An insurance agency is a business; make no doubt about it. And it needs to be treated as a true business to fully realize its potential. Many traditional agency owners, however, are not interested in running a business. They like the idea of owning a business, and, psychologically, many need to own an agency rather than work in one. Wanting to “own” a business and wanting to “run” a business have almost nothing in common, other than society and law mostly dictate that those who own a business should run it, with the partial exception of publicly traded companies.
Most owners do not want to run a business. I’ve heard some people say that it is a hobby for many agency owners. In my experience, that is not correct. Agency owners I work with do not view their agencies as hobbies but as very serious endeavors. The difference is that most agency owners truly enjoy working with customers, helping customers, and building a better world.
They are operating at a very high level far beyond the capabilities of a hobbyist. They are professional craftspeople. They know insurance coverages inside and out, understand how to communicate effectively with consumers, and build the most trusting relationships. Their talents amaze me.
They are not that interested, though, in dealing with vendors and solving HR issues; handling arcane accounting issues, contracts, or IT; or especially holding producers accountable. Inside management is not their forte. Many of these agencies would benefit from hiring quality people focused on inside customers. But few agency owners are willing to relinquish control and take that step.
The industry is experiencing significant acquisition activity that promises to relieve these owners of all their inside customer management responsibilities. Most of the time, this promise is of little consequence because the sellers are soon retiring, but it is an important point. Some agency networks are promising something similar to people who are not retiring, which, if executed well, will be a game changer. And we will have an Adam Smith pin factory example played out in the modern world.
A point of conflict is arising with the acquisitions. Many acquirers do not really care about the craft of taking care of clients. There are several carriers and agencies/brokers who have quietly but purposely built organizations based on people with “good enough” (direct quote) skills. High-quality people are too expensive. And the high-quality people who stay, the professional craftspeople, grow frustrated by their inability to provide quality products and services to clients. They are angered by the degeneration of their work and treatment of customers.
