The ‘one-channel’ P&C agent sales model has become a major liability

By: John Drosos Channel Sales

Let’s stroll down memory lane. A little over 10 years ago, life was pleasant in the P&C insurance business, particularly in the consumer market. Age old and financially solid P&C firms enjoyed a stable market of consumers who dutifully renewed their policies every year and continued to add more cars, second homes and motorboats to their profiles. The local agent was a fixture of the community, providing a calming presence to consumers and insurers alike. Savvy agents kept the competition at bay by highlighting the risks of switching to another major carrier, let alone an upstart, ‘remote’ competitor that couldn’t welcome you into a local office.

My how things have changed. Today consumers click away on their laptops and mobile phones, confidently researching and buying home and auto policies (and homes and autos for that matter). A lizard and a pleasant woman named Flo are successfully enticing millions of consumers to dump their agents, switch and save a buck or two. Traditional carriers are struggling to maintain share, especially in their core auto segment. Meanwhile local agents wonder if staying with a traditional carrier is the equivalent of riding the Titanic to its doom.

Buying insurance ‘remotely’ has been an option for a long time. The move to on-line and tele channels has been relatively ‘slow’ in terms of market share for P&C insurance compared to other, ‘simpler’ goods and services like books, consumer electronics and cable. But the cumulative effect has been devastating. Starting in 2003, direct, non-agent sales channels have consistently been taking a point of auto-market share every year from the agent channel. By 2012, 28% of share was captured by direct channels, compared to 20% in 2003¹.

Traditional carriers who have resisted the change are increasingly losing share. Carriers and agents alike can no longer keep their heads in the sand hoping their legacy agents can simply ‘turn the tide’ and win back share. To survive in today’s marketplace , carriers must adopt a truly integrated, multi-channel selling approach that embraces the convenience and cost effectiveness of online and tele-sales channels while truly leveraging the insight-led value that top agents can provide for the most coveted customers.

A new sales ‘paradigm’ is needed. The challenge the P&C industry faces to adapt the agent selling model to the current and future environment is enormous. To succeed, traditional carriers have to rethink their sales coverage approach from top to bottom. Just some of the challenges include:

  • Building out non-traditional channels (online, mobile, call-center) without alienating current agents
  • Re-focusing internal ‘channel’ managers (aka, Field Leaders, Marketing Reps) from administrative tasks to drive better agent development, sales growth and sales execution
  • Redefining the sales agent role (both captive and independent) to focus on higher-value customers
  • Evaluating agent ranks to invest more in ones that have or will adapt to a multi-channel model
  • Aligning incentive structures to cost effectively drive the right selling behaviors for both agents and internal selling resources

Moving Forward: It Starts With Sales Leadership
Creating a new sales ‘paradigm’ in a very traditional industry is a difficult enough task. But the Achilles Heel hindering a more rapid and effective transformation in the industry is that, simply put, the sales function has not been a priority for carriers. Sales expertise and leadership was the domain of agents. Carriers have focused on product, marketing and finance as the drivers of success. So, not surprisingly, carriers face a bit of a Catch-22: How do you build a successful selling model when internal sales leadership and expertise is sorely lacking?

First and foremost, sales must become the priority for carriers. Internal Sales leadership and excellence, and not just ‘good’ product, will drive future growth. Carriers must invest in top notch sales leaders (many of whom will come from outside the industry) and empower those leaders to execute a truly integrated, multi-channel selling approach. In practice this will mean:

  • Online, mobile, call-center and agent channels all report to one ‘national’ sales leader
  • The ‘sales’ function is distinctly separated, with its own unique charter, from the ‘marketing’ umbrella
  • The sales function has more direct control and influence in recruiting, training and enabling sales resources across all channels
  • Regional sales teams report directly to a national sales leader and not regional general managers
  • Sales enablement technologies (e.g., CRM, online-purchasing engines) are developed in close coordination with sales leadership

If carriers want to adapt the competitive selling models found in the best of breed high-tech, diversified manufacturing and business services firms, they need to adapt the Sales Priorities, Leadership and Execution structures of these successful and highly adaptable firms.

Change is a constant, it is hitting the P&C industry rapidly, and only those firms that truly raise the profile of the sales organization will prosper. Those that don’t start allowing the Sales Function to ‘Eat First’, as we like to say in the Alexander Group, may just be the first to get eaten.

Learn more about Alexander Group’s Channel Sales practice.

¹Source: A.M. Best Report

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John Drosos

John Drosos is a principal in Alexander Group’s Chicago office. John consults with companies across several of the firm’s key industries, including medical devices/diagnostics, insurance, capital equipment, diversified manufacturing and technology/information services. John has over 11 years of management, technology and in-house consulting experience. His key focus areas are strategic analysis and program management and implementation. He has completed and led projects in sales growth, compensation, sales strategy and coverage, quota development, marketing strategy, market analysis and acquisitions.


Prior to joining the Alexander Group, John worked as a general manager at Home Depot and as a consultant at both Bain & Company and Andersen Consulting (now Accenture). John holds a Master of Business Administration and a Bachelor of Arts from Harvard University.


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