Why is Agent and Broker Employment Declining?

 

 
The latest issue of Best’s Review shows that employment in the insurance industry’s agent and broker segment continues to decline at a rate of about 3%. This could be just a “sign of the times” due to the economy and the protracted soft commercial insurance market, or it could be indicative of deeper issues.
 When times and finances are good, agents and brokers tend to maintain staff or even add to the employee count. If management doesn’t constantly monitor the workload for agency internal staff members, and compare their workload with the best practices of the industry, an overstaffing situation is not uncommon. Ironically, when asked why agencies experience service failures, E&O problems, or chronic backlog, most would say the reason is that they are understaffed. The reality is that many agencies have more than enough personnel, but what they are lacking is formalized and effective workflows and procedures, solid operational management, and a compensation system that recognizes outstanding, rather than mediocre, achievement. In some cases, the staff is adequate to maintain the status quo, but may not possess the skills and abilities to move the agency from reactive service to the proactive customer service that will keep current customers on board and attract prospective clients.
 There should be no shame in “right-sizing” an organization, although we recognize how difficult the decision is to let someone go, especially in relatively small agencies. There are ways to terminate an employee that leave his or her dignity intact, and in some cases you are actually doing the person a great service. No one is truly fulfilled doing a job they dislike or at which they are failing.
 In the coming months, Insurance Skills Center will present programs and resources that will help member agents identify operational problems and deficiencies, develop plans to close the gaps between current operations and desired outcomes, and assist members in running more productive and profitable organizations. Our focus will be on providing the tools and resources members require to move their organizations forward and make them more recession-proof in the next few years.
 Cheryl L. Koch, CPCU, CIC, AAI, ARM, AAM, AIM, AIS, ARP, API, ACSR, AFIS is the Managing Director of Insurance Skills Center / IBA West Education

 

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