Insurance Trends and Insights Webinar Replay

John Drosos: Hi. Good morning. Welcome, everyone, to our Insurance Channel Trends and Insights webinar.

Let’s start with introductions. My name is John Drosos. I have been a principal with the Alexander Group for about ten years and have been with the firm for 17 years. I co-lead our financial services and business services practice and I am the insurance expert at Alexander Group. I work with a wide variety of carriers to help with any issues they have with their selling models, sales roles, channels, optimization, and compensation. Recently, I have headed up some in-depth external research to look at industry trends. This research led to collaboration with Ernie, who I have known for quite some time and has been a good partner with us over the years. Ernie, would you like to introduce yourself?

Ernie Wolansky: Sure. Hi, everyone. My name is Ernie Wolansky. I am currently working on my own as an insurance compensation strategist. I am a dedicated specialist consultant working with both agencies and carriers on insurance compensation issues and opportunities. Before this, I was with Liberty and Safeco for 8-9 years and also spent 17 years at Nationwide Insurance working mostly with exclusive agencies. I have been working in insurance compensation for over 25 years in multiple distribution channels, helping both agencies and carriers with compensation issues and opportunities. I am glad to be here and have had great success working with Alexander Group in the past.

John Drosos: All right. Well, Ernie, great for you to be here. We’ll have a great conversation. So, let’s get right into it. A few months ago, we conducted some external research. We reached out to 80 insurance leaders across about 60 insurers and carriers, mainly on the P&C side, but also life, specialty insurers and some healthcare. However, we did not focus on healthcare, so you will not see a lot of information on that sector. We talked to a lot of executives across operations, sales, marketing and the C-suite from companies that manage premium in the $2 to $500 range all the way up to $5 billion-plus. This is a diverse slice of the market of insurers and some of the top insurers in the country gave us their opinions on what’s happening in the industry. We asked a lot of questions about sales models and commercial models in general and channels. We will show you a snippet of some of that data today and some of the very interesting insights on channels, some of which you may already understand and others that we found to be interesting and deserving of further exploration.

So what did we find when we asked about channel trends? We asked about how companies are covering the market and what channels they are using. Are they using external agents who are independent or brokers or consultants? Are they using employee sellers who are not just managing an external channel but are doing the selling themselves, whether it be through a call center, telesales, or account managers? Or are they primarily going online? We asked specifically how much of the premium is being sold and managed primarily online.

We found that about 20% is going online, 13% is through employee channels, and 70% is still through the traditional agent-broker model. This seems to be what we would expect and there were no major surprises.

Ernie Wolansky: I agree. I think things are leveling off from an online perspective. I know 20 years ago, everyone thought that online would dominate. And while it’s still very important and growing, it hasn’t grown as fast as some predicted. So things have stabilized more than expected. But I still think the growth opportunity is still there and your numbers show it, John. There’s still more room to grow in online channels.

John Drosos: Yeah, everyone is pretty bullish. We’ll see if that bullishness is validated. When we asked about where growth is coming from, the top answer was online and mobile. 4.5 on a survey like this across 80 executives is pretty good support that there’s still a lot of growth there and that’s where companies are investing. On the bottom end, we’ve got call centers and telesales. It’s surprising to me that it seems to be in decline or at least flatlining, the same with employee agents and account managers.

So it seems like employee-selling models aren’t currently a significant share of overall sales and they appear to be stagnant or at least, that’s the opinion of where growth is. That’s not where leaders believe growth to be. Another interesting fact is that exclusive and dedicated agents have been on the defensive for a while. Share has actually gone down a bit. Companies are bullish on exclusive or dedicated agents, but particularly in independent agents. As you can see in the prior slide, this is the dominant channel, with about 29% of premium being managed by independent agents. Outside of mobile and online, this is where the action is. Companies, or carriers, are very bullish on independents and they pretty much edge out all the other channels. Ernie, any thoughts on these before we delve deeper into some of these topics?

Ernie Wolansky: No, just looking at long-term trends, independent agency distribution has pretty much held steady over the last 20 years. There’s been an increase in direct and online sales, and most of that business has come at the expense of exclusive and dedicated agencies. Those trends are starting to level out now.

John Drosos: Yeah, it seems. I’m surprised there was a little bit more positivity towards exclusive and dedicated agents. Carriers aren’t giving up on that channel, and it still accounts for about a fifth of premium. So, we won’t talk much about that channel, but we will definitely delve into other topics like Independence, Online and what’s going on with employee cell sales models. So, with that, we looked at whether there was a bias. Maybe if you are employee-channel heavy, if you use a lot of call centers and employee agents or account managers, maybe you would be more bullish. And maybe if you don’t, if your external channel heavy, you don’t know what a call center is or you’ve never used one, you’ve never had an employee agent or an employee seller, maybe you would be less bullish on the channel. That’s not what we found, though. We actually found that the carriers that are employee-channel heavy and here it meant where about a third of the business is managed by an employee channel. So, these are companies, I’d say about 2025 of the carriers in the data set where a good chunk of their business is being managed, the premiums being managed through employee channels, they’re even less bullish than others. There’s definitely some negativity here. There’s definitely some thought that this is not where the growth is. And overall, we see a little more optimism around the external channel heavy insurers. So, there’s definitely no bias here. It seems to be more universal that these trends are what they are online and mobile is where the expected growth is. Independent agents are seen positively and seem to edge out all the other channels and then call centers and employee agents, account managers come out as on the bottom as far as where growth expectation is either flat or possibly declining. Any thoughts on this? I think this is our last data slide and then we’ll delve into a more in-depth conversation around some of these trends.

Ernie Wolansky: No, I think I was surprised as well. Call centers and telesales are complementary. They complement online mobile sales, because I think anyone who’s selling online mobile also has to have a call center. They have some sort of in-person support, but they’re putting more resources into developing robust websites and mobile to actually close sales with less call center contact.

John Drosos: Yeah. And it doesn’t seem to me like the call center as a selling resource, either outbound or where the call center rep is closing the inquiry, that doesn’t seem to be where the investment is going. It’s definitely going more towards mobile, where you may not need a selling resource. You may just need someone that helps close buying a policy, a servicing resource on the back end to get that done. Or maybe it all gets done online.

Ernie Wolansky: All right.

John Drosos: All right. So that spurred several conversations. I actually looked at this data, reviewed it with Ernie over a few weeks and said, hey, are we seeing the right things here? Does this make sense? And what do we think about it? Based on that, we actually put together an article a few weeks back that’s out there. Happy to share that with everyone who is on this webinar. But for today, we’re going to delve into some of these themes or what’s coming out of what we see here at some major channel trends. So, number one, online mobile offers tremendous growth opportunities. So, there’s maybe there’s a leveling off, but it looks like there’s still a lot of growth there. And we’ll discuss what’s the best way to capture that growth and what are some good options if you’re investing in online. Can you just go purely independently with an online mobile channel? Does it make sense to integrate? Should you do both? Independent agents are the preferred route to market for many carriers, most perhaps. But there’s also some downsides. You don’t have a lot of control over independent agents. You probably need to pay them more. You definitely do pay more in most cases. And they’re not necessarily that loyal. So, it could be a good route to market, but I’m not sure it works for everyone and it has to be done well.

Ernie Wolansky: You don’t own the business, right?

John Drosos: Exactly. You don’t own the business. You have very little control, which could be positive and negative. You have some flexibility there as far as you can go to another independent agent if you don’t like the one you’re with. But they could take a lot of business with them if their relationship sours. Finally, on the employee channel side, there is stagnation. There is some decline that we’re seeing here. Here at the Alexander Group, we are pretty bullish on inside sales channels. We’re pretty bullish on managing employee sales resources. That actually is the dominant model outside of insurance, particularly on the commercial or enterprise side. But there definitely are some difficulties here. So, we’ll discuss a little bit around what are those difficulties, what is causing this pessimism in this channel and what can you do if this is your channel? This is there are some carriers out there we know pretty well that have been very successful with this model. Can they continue to be so or can you continue to be so if you’re having seen some issues right now with costs, with investment, with growth, with what they have, what you have in employee sales channel? So, let’s start with online and mobile. We’ve set up some questions here and happy to get questions from participants, so feel free to send them through. And hopefully if I can manage technology here, I can see some of those questions come through. So, feel free to send us any questions you might have.

And for those of you joining us a little bit late, we are having trouble with the webcam, so you won’t see our faces. Rest assured, we are here. We’d like to show you our faces, but unfortunately, we’re having some issues in that regard. So you might see us pop in, but probably you’ll just be looking at the slides for the presentation. All right. So online, mobile insights and best practices, there’s obvious growth and high expectations for online mobile. You saw the data, 4.5 out of five. Everyone is bullish on growth here, but carriers are very different in their approaches and capitalizing on this route to market. So question number one, we’ll spend about ten or 15 minutes on this topic and then we’ll move on to the other two. Should all carriers invest in a dedicated online mobile channel? Is this is this a must-have right now as a carrier or you’re going to be uncompetitive? And first question, should you do it with minimal or no shared commissions with other channels? Is it pretty straightforward just to set this up as an independent channel? I don’t have to share with my whatever brokers, agents out there, employees. I just know someone comes online, they want a policy, they close it, don’t pay anyone, or we can get also into question number two. Is it better to integrate and how do you do that? How do you best integrate online with other channels? Any thoughts?

Ernie Wolansky: Yeah, so I think the obvious answer is yes, everyone should have online mobile channels, whether it’s a way that they market for new business or just as a support mechanism for the other channels and for the customers of the other channels. So, I think most folks have the capability. It’s whether or not they market to compete against their external channels or not. I think it’s very interesting if you look at the top 20 carriers in the marketplace, the top carriers, top five or so, if you go to the landing page on their websites, they have “get a quote” or “find an agent.” And the second tier, by agents, i.e., agent carriers, generally really focusing on agents. And so I think it’s just a matter of time. You’ll see more and more of these companies also providing an online channel, a way to get new business, but also as a main tool for an existing customer who’s a customer of an independent agency carrier to make a change on the policy or even add a policy and basically manage their own. They prefer not to work 100% of the time with their independent agency, but they can make changes directly with the carrier through the online channel. So I think that’s almost a must going forward.

John Drosos: Yeah, to either have it completely independent or have it integrated when you integrate it. And I think that probably leads to question number three. How do you do it with agents out there? So I know I think I mentioned before we work with a client where they had a it used to take two days, two days when you’d call an agent or leave a message before they responded, which was just awful. You know, online you can do everything right away, but there’s a cost to that. I mean, carriers obviously have to put a lot of money into online systems and things like that. How do you get agents on board and sharing some of the costs? What are some best practices to do that?

Ernie Wolansky: Yeah, so it’s a cost distribution, right? I think you have to bake it into your compensation rates for your external agents. It’s a service that works for your customers and works for your agents. You have to market it that way and have a total compensation package that allows for servicing your agents or servicing your customers with online channels. The last thing you want to do is start charging your agents when your customers choose to go online. That sets up a bunch of conflict with your agents and it’s a very complex process of pay and reduced commissions for customers who choose to do business online. It’s just fraught with error. So, I think you just have to go forward and say we’re going to provide these tools for our customers and our agents. You don’t have to use them all, but it’s going to be baked into how we compensate you.

John Drosos: And whether the agent wants to use them or not. You have to change all your rate tables, right?

Ernie Wolansky: So the customers can always call them or they can have servicing provided by the carrier through using online tools. Eventually, most customers are going to demand and want to go online and manage things themselves directly with the carrier as opposed to always working through a middleman agency for simple issues.

John Drosos: So in that case, you have to do it with all your agents. You can’t just go out and say, who wants to sign up?

Ernie Wolansky: A lot of carriers will try to segment their agencies or charge a certain amount for online servicing, but it’s fraught with error and conflict. Instead, to provide the best service to all your customers, bake it into your cost structure. For many carriers, it will mean changing the commission structure as they make investments and change the way they do business with their customers.

John Drosos: Yeah, it’s tough to have ten different policies for all your agents. You almost have to go through the pain of just getting it done and saying, this is how we’re going to operate going forward, even if this is a dominant channel. The agents themselves, especially independents and smaller brokers, need to get on board with technology or else they’re going to be at a disadvantage. We’ll get into that topic in a little bit. The last piece here, if there are any questions coming from participants, we’d be happy to answer. As we get to the next topic, we’ll spend a few more minutes on this. Is the rapid growth going to continue? Everyone thinks it’s going to continue. And what’s interesting is that when online first became viable, I’d say maybe 10, 15 years ago, when we work with them, we work with carriers. There was a thought that, hey, maybe it’s the simple stuff that can go online. If you’ve got a simple auto policy, you can do it 100% online, but it’s going to be harder to get everything else on their complex life policies or property or commercial. But it seems that this is what’s happening right now. All generations are getting very comfortable with technology, especially, the younger generations, So, what we thought was not possible before is possible today. What are your thoughts on how much can be sold online purely or maybe with a little bit of help, but can you complete a complex policy online?

Ernie Wolansky: If everything started with auto rights and most companies you can buy auto online from start to finish. Some companies are doing it with homeowners, some of them not so much, and a lot of homeowners. It’s directed to someone, but you can still do that. But I think commercial lines are headed that way. I mean, small commercial is not so much different than a home. It’s property and liability and smart commercial is being written without underwriters a lot these days. Commercial auto is a lot like personal auto, so I think simplified commercial is headed that way. But I think there’s always going to be obviously the larger commercial and medium commercial that the business is going to is best served by an agent, whether it be a person in a call center, or an external agent continues to dominate mid-market, commercial, and life insurance. Simple term insurance. I know that a lot of that has been written directly online, but for the most part, most of that has been closed and sold through external agencies, agents as well.

John Drosos: All right. It looks like we got a couple of questions here. I’ve got a little echo. Hopefully that goes away. But I think we might have answered this. But what do you see as the trend with insurance insurtech BGA to accelerate the online channel sales separate from the carrier’s own online channels? Any thoughts on that? I think we covered that a little bit.

Ernie Wolansky: But yeah, it depends on what you call insurance. So, if you’re talking about some of the aggregators, like the zebras of the world who are out there selling independent agency, it’s basically another agency, right? So it’s an external sales channel. Using leveraging technology, I think you’ll see more and more of that. They’re basically stepping in and saying, Hey, we can provide something that carriers can’t and that agencies, traditional agencies aren’t doing is basically automating an independent agency completely online. So, they’re providing that simplicity to those customers who really prefer to do business completely online without working with a traditional independent agency. But they are they are platforms. They are working as independent agencies selling multiple products. So, from an insurer, tact, you know, a lot of these aggregators, these consolidators are having success in the marketplace and probably we’ll continue to.

John Drosos: All right. We’ll talk about that a little bit more with our next topic. So we could talk about this for at least another hour. A lot going on here, but it’s not going away. There’s a lot of investment. There’s a lot of growth in. It’s complicated things. It’s a lot more complicated to deal with multiple channels and splitting commissions and cost structures that it was in the past where maybe you just had one channel to market, But it still offers a lot of tremendous growth opportunity. And pretty much every carrier needs to have an online strategy. So number two, independent agents. They’re continuing to go strong. I mean, with all that’s going on out there, with all the pressures on agents, with call center models, with online and mobile now. Independent agents have continued to hold their own. They continue to keep share, maybe even grow share a little bit. And the better ones out there are taking advantage of technology. They’re consolidating, they’re getting bigger and they’re getting stronger. So. The channel overall, I think is doing well. I think you’d agree. And carriers are bullish on independent agents. So, I think you’d agree the channel overall is doing well. And carriers are bullish on independent agents. What are some of the advantages and disadvantages of independent agents from a carrier perspective?

Ernie Wolansky: Yeah, the big one is flexibility, right? Flexibility of having coverage to sell your product. It’s 100% variable cost as opposed to having an employee-based external operation. It’s easy to appoint agencies compared to hiring sellers. So, you have complete flexibility and if you’re competitive in one market and not competitive later on, the independent agencies have other markets they can take advantage of. So, the sellers aren’t dependent on you having a competitive product because they have other markets and you’re not beholden to an employee agency force or a dedicated exclusive agency force and need competitive products in order to make a living. Right. So, it’s the flexibility that the independent agency channel provides and the choices that they provide to their customers that are the biggest advantage that independent agencies distribution has for customers and for carriers.

John Drosos: Yeah, and there’s quite a variety out there too, right? There’s just not one flavor. You’ve got some very sophisticated independent agencies out there.

Ernie Wolansky: Brokers, right. Huge brokers. And then you have very one or two person shops and you have InsurTech that someone brought up earlier that do business a lot. Completely different. There’re franchises, there’re all kinds of networks of agencies. So independent agencies come in many different shapes and sizes. But that is a challenge for carriers, too. How do you manage such a diverse group of sellers? Can you have a compensation program that fits everyone? And the answer is no, right? So that provides some internal challenges as carriers try to adapt or adapt the many different types of independent agencies.

John Drosos: Yeah, and there are the negatives too, right? So, they usually cost more, at least maybe not on a fixed basis, but on a variable basis you have to pay 25, 50% plus depending, and some carriers pay a lot more than others depending on the clout they have.

Ernie Wolansky: In our product and whether it’s Property and Casualty or life insurance. And there’s different commission structures and you pay a price, but you’re also paying part of that commission is customer acquisition costs. So, in the independent agency world, a lot of these independent agency companies don’t have high advertising budgets, right? So, they’re paying their independent agencies to find new customers.

John Drosos: So. So how do you establish and maintain a strong relationship then? How do you. In my work, it’s you. You typically want to be number one, two or three, right? Carrier that the independent agent goes to and when they’re quoting something ideally number one. So, what are some tricks of the trade to make sure that you have a strong relationship with independent agents and you can continue to be in that top three.

Ernie Wolansky: Well, you’ve got to be perceived as their advocate. I mean, there’s different approaches for different carriers. Some carriers will say we’re going to have the best price and we’re going to be the easiest to do business with. Right. And they’re not deep with any particular agent, but they’re appointed every single agency that’s out there. And the way that they compete is having very progressive prices. Right. So, they’re out there with everyone. And then other carriers are really competing on depth. And their focus is how can we have as many agencies having one or two or three and they reward agencies based on that. Successful carriers are competing in this space by rewarding agencies on how deep they are with the carrier. So, I think that’s super important. And having segmentation, you can’t treat all agencies the same. We know that agencies look and feel very differently, so you have to have different programs for different types of agencies, whether they’re a network or an aggregator or a partner in some sort. You have to be flexible and you have to meet the needs of the agents, and you’re going to have to do some sort of segmentation play in order to do that. So, I think it comes down to having a very strong field force and having processes in place to maintain those individual relationships with the agents.

John Drosos: Yeah. So, on the commission side, our fourth question here, you can’t have just a simple commission structure, right? You know, it’s 10% for everything. Know that there’s some complications you need in your commission structures. And ideally, I would argue for some add-on or bonus programs, where if you are a top independent agent, you get a lot extra, you get a lot more, maybe not a lot more, but five, ten, 15% more upside in your commissions or based on other performance factors, right?

Ernie Wolansky: Yeah. I think the best practice is not to have the best in class based commission structure in your market. You have to be close. But I think you have to allow for some of your compensation budget for reward programs and for segmentation plays and to adjust for dislocation and for growth opportunities. So, you have to carve out part of your total agent compensation budget for rewards to meet your growth objectives and to handle dislocation and to take advantage of opportunities in the market. If you don’t, you try to have a one size fits all. You’re going to be missing a lot of opportunity in this space.

I mean, two of the biggest players out there, Allstate and State Farm, have dedicated agent forces and some of them are having very good years. I don’t think there are as many companies using dedicated agents, at least in the P&C world and personal lines, as there have been in the past. But consumers still work with these brick-and-mortar dedicated agencies in the marketplace. You see them at the strip malls around the country, right? State Farms, Allstate, and American Family. They’re all having consistent success sticking to these channels. So, they’re still competitive. They’re finding ways, I think, to use online and mobile to augment and work with their dedicated agencies. But they’re still competitive. They’re still out there, they’re still gaining market share and they’re still very visible in the marketplace.

John Drosos: Yeah, there’s definitely a dip for a while and then it seems to have leveled out, interestingly enough. And maybe the online growth has moderated a little bit. Maybe the online and employee sales channels have started to show weakness, as we see, and that may be benefiting dedicated agent models.

Ernie Wolansky: So if you go to their landing sites, they are quoting and providing quotes online. In essence, they are competing with some of their dedicated agencies.

John Drosos: Yeah. And again, it also brings up the same questions with dedicated as independent insurance agent. How do you share commissions? How do you bake that in? Whether you use one channel or the other more frequently or rely on one more heavily, it still gets back to the online presence, right? You need a pretty good online, integrated online strategy to help augment your external channels. So, it brings us to the third topic here, which is the employee sales channel. This is a little dire, stagnation, decline. It’s a little surprising, but there are some reasons for this and maybe it’s a shorter-term effect. Maybe it’s a longer-term effect because of the things we’re seeing. We’re seeing the agent channels get a little stronger, definitely online. It’s continued to see a lot of growth. And so that leaves the employee channel with kind of holding the bag a little bit. And there’s some reasons for that, but I think there’s also room for some optimism. And I think some companies, especially some companies that are highly specialized and work more on the commercial side, an employee or an agent-employee model might work best for you. But if you’re heavily on the consumer side, I think it’s becoming more and more difficult for a number of reasons. So, number one, cost disadvantage. You know, it was looked at as a cost advantage a while back, but now maybe there’s a cost disadvantage. The data we looked at shows about 70% plus fixed cost with employee-agent models, particularly sales or call centers. And so you’ve got that built in and about 30% of variable cost that doesn’t even include benefits and equipment and things like that. So, is there a cost disadvantage here? Is that real? Is that what’s driving this or is there more to it than that?

Ernie Wolansky: Well, it’s a heavy fixed cost, right? So, you have to hire employees. There’s heavy churn in hiring producers, whether they’re in field employee channels or in call centers. There’s a huge turnover, particularly in the first year or two, 50%. So, you have to hire or train one. There’s a lot of training costs, a lot of benefit costs. And then you have to match your sellers to the demand of your product and try to estimate what the demand for your product is going to be when you’re underwriters or raising prices. And there’s a lot of competitive change in the marketplace, it can be very difficult to predict project demand and how many sellers you’re going to be needing for employee-led channels. Sometimes you can just add employees, and everyone sells less, right? So trying to match the number of sellers and the optimal amount of sellers to the demand for your product is very challenging, particularly if you don’t have one product to sell. There’s a lot of carriers now that have their own internal brokerage houses that are selling other company’s more competitively based products and trying to look more like an independent agent, even though they have dedicated employee-led sales channels. I think that’s key to recouping some of their costs of their advertising by earning a commission, selling another product if they’re not competitive and taking advantage of their investment in lead generation, which is if you just have one product and you’re trying to drive phone calls or to drive sales and you’re only closing 10% of them, it’s very difficult to do that profitably.

John Drosos: Yeah, and what we saw was interesting in the data and then what we’ve done is the variability here. There’s no one model, so one carrier will pay. We’ll go the kind of model where they’ll pay 50 grand and very little incentive for an inside sellers. Others will pay up to $150,000. If you have a good year with an inside seller, which starts to drive your costs out of control. I think part of from when we look at it, there’s not there’s not a lot of good discipline out there or more consistency in how these channels are managed and the problems you bring up, too. You’ve got to be flexible. Maybe one year you need to flex up or flex down or focus more on outbound versus inbound. So just having that sophistication to manage those channels is sometimes missing with these carriers and they let the costs get out of control.

Ernie Wolansky: Yeah, I think the key to being successful is having a competitive, stable priced product in the marketplace. If you’re a carrier taking 15 to 20% rate increases on a regular basis or every other year in certain key products, then it’s very hard to be successful with an employee led channel.

John Drosos: Let’s talk a little bit about the field sales model, too, which is interesting, which is the field sales model. I think we’ve seen it work with on the commercial side or where you’re highly specialized commercial enterprise policies that you sell. It’s tough to do though, with consumers, right? Hiring someone, putting them out in the field as an employee agent or as an employee account manager. That just seems to be a tough model. Any thoughts on that specifically where you’re not just hiring a call center resource, but you’re setting up a small office.

Ernie Wolansky: Especially, you’re competing with the dedicated independent contractor agency that’s out there who is cost structure is a lot less than a carrier based field employee, right? So those models are far and few between far and few between. And they’re not having as much success as they had in the past. And they’re trying to become the ones that I’ve seen in the marketplace, are trying to become more like an independent agency model and selling other products. There’s a lot of changes in those companies that still exist that are employee based, exclusive distribution, you know. Companies are trying to compete in the marketplace.

John Drosos: Yeah, and again, I’ve seen examples where you’re highly specialized, you know, in what you’re going after. It tends to be higher ticket commercial lines that you’re selling. So that can work there. But we’re trying to do it in the consumer space.

Ernie Wolansky: I mean, there’s a lot of success flows in the life insurance, a lot of successful models in life insurance and financial services, of course, in this space as well as in larger commercial, that’s what we see a lot of channels having success in employee field operations.

John Drosos: And another thing, too, and I think you brought it up is when you try to copy the agent model. So having an employee is different. Typically, you need a base salary and you often have a more variable bonus-type program, not just a straight commission. But I’ve seen a lot of carriers just try to copy the agent model where they’ll bring someone on with a very low base, 100% commission, and you kind of get the worst of both worlds, right? You don’t have an independent agent or even an exclusive agent. You have someone at 100% or close to 100% commission, but you still have to support them with benefit costs, marketing, and what have you. So, you kind of get the worst of both worlds if you don’t do it right.

Ernie Wolansky: Right.

John Drosos: All right. So, I think we’ve got really good discussion across all three of these topics. I’ll see if there’s any questions. Please feel free to bring them through if you have any. But we’ll kind of close off here with some words of wisdom, as we always do at the Alexander Group. How do carriers ensure their selling models drive profitable growth? Ernie, please feel free to chime in on any of these. You’ve got to have a mobile and online strategy. Ideally, if you’ve got one channel, you can separate them out. Great. But ideally, if you’re a diversified carrier out there, you’ve got to have this integrated across your channels. Assess the productivity and effectiveness of all your channels to market. You may think you’re productive. You may think you’re effective. But when we’ve done analysis, we’ve seen that cost structures can vary dramatically. When you have one employee that’s costing you 100% of new premium, others that are extremely efficient.

Ernie Wolansky: This one’s really key. I think a lot of carriers don’t want to give up on their legacy channels. Some of them have been successful in migrating from employee-based or dedicated channels and moving to a complete online channel. You have to evolve in the marketplace and you have to do a lot of rigor to the cost and really challenge in terms of where are you going to put your investments in the marketplace to optimize your selling effectiveness?

John Drosos: Absolutely. Yeah. But it may not be the only answer. You may move to one channel or the other. But it may just be, hey, this channel needs to be a certain size and maybe I need to invest in another channel as well.

Ernie Wolansky: What do you do? Where do you place your bets? Right. What channels are you going to get the most bang for? There might be some channels that are going to be cash cows. You’re not going to invest, but they’re still profitable while others you have to make the investments in for future growth opportunities.

John Drosos: Absolutely. And that kind of covers number four, put analysis and rigor behind adding selling capacity. We noticed in the survey that carriers are more bullish on growth going forward and are adding selling capacity. But if you add selling capacity, you have to be smart about where and how you add it. Number three, just about everyone needs a sales and marketing operations team. This team should not only focus on operations but also maximizing the efficiency of your selling and marketing operations. There are a lot of tools out there, such as CRM and marketing automation, that can help with this. But given the complexity, it’s hard to manage it all without a dedicated team. Number five, go ahead.

Ernie Wolansky: The key point is you don’t want to starve your back office here, right? Some companies will invest in field operations and front-line salespeople, but they starve their back-office operations. And I think that can be a big mistake in the marketplace.

John Drosos: It’s a bad idea. I mean, you may have too many operational resources that may not be doing the right thing, but once you have a sales or marketing operations team in place, it’s a good place to invest. Every research and piece of research we’ve done shows that companies that have established sales and marketing operations teams have higher growth at a lower cost. This is because these teams can do the analytics and figure out where to focus efforts to make sellers more effective. So, you definitely need to invest here.

Ernie Wolansky: Yeah, you just don’t want to throw sellers in the marketplace. You need to invest in well-balanced back-office teams that make sure you’re spending your dollars efficiently and sellers’ time efficiently.

John Drosos: Absolutely. And one of the things that drives this is that there’s so much sales and marketing technology out there, and people are just confused about what they should buy or how to use it in different ways for marketing automation. There are now ten or fifteen CRM systems outside of Salesforce. How do you put it all together? Not to mention AI and all kinds of tools for call center operations and sales and marketing. So having someone close to sales and marketing who can figure it out and help you with it pays dividends. Number six, ensure that traditional commission plans are driving the right behaviors. Another thing we see is just relying on an old commission table and not doing much else with it. You’ve got to be more active. You don’t want to change your commission tables every year, as there are some legal issues, but you’ve got to be looking at it and trying to figure out if you’re putting the right amount of incentive where you need to see growth.

Ernie Wolansky: Yeah. Commissions themselves rarely drive behavior. You must have a competitive commission structure, but it’s more about the incentive structures and everything else you do from a compensation perspective that’s going to drive growth in the market. You have to do something right.

John Drosos: Which also brings up number six. You can do a lot with your commission table, but that’s not enough. You’ve got to have some money set aside to figure out, how do I strategically pay for certain behaviors with an add-on bonus program? These aren’t automated programs where you’ve been an agent for five years, so we’ll give you an extra 5%. These are programs where you say, “Hey, if you can grow this line for me by X, you’re going to get a lot more than your standard commission.

Ernie Wolansky: Absolutely. You’ve got to do something different with independent agency channels, like profit share or other incentives for dedicated channels that are more growth-focused. There’s a lot of different things you’ve got to do. And then you’re trying to serve, at least in the independent agency world, a very diverse set of independent agencies. You have to accommodate their needs and spend some back office time and have some segmentation programs to meet their needs to be effective in the changing market.

John Drosos: The last note brings us back to number three. Having a sales and marketing ops team and having a little bit more investment in sales management can help you with all of this. All right, Ernie, thank you so much. A little bit of advertising from the Alexander Group. If you want some more insights from us, download our app. If you are interested in sales and marketing in general, we do have a Women Revenue Leaders Forum coming up in May. This would be, I think, our third or fourth, and it’s a fantastic event. And then finally, our capstone event, our Executive Forum in Palm Beach, Florida. Finally, back after a few years. That is a tremendous event. We typically have about 300 sales marketing revenue leaders attend across industries. So, fantastic event, and probably the best event out there if you are in commercial revenue leadership. And with that, thank you to everyone. Thank you in particular to Ernie for coming on board here and sharing your tremendous insights and experience.

Ernie Wolansky: Thanks, John. It’s always a pleasure.

John Drosos: All right. And to everyone who attended, sorry that you could not see our faces, I don’t think you missed much. Hopefully, you got something out of the webinar. Thank you all.

Ernie Wolansky: Have a great day, guys.