Safeco Exec Tells SIAA: Independent Agents Key Value is at Point-of-Sale
Insurance companies value the personal knowledge of customers that independent agents have and sometimes this point-of-sale personal touch can override even the most sophisticated of rating technology, according to a leading insurance executive.
“The best way for a consumer to buy insurance is to use the services of an independent agent, but to be successful that agent has to be smart, efficient and well-informed,” according to Mike LaRocco, Safeco Insurance Companies president of product, underwriting and claims.
LaRocco spoke to members of the Strategic Independent Agents Alliance during SIAA’s 19th semi-annual business meeting at the Marriot World Center in Orlando, Fla.
LaRocco, who joined Safeco in 2001, has helped the company become one of the most efficient and profitable companies selling personal lines insurance exclusively through the independent distribution channel.
“A key factor an independent has is that at the point-of-sale the independent agent can look the customer in the eye,” LaRocco said. “You know things about the customer and can make changes every day.”
One of the most important factors in the insurance business is consistency, according to LaRocco. He said companies that use only a few points to determine how much to charge for a policy can’t possibly compete with companies like Safeco that often use systems involving 35 or more tiers.
LaRocco maintained that even with elaborate rating systems, companies should retain some flexibility. If an agent contacts Safeco and explains that he personally knew a customer and provided reasons why the risk qualified for a better rate, the company has the latitude to take such personal factors into consideration and could base the policy cost on the agent’s evaluation.
In the past, according to LaRocco, insurance cycles have had a major influence on how companies sold their products. He pointed out that in some years prices often fluctuated upward by as much as 30 to 40 percent; while during other years they might drop 20 percent. He said that such fluctuation made it easy for agents to make dramatic mistakes in pricing their policies.
Data-mining skills essential
“Companies that use technology to understand how to sell their product and use data mining and skill sets can predict the future and flatten out such cycles,” LaRocco said. He explained that companies that rely on paperwork and single price points to make decisions often under-price products, lose money and don’t stay in business very long.
LaRocco called SIAA a “pioneer” in changing the distribution force. “It’s important to be smart, efficient and have smart partners,” LaRocco explained.
He said that in property/casualty lines lots of companies have come and gone because they did not understand how to price their products. He said that the major remaining players are Safeco, Progressive and Allstate.
SIAA is an independent insurance agency network comprised of large master agencies and local independent agencies. During SIAA’s business meeting, members met with representatives from The Hartford, Travelers, Safeco, Liberty RAM, Zurich, MetLife, Sentry (Dairyland) and Bristol West.
Steve Tague, of Tague 3M Alliance Services, accepted the award as SIAA rookie of the year. Chris Torres of Oklahoma Insurance was honored as the top recruiter.
SIAA chose the following agencies as its top performers: Agents Helping Agents, Continental Insurance Agency Alliance, Hudson Valley Agency Alliance, Mountain State Agency Alliance, Oklahoma Agents Alliance, Potomac Insurance Network, Satellite Agency of New York, SIA of North Carolina, SIA of Wisconsin, South Carolina Agents Network and Southern Insurance Group.