Consistency is a critical factor in shaping a trustworthy corporate persona. While agencies must adapt in response to changing coverages and technical improvements, a company's basic business philosophy should not shift with the marketplace. “The current marketplace is different,” said Hampton, “but core values do not change. What we are doing today really has not changed much from what we were doing when times were much better.”

Another important element is commitment, as both carriers and agents experience the ebb and flow of doing business together. Loss history may suffer or volume may drop off; key underwriters, CSRs or producers may move on or retire. Things change — and not always for an agent's immediate benefit. How well you stay the course and hold to your commitment says a lot about how you build relationships.

In all business discussions, the bottom line remains the bottom line; results are king. Agencies with large volume have some leverage over smaller competitors, and being able to access many companies can be a plus in building your book of business. But access does not guarantee success, and it comes with the danger of looking just like every other agency in town, offering the same products and markets. Ostrander likes taking a slightly contrarian view. “We are a larger agency and we have the benefit of having a mix of markets. Whenever possible, we like having good quality markets that many of our competitors do not. Franchise value is a big plus in my mind.”

That approach is one to consider for any size agency. It can bring smaller agencies into play if they choose to more narrowly focus their branding, expertise and energy. “If I were a small agency,” said Ostrander, “I would try to focus on a much smaller number of companies to build my relationships and value. You can always get to other markets when you need to through MGUs and wholesalers,” Hampton added. “There is so much pressure on underwriters to meet pricing and terms to be competitive they will be more inclined to 'stretch' for someone they know and trust.”

If you are a smaller agency it can make sense to commit to fewer carriers, do a better job for them, and then consider adding markets as you grow. The alternative is trying to build too many relationships with too few unique or special markets.

Communicating in Good Times and Bad

A strong relationship requires effective communication, and that takes time, energy, and at some point, resources. John Hennessy, senior vice president of distribution at CNA in Chicago, noted, “Agency partners look for consistency and a predictable outcome from their carriers. To accomplish this, we take intentional steps to make our underwriting strategies clear, we plan together with our agents and in concert with those underwriting strategies, and we remain flexible to react to specific challenges.”

Agencies often find it necessary to be pro-active in their communication, especially with their carrier partners. On the subject of facing problems of your own doing, Ostrander said what other principals are saying to their agency forces, or what they should be saying: “If a problem exists, come clean by admitting the mistake. If it is not intentional or unethical we find that most carriers are pretty good about getting past it.”

If an agent is on the receiving end of bad news, that requires action as well. As an example, Ostrander talked about a carrier moving a key company employee away from his agency. “When a carrier has to move an underwriter, or we lose that contact for whatever reason, we will ask the carrier to reconsider or to replace the person with someone of equal or better capabilities. If they fail to do so, we are not shy about going back and asking again.”

Delivering or receiving bad news is a natural result of open and honest communication. Hennessy said, “One of the hard edges of reality is that from time to time we need to make some tough choices. We are constantly evaluating our partners and in some cases agencies have to be de-selected, just like agents may choose to de-select a carrier. We do this in part to protect all of our agency partners.”

Ray Eng, national director of agency development at Travelers, said, “No partner is perfect; there will be differing opinions or missteps. I would suggest that, as partners, we hold each other accountable for how we respond to differences in opinion and missteps, not one incident in and of itself.”

“No one wants to hear (or deliver) bad news, but it is important to address issues that can be resolved,” Eng continues. “And difficult decisions are necessary to make sure we are a viable carrier for the long term. We have made a promise to our customer and we take that obligation very seriously, but to fulfill that promise we have to be around to do so.” Perhaps the best summation on the subject came from Hampton: “Bad news happens, you just have to work through it. The better the relationship, the more challenges it can withstand.”

Plan, Plan, Plan

Business planning is one area where most agencies could afford to spend more time. What is interesting is that some carriers don't pay much attention to the details of their agency partners' plans, or if they even have a plan.

Eng said that lack of planning is a team effort. “One of the problems that can prevent or limit the development of the carrier/agency relationship is the agency's lack of a formal business plan. Carriers may be guilty of allowing agents to set goals without explaining how they arrived at those goals and how they plan to achieve them. Agencies may be guilty of accepting goals from carriers that they cannot support.”

Hennessy summed up the importance of making good partner decisions from a carrier's perspective: “Due to the cost of capital, deteriorating results, competition and the like, there is tremendous pressure on carriers, and it is critical that we partner with the very best agents. You've got to get it right the first time around, as mistakes made today could be unrecoverable tomorrow.”

CNA, Travelers and other carriers are not working with or courting only the top performing agencies; they also are talking with emerging or newly formed agencies that can and will bring something to the table. New agencies and brokers have a legitimate shot at market representation, but they must be fully prepared to make their case. Once into a partnership with an agency, most carriers will supply the training and tools to help their partners succeed.

Agents and carriers alike will agree that challenges are abundant these days, and many are quite serious. There are various technical solutions and new and improved strategies, techniques and “secrets” being sold and promoted to help insurance professionals meet these challenges. Before spending a lot of time and money chasing the latest new thing, consider the possibility that ethics, mutual trust, effective communication, and good planning remain at the heart of successful business relationships.