commissions, Pike says. "Previously, agents would go to an employer with one of their carriers offering personal lines insurance, but the carrier effectively did everything-the advertising, the rating, the billing, and so on," he adds. "All the agent did was open the door."

Now, the agent opens the door, ushers in an array of carriers competing for the employee's business and rides herd on the process. "An independent agent can offer an employee the right product at the right pricing for that employee, as opposed to a cookie cutter solution," says Cameron.

The employer, meanwhile, has the ability to offer an employee benefit that doesn't cost it a dime yet does enhance its ability to retain quality workers. "The company basically is providing a benefit that the employee can't get anywhere else-an 'ease of convenience' payment plan for different lines of insurance sold by several different insurance companies," says Dwight Bagwell, president of Bagwell Insurance Services, a Martinez, Georgia-based agency using the new system.

"The ease comes from a weekly or bi-monthly payroll deduction, as opposed to having to pay a lump sum once or twice a year," Bagwell explains. "The employee is given a way to pay premiums via a more favorable payment method-a key consideration for families that are budget conscious."

The insurer also benefits. "There's never a late payment or a cancellation of the policy for non-payment, since the premium automatically is deducted from payroll," Pike notes. "Carriers and agencies are relieved of all that policy status work, which takes up an awful amount of time."

The system also promotes higher policy retention metrics. "By deducting the premium from the employee's paycheck, the employee basically forgets all about the expiration date-they just know they're insured," Bagley says. "If there is a rate increase, it's distributed over 26 or 52 pay periods so it doesn't appear to be significant. Thus, there's seemingly no reason to shop elsewhere for insurance."

But the biggest advantage accrues to the agent. "I'm able to generate a substantial number of personal lines leads at one central source," Bagley says. "All I need to do is get the employer's approval for the program, then send each employee a payroll stuffer explaining the benefits and asking for their (policy) expiration dates. The software takes care of the rest."

Bagley has lined up three employer groups so far, two of which are current commercial clients. "I've set up meetings with the employees to educate them how the program works, and at that point I will try to secure the expiration dates," he says. In this initial go-round, Bagley is offering quotes from only three markets-Safeco, Progressive and Auto Owners Insurance Co. in Lansing, Michigan. "I'm gradually talking to my other carriers about it," he says.

Selling the Store
Marketing personal lines at the worksite is nothing new-many direct writers and independent agency carriers have marketed automobile, homeowners, life and disability insurance as employee benefits for decades. Using software to market multiple carriers at the worksite also isn't new. AMS, for example, offers agents software (called IDS, for Insurance Deduction Systems) that accomplishes much of what Pike is tendering, albeit not in a Web-based hosted environment.

Ron Mooney, owner of the Columbus, Ohio-based insurance agency RHK Group, has used IDS for four years but is now mulling a switch to Worksite Marketing Manager. "The fact it is Web-based makes it very compelling," he says. "I won't have to worry about updating my software and having someone on staff to make sure the program is maintained. I can rely on their server to do that for me."

Mooney says he also likes the way Worksite Marketing Manager parses commissions between different agents and brokers. "I've been very successful going to life and health brokers and cutting a deal to offer adding auto or homeowners insurance to their menu of benefits," he explains. "When I do that, it requires that two producers be compensated. Agency Revenue Tools offers a way to easily split commission percentages on a monthly basis."

Mooney may not have to switch providers, after all. Rumors are swirling that Pike is in talks with AMS about selling IDS to Agency Revenue Tools, which Pike would neither confirm nor deny. AMS, however, confirmed the talks. "We're negotiating a sale-that's all I can say at this point," says Betsy Hopkins, an AMS spokeswoman.

New Era Beckons
Down the road, the new system (and others like it) will help level the competitive playing field for independent agents in the personal lines market. Indeed, Bagley believes the new marketing tool will make his agency as profitable at selling personal lines as it is at selling commercial lines. "We're in Augusta, which is considered a great corporate branch location town," he explains.

"I've got more branch locations of Fortune 500 companies here than you could shake a stick at, but for the most part their commercial insurance is taken care of at headquarters. Now I've got a way to get inside these companies by offering them a way to retain their best workers at no cost to them."

He expects to sell an additional 5,000 personal lines policies within three years with Worksite Marketing Manager. "I'm starting with my current commercial client base and then going after all those Fortune 500 branch locations," he says.

Cameron, too, is enthusiastic. "This is a new way of thinking about and selling personal lines," she maintains. "What makes this model so exciting, and what makes this really work for agents, is the fact that it is multi-company. Study after study confirms that no one company has the product and pricing for everybody. That's what makes the independent agency system so great-the ability to offer diverse insurance products to meet a broad spectrum of needs."

As for Safeco, which is introducing Worksite Marketing Manager at 250 agencies this month, Cameron notes that, "any time agents get access to more potential customers, we write more business." Like Pike says-put agents in front of prospects and they will dominate.

Banham bzwriter@aol.com is IA's senior contributing writer.