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Partnering with Carriers

Motherhood, apple pie & partnering with carriers. We all agree that these things are inherently GOOD, but what does an agency partnering with its companies imply? What are the commitments that an agency should make and what are the appropriate expectations in return? And what should we do and expect if those commitments turn out to be lip service or ‘Good Times Commitments’ (maintained until times get tough, then are abandoned)?

First of all, agencies have given carriers as many reasons to distrust their commitments as carriers have given agents. Both groups have, time and again, changed attitude, leaving loyalty and commitment, like victims, in the dust. Perhaps the reason for this is that our historical definitions of loyalty and commitment are flawed.

Loyalty is a trait that human beings (and many animals) have for each other, but a personal, not business, bond must exist for loyalty to occur. A parent will often remain loyal to a child (love is the bond) or to another adult (friendship is the bond) even if the other has done despicable things. However, if an employee commits fraud or a felonious crime, the corporation that employs him has no personal bond that will maintain its loyalty to the employee. Loyalty is often for long periods of time until and unless something happens to the bond between the two people.

Business relationships do not, in themselves, create loyalty. Your employees can deal with underwriters without ever building a bond with them. You can deal with company managers without ever bonding with them. Business relationships may go on for years without the issue of loyalty arising, until something goes wrong. Then one or the other parties to the relationship bemoans the lack of loyalty from the other party, but, in reality, we cannot bemoan a relationship that we never created. It is like buying groceries from a supermarket. We can do so for years, but if the store raises prices you shop at another store. If the store finds that it can make more money by moving out of your neighborhood, it will do so.

However, some retailers actually develop personal relationships with their customers. They will stay in a neighborhood, working with the customers to make enough money to remain in business. Similarly, when the loyalty is there, customers will absorb price increases to keep dealing with the business. How is loyalty built in a business relationship like that between agencies and carriers?

Friendship and mutual respect are the bonds from which loyal relationships are built. If you don’t trust each other then mutual respect is impossible. Business friendships (as opposed to social friendships) are built upon the trust, mutual respect, and a high degree of concern about helping the other party achieve his goals. So if you want to partner with agencies and carriers, begin by building a feeling of mutual trust that each partner highly desires to help the other partner achieve his goals. Once this trust is built and proven, both sides will find that their relationship is easier and smoother on a daily basis.

Commitments are tangible objectives for which each partner agrees to support the other. An agent can “commit” a level of growth to a carrier. A carrier can “commit” speed and a percentage of submissions that will be accepted. Commitment CANNOT be one sided (as most agency/carrier “commitments” currently are stated). If it is unilateral, it is a commandment, not a commitment. Commitment, as opposed to loyalty, should not be assumed to be endless. Conditions can arise, the result of which is a change in the commitment of one person or entity to another.

So let’s assume that partnering of agency and carrier is a relationship based on a commitment of each other, to each other, as long as the conditions of the commitment do not change. When conditions change, the requirement of a set of commitments is to notify the partner and alter the commitment.

A commitment without personal loyalty is possible, but is, by its nature, weaker than a commitment substantiated by a feeling of loyalty between concurrent levels in each entity.

The term “concurrent levels” is extremely important. Many an agent has found himself restricted or terminated even though they have an excellent relationship with their underwriter or marketing representative. The relationship with underwriting and marketing is important to the flow of business, but the agent must establish a relationship with the person in the company who has the authority to determine the company’s commitment to the agent. Every one below that person may be loyal, but can only pass down a change in commitment, not ameliorate it.

While no company commitment can be guaranteed because of the national or international dimension of decision-making. However, barring major changes in carrier behavior, a commitment between agency and company, negotiated in good faith and backed by the loyalty built on personal relationships between the agency staff and the carrier staff will withstand most volatility in the marketplace.

Agency/Carrier Partnerships are the most efficient and effective way for both to achieve their goals and objectives. If those partnerships continue to evade our industry, we should be prepared for the decline of the agency-based carriers as they seek better ways to manage their growth. I urge every agency to include its carriers in the Planning Process, and to establish both personal relationships and commitments with its principle carriers.