Uncaptive Agency: The Future of Insurance, Ep. 10

According to our guest Tyler Asher, insurance carrier Liberty Mutual believes in supporting independent agents and pursuing a deep digital transformation going into the future. The COVID pandemic has only accelerated the trend, with customers demanding more digital options and more personalization, and the acceleration will continue over the next few years.  

Company culture has to change to adapt to the times, and Liberty Mutual’s culture focuses on supporting independent agents with integrity, making things easy, because as Tyler says “your success drives our success.”

Join me as I discuss the future of insurance distribution with Tyler Asher, President of Independent Agency Distribution, Liberty Mutual.

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TC: Hi, everybody, welcome to another episode of uncapped agent the future of insurance. This afternoon I'm delighted to have as my guest, Tyler Asher Tyler is the president of independent agency distribution for Liberty Mutual and Safeco, insurance. Welcome. Glad to have you. 

TA: Thanks for having me on, Tony, excited to be with you today.

TC: So we're going to talk a little bit about what your view of the future of insurance distribution is over the next three to five years. I've had the opportunity to hear you speak a number of times. And you always talk about Safeco, insurance and Liberty Mutual in a way that I think is interesting: you always say that you're not only committed to independent insurance agents, which we really appreciate, but also that you're committed to being deeply digital. And so it seems to me that that's a great place to start our conversation about the future. So first of all, I know that you have a personal confidence in a strong and vibrant future for independent agents. But I also sense that you believe that the future is also really digital. Would you mind sharing with us, not just the carrier perspective about how you want to be digital, but also about what you think agencies look like as we go forward?

TA: Yeah, our core belief is that independent agents will continue to win in the market. And we look at the agency channel relative to any other channel, and what sets agents apart in terms of a competitive advantage is our ability to provide the combination of ease of doing business choice in terms of breadth of offering and custom, tailored advice. That's been a winning formula for the channel for many years. And it really is the foundation of the success that we've had. And as we have an eye towards the future, it's looking at that specific competitive advantage, ease of choice and advice, and thinking through how to evolve that over time to maintain that advantage. And that's where our focus on digital enablement, deeply digital really comes into play, because we think over time, what it means to provide each of those elements ease of doing business isn't just shopping on behalf of customers, it's how do you make yourself available anytime, anywhere, with deeply personalized experiences that are available to customer when they want choices, and just choosing between carriers, it's really as customizing a tailored, you know, risk solution to meet their needs. And advice has never been, you know, more important than it is now, in terms of a changing landscape. So what's important for us is, how do we continue to really set ourselves up for that success and evolve that value proposition? Digital is a huge aspect of that. And we've you know, we've been on a journey with digital for a while. And it's really been, how do we collectively, not just on the carrier side, but an agency side, really rise to meet customer's kind of soaring expectations in regards to digital. And we've made a lot of progress over the past few years on ramping up adoption, making investments. And I'll tell you this, this COVID period has really put that on overdrive, in terms of customer expectation shifting, and the need for both carriers and agents alike to really respond, you know, with services and solutions that are that are tailored to customers that make it incredibly easy to partner with us. And we see that trend really amplifying and accelerating over the next three or five years.

TC: You know, I have a business coach who was talking about COVID and the impact on his clients’ business, generally speaking, and his comment was that he felt like COVID had really accelerated both progress and also opportunity, about five years into the future. In other words, some people are talking about COVID as something that put what was going on on steroids. His perspective is it just totally shifted. We're five years into the future compared to where we were at the beginning of the year. How do you see that?

TA: Well, Tony, that's exactly right. And actually, I'm gonna I forget the source. I'm gonna find it for you. But we were just looking at this. So ecommerce sales as a barometer, and this is insurance. This is all retail, right? E-commerce sales went from about 5%, up to 15% over the last decade, so 10 years to go up 10 percentage points, the first eight weeks of the lockdown. So really March, April, we went up another 10 points. So in eight weeks, two months, the rate of adoption of e-commerce really matched the progress made over the last decade. And so certainly in this environment, you know, when everyone's locked at home, you're trying to get things done. It's the only way to work. But we do think that has some, you know, long term kind of persistence, where that really has changed. You know, people's mindset and nearly has made them more willing to accept digital? Will it stay at this level? You know, I think many of us, myself included, are eager to kind of get back out into the world and some level of normalcy. But I also think, you know, for those that maybe hadn't thought about doing transactions, whether it's sales or service digitally, we really do think that their mindsets have probably permanently been altered by the experience they've had during this period.

TC: Well, here we are in the fourth quarter, getting towards the end of 2020. And so a five-year look into the future takes us to the end of 2025. So if we were having this conversation five years from now, what has to happen? What has to change between now and then, for an independent insurance agency to continue the success just at the same level they're at today? Then what has to change between now and then to be successful? At that point in the future? In your opinion? 

TA: We really think that successful agents really have all different types of operating models, and you can kind of try to distill down, like, what are the key factors that we think will drive a successful agency in the future, and we've done a lot of work on a resource called agent for the future.com to really study this, but we think, you know, culture is going to be a huge piece of it, you know, can agents really set the tone where they're attracting, you know, new talent in town with a fresh perspective, from different backgrounds, and really drive high engagement. So culture, absolutely critical. The ability for the agency to really challenge themselves to continue to evolve and adapt. Digital is a huge piece there. So just a willingness to reinvent yourself and continue to rise to customer expectations or changes in the market. And then finally, for us, just a willingness to continue to invest in your agency in your ability to respond. And that could be technology that could be bringing in additional producers, if that's the primary lever to drive growth. So we think the combination of culture, evolution, and continuing to invest, whether that's in digital or people is going to be absolutely critical as we move forward.

TC: I'm so glad you mentioned culture, it's something that for some reason, it's like having a sore toe, I've been tripping over it over and over again, the last two or three weeks. My personal view is that culture is the foundation of everything, and if you get the culture right, you can't help but succeed. Curious, from your perspective, you lead a very large organization working with relatively small organizations, what are the cultural, you know, high points, or bullet points, or key things that you would look at to say, gosh, this is what we think effective, efficient and successful cultures for insurance distribution look like?

TA: I'll offer kind of our perspective as a carrier in terms of how we think about our own business, and then maybe offer some thoughts on what we see for agents. For our part, you know, our culture is really who we want to be in the market and in for us, and you've heard us say it a lot, you know, we intend to be champions for independent agents, you know, back to that belief that independent agents are going to win. We believe that there's no better way to purchase insurance than through a trusted advisor. And so that really drives everything we do. So for our team, from the moment they come in, we're very focused on getting professionals that are rallied around that cause, helping each of our agency partners grow and win in their business, realizing that, you know, your success drives our success, it's really the only way that we win. And so for us, it's how do we continue to reinforce that. And it's important for us from a messaging standpoint and communication standpoint, to get that through. And then for us, it's really about walking the walk and making sure that we're demonstrating that each and every day that the decisions we make, clearly are towards that kind of focus of putting our agency partners first, that we continue and consistently do the right thing. We do it with integrity, that we make things easy that we make things better for agents each and every day. And so it's a lot about setting the tone early, continuing to reinforce it through all of our messaging. And then really just demonstrating that, again, we were living up to these ideals, and we have proof points, not just talking points. And that's that's pretty important, I think is what you know, we get out and talk to agents, again, of all different sizes. You know, culture is important, and we and you serve agents. You know, the number one issue, the number one need is how do we get talent? How do we bring new talent into the industry, new talent into my agency, and culture is a huge piece of that. And a lot of times, you know, we'll hear from agents that “I had a really bad experience hiring a millennial. You know, I hired them, but you know, six months in between Just really wasn't working out”. And it's because of this, you know, this difference in opinion and thought and etc. And, you know, I would, you know, encourage all agents to really examine that because I think that the fact that we can bring millennials and new talent into the industry is very encouraging. The question is, why aren't we keeping them? Or why isn't an agency able to bring them in? Keep them past that six month one year mark? And I do think culture is a huge piece of that. I mean, as you step back, Tony, we're in a business that truly is a noble profession, how do we help you know people in their greatest time of need, it's a profession that gives many a profound sense of meaning, belonging, and really a higher kind of cause in terms of what we do every day. That's what drives my passion. And if you talk to like most people coming into an industry, if you lay that out, this is what you're getting into. It's a very attractive profession. So the gap is, is is culture are agents, you know, opening their doors to a broader set of talent and perspectives. Are they driving home the values or emphasizing the importance of what they do in their communities, for their customers? And do they have a growth mindset, willing to try new things willing to continue to adapt and take on new ideas, there's no point bringing new people in if you're not willing to listen to kind of the outside perspectives. And so we see a lot of those being really critical to drive in a culture that will really stand the test of time and continue to evolve and adapt on its own.

TC: I was listening to you talk and I was struck by the fact that over half of the workforce, and over half the business ownership now in the United States are millennial. And so it seems to me that if you're an insurance agency, and you haven't figured this out, yet, you don't have much of a future. Because I mean, you know, the rest of the people are dying and marching off the stage. But, you know, back to culture just for a second, you know, my observation from working with lots of different agencies, is that most of the time culture is accidental and organic. And what I mean by that is, it's, you know, it's just a collection of the people that you brought in, and it's a muddy mess, because it's not intentional. And to your point about, you know, nobility and the work that we do, and all those other things, which are our true, it seems to me that what agents have to do if culture is foundational is they have to make it intentional, they have to start with it be really clear about what the values they have are, you enumerated right off the top of your heads, your values at Safeco and liberty. And I know from talking to you earlier, you know, over a long period of time, that you hire people, batteries included, based on their already having that same set of values, which means that your culture gets reinforced every time you hire somebody instead of muddying the water down. So anyway, I'm delighted to hear that you think the culture is the foundation because I agree with you. So if an agency of the future has gotten a really strong culture, they've clearly enumerated their values that hire and promote and reward based on those values. And they found a way to bring in talent based on that and that talent is going to be younger talent, millennial and actual Generation X. Then the two other things that you said were important, I'd like to just explore for a minute one is investment. And the other one is, you know, and maybe even more important, or maybe it's not more important, like to know what you think, is the adaption, you know, context means being willing to adapt to the new environment. And, you know, surveys share that the average independent insurance agency owner looks a bit like me, he's, you know, late 50s, early 60s. And that's a largely male, largely white, you know, so increasingly not reflective of society at large, but also in an agent mindset of, you know, not wanting to change, not wanting to adapt. So, and also maybe more interested in the beginning. So, do you see a wholesale change in agency leadership coming over the next five years? How does that strike you?

TA: The numbers are actually overwhelming when you see them in terms of the percent of the channel that's nearing retirement age, if you will, over the next, you know, five to 10 years. So there's a staggering amount of talent that's going to leave the channel. And so that's one of the reasons why it's so important for us to really focus on bringing in new talent. And you mentioned millennials, we talked about still but honestly they're 40 I think this year, the old So not so young anymore. But just bringing in new talent is critically important. Because with that you bring in fresh perspectives, new ways to think about the industry and new ways to think about and understand what do customers really need in our communities. Diversity is a huge part of that, too, from the standpoint of, you know, local agents generally, you know, in terms of retail location, or servicing in a geography that surrounds their agency. And, you know, that isn't necessarily getting larger unless you open up additional retail locations. And so what's critical is, can we take advantage of the entire community in which we work and serve? And oftentimes, you know, not having teams that fully represent the community is a disadvantage. So it's a marketing revenue opportunity that honestly, we're missing out on across the country. But I do see as we continue to hire, you bring in new perspectives, I think we're positioning ourselves well, for what will be a gradual kind of evolution. And I think this is kind of a natural state, you know, you've got a large portion of the industry that's spent a career building what really is a tremendously strong channel. And I think that's great. And I think we're to the point where many of those are now looking at, you know, retirement, and what's next. And the key is, are we perpetuating that in a way, where we've got kind of the next set of talent ready to take it over and take it to the next level. And all of those things are twined, right? So culture, the ability to adapt the ability to invest, they're all linked in a very kind of important way, where, you know, you need to have a mindset of willing to evolve, but then you actually need to be able to put your money where your mouth is, and take some risk with investment. And again, just evolution and adaptability, it can be a key part of an organization's culture. So they're all very tightly interwoven. But my view is, you know, I'm incredibly encouraged by the fact that we've seen agents across the country really hiring a lot over the last few years, hirings been up, we think that's great. We think the increase in terms of new talent from outside the industry is very encouraging. A lot of the trends we've seen in some of the captive channels were, you know, pretty large portions of the workforce. Shifting to independent agency is another strong, you know, talent infusion for us. So we're pretty optimistic about those trends, I would say the one area that we're really trying to step up, you know, in our conversations is the ability to attract and retain, you know, diverse talent, cuz we do think that's a huge area of focus, it is for us as a company, but it's also an area of focus that we believe the channel needs, you know, the majority of the channel is female. But if you look at, you know, what's the female representation and ownership, it's, it's disproportionately to use what you said, very male dominated. And so that's a dynamic where we want to make sure that, you know, all of our agents, you know, are thinking through that, and how do we build teams? And how do we promote teams over time, and we think that's an opportunity, and then in certainly people of color, very underrepresented in the channel, we think that's a huge area of opportunity, as well. So, you know, I kind of just wrap that off and say, there's a lot of work to do. But I leave the kind of listeners and viewers here with a, with a little bit of tone of optimism, you know, we see a lot of encouraging signs, and we think the talents out there, we think the work that we do every day in this industry is truly special. We just got to do a little better job marketing ourselves and bringing the talent in.

TC: Well, this is always been a an industry that the agency industry that doesn't require a lot of capital, say compared to other businesses. But I do sense that that's changing, certainly the the need to invest in technology to not only grow, but just to stay even, is a challenge that a lot of agency owners really have never had to grapple with. But but in your point, one of the four things that you mentioned that you feel like the agency in the future has really got to do is invest. So just curious, in terms of that investment? Is it principally in the hiring and training and development of producers? Is it more buying the hardware? And then the soft, the soft technologies to to serve customers? 24 seven, where do agents need to think about needing to make investments and then how would you prioritize them?

TA: Yeah, that's a great question. I, you know, I would put talent, probably number one. And again, that's from the standpoint that we believe, you know, agents have a unique value proposition that most other channels can't offer. We believe there's plenty of demand out there. And so the challenge really is bringing customers in and having them understand the value that an agent provides. And so the ability to help new producers is critically important, the ability for an agency to invest in hiring a dedicated marketer for the agency, hugely important as well. And so we think talent is really critical. The ability to shift from purely a service mindset to a sales mindset is important as well. And that's probably a little bit different between personal and commercial lines, but impersonal lines, for sure, there was a time when agents thought every single interaction with a client was an opportunity to build long term loyalty. And that simply isn't the case anymore. I mean, a lot of transactions are so routine that you either want them to do it by themselves from a digital perspective, or, you know, carriers, like us, have service center options to take that weight off of agencies. So we think the ability to hire talent, the ability to really dedicate enough energy and effort towards sales is critical. And the third piece that I would throw in there is the ability to look at new technology, whether that's really investing in an integrated agency management system, a, you know, potentially like a CRM, a customer relationship management and keep track of marketing efforts, ongoing customer communications, the ability to make sure that your teams are fully enabled to be efficient, whether that's, you know, comparative rating on the personalized side, that's certainly starting to pick up in this small commercial space as well. That's kind of, for me, the third leg of the stool. And sometimes it's not even like investing in a whole new set of tools, it's just investing the time to get the value from the tools that you're already paying for. There are a lot of agents who spend a lot of money on agency management systems, yet, they're using probably 10% of the data that they have in those systems to optimize their business. That alone, I mean, not every agency is in a position to go hire an analyst or finance person to really crunch the numbers. But there's some there's some small things that agents of any size can do to really make sure they're taking advantage and looking at their customers holistically. And taking advantage of the technology dollars they are spending.

TC: Yeah, you know, there's a lot of conversations about, about data and about data manipulation, use of data and all this kind of stuff. And yet, the average Insurance Agency probably has really bad data, because they haven't gathered it very well, they haven't managed that process. And so they've got to make that change, if nothing else. And when you ask people to, you know, know about agency management systems, or using the capability, they just laugh. So I would agree with you that that's a great starting point, it doesn't cost any more money, it just takes a little bit more effort and a bit more management attention. And you know, that that's going to be that's like table stakes. If you're not maxing out your agency management system, and you don't have an effective customer relationship management program of some kind. You're probably not in business in five years. I mean, you may disagree with me, but I think those are table stakes for the future.

TA: Yeah, I couldn't agree more.

TC: One of the things that's really fascinating, and I know that, you know, Safeco, for example, has always - from the carrier side - been a company, you know, for decades that people looked at, in terms of embracing technology in the future. And so I know, there's just a, it's baked into the DNA of the organization. So, you know, you know a lot about this, I think, probably more so than many other carriers, in fact. And so it's interesting to me, looking at what technology is going to be able to do in just five years, for example. For most agents, I think artificial intelligence is a term that they don't really understand. And yet, carriers are already massively using this capability to make life easier for agents. So you know, your underwriting and pricing risk in the background as agents or, or putting the information into your system, it's happening in real time, agents are going to have that capability in their operations, I think within the next five years. And to me, what that means is that all the drudgery goes away, all of the time, effort and expense of entering data goes away because your AI does it for you. The effort to market and select among a variety of carriers, the best carrier based on the needs of the client, that all goes away from a time perspective. And even the process of preparing proposals and other things goes away cuz it's all done for you in the background. So as an agent, you have all this time on your hands. I mean, for me, COVID gave me 130 days back this year that I wasn't traveling. And so what am I going to do with myself? I think I'll start a podcast. You know, I mean, suddenly You have tons of time, right? And so what are you going to do with it? I think for agents, the opportunity is to actually just have a whole lot more serious, in-depth, real conversations with people, and understanding their hopes, dreams, fears, aspirations, and how does risk transfer and insurance relate to all that stuff? So, to me, I think the nature of the work that agents are going to be doing in five years is going to be really different. I mean, what do you think about that?

TA: I couldn't agree more. I mean, I think, you know, there's, there's like reactive service and reactive, you know, how do you build loyalty? And then there's the piece of, can you really get out in front? with the customers that drive you know, the 8020 year old are driving 20%? You know, it's 20% of customers driving 80% of your agency's volume and revenue? Are you spending time with them? Are you spending time with whoever calls, you know, next on the phone? And so there's a huge opportunity as these technologies are able to free agents up to really refocus on which are the customers that really are going to drive value for you over time? How do you now have more time to get out for prospecting? So again, that takes the meat off of hiring additional producers, because you become that much more efficient and effective. And I couldn't agree more. I think all of these tools, they're not anything to be scared of, in my opinion. They're really how you enable, you know, our great industry to do its work more efficiently. And that enables us to honestly serve more people to take the good that we do in our channel, and extend it and bring more people into it. And AI is a great example. It's data and analytics, it's not replacing human judgment. It's not replacing relationship building. But it's helping us make decisions faster, focus on the right things, and really be able to just again, focus on those activities that really are going to build long term loyalty and an outsized impact on revenue generation.

TC: So for beginning baby steps, every agency in America needs to make sure that they're getting really good data put into their agency management system, even if they don't know what to do with it today.

TA: Absolutely. And, you know, as bad as the data is on the agency side, it's a little bit worse on the carrier side, because we rely on agents to put it all in our system. So it wasn't a few years ago, and we went out to look at what percentage of customers do we have email addresses for? We probably had, you know, 40% of customers without email. And when you think about how communications are evolving, we're almost past email, truthfully, more customers now are demanding, you know, SMS communications and otherwise, but it is something where and this is on the carrier side and the agency side, the more that we can do to get good information about customers, the better off we are in terms of our ability to one, you know, to take care of their needs more holistically, but to look for additional revenue opportunity. So data becomes a really important, you know, battleground for us. And I speak just for the channel, direct writers, Today, many of them are very sophisticated from an analytic standpoint, they've got a ton of customer data. And so for the independent agency channel to continue to compete, and really, you know, be able to live the competitive advantage I mentioned, we have to be at the same, you know, playing field. And we have the advantage of, you know, we're partners, so we can share data, we can make, you know, connectivity easier between our data and the customer interactions, that's an advantage. But we have to focus on getting good data in the front door to take advantage of that.

TC: We know this whole data thing, and which implies systems and then you talk about investment that that agents need to make the same sets of issues apply on the carrier side of the channel as well, right. So today, we have roughly 900 carriers in the channel if you take out the FNS markets. And there are clearly eight agency companies that are spending or investing huge sums of money for speed of, you know, speed to market ease of use, great claims service, one of the things that some of these companies, and I think Safeco and liberty are at the forefront of this understand is that we're all competing with Amazon and other companies like that, from the standpoint of what what consumers expect. I mean, they're judging us not against each other, not against, not against, but against other industries that are doing a much better job than probably we are. So all of that really implies that some companies are going to be left behind in that race as we go forward in the next five years. You know, how do you see it like 10% of the insurance companies in America have 90% of the business already. So, I mean, or some number like that it's the 80/20 rule on steroids, right? What happens, in your view, to the insurance carrier ranks? How does it shrink or realign itself? What does that all gonna look like? And then what are the implications of that, for insurance agents in terms of how they look forward to building their business?

TA: Yeah, it's, you know, it's a great question. And it's, it's a trend that's been, you know, happening probably a little bit more on the personalized side, over the last 510 years. And it's coming in small commercial as well, but it's fragmented. And you mentioned the number of carriers, you know, personal lines, you know, estimated market sizes, you know, 90 billion for the channel, but it's spread over 350 carriers of mass, the vast majority of which have 100 million or premium or less. And that really does put them in a position where spending on technology, spending on, you know, New Product Solutions, innovation really does start to be cost prohibitive, and doesn't allow them to put the most competitive prices in the market. So we do think that, you know, large national carriers do have a scale advantage. Now, the trick is finding a balance. And so you know, one of our values is we're local and national. And so we have the scale the capabilities, the wherewithal to invest in a national organization. But we also execute locally, through our local distribution teams, local underwriting, local product, and the balance of the two is critical. So we do see continued separation, likely consolidation. And, you know, for Safeco, we've been very focused on making sure that we offer agents a solution for when that situation is warranted. You know, we've, we've actually just hit a milestone last week, where we have now, you know, booked over a billion dollars in a book consolidation premium, by helping all of our partners really take a look at their strategic, you know, carriers and say, do we have an opportunity to consolidate, to simplify to maximize revenue by focusing on, you know, strategic and core care carriers, and we continue to see that hypothesis play out all over the personalized space. What's interesting is that business lines are even more fragmented. It's a $110 billion market, everybody's kind of clustered and similar market share. So there's no major breakout. So we think business lines a little bit earlier stage, but their scale is going to continue to matter. And what does it mean for agents? So that part, your question, I'd say, you know, I mentioned one of the advantages is choice. And so the ability to offer customers a set of products, the average independent agent on the personal inside has 10, to 12, carriers, some have as many as 15. And if you're in a choir, and you've bought in a bunch of agencies over time, you might find yourself with like, all 350. And so it's, it's really a question of, you know, what's most efficient for the agency, having that number of carriers to keep, you know, keep up to date on what products they're selling, having their territory managers or marketing reps wanting to come into the office, having to deal with systems, or maybe you don't write this line of business every day, there's a pretty steep learning curve there for agency producers, personnel, service staff. And so looking at your carrier set strategically to say, Hey, you know, choice doesn't mean I have to offer 12 choice could be that I've got, you know, four or five, go to and I've got specialty providers needed to fill out some shelf space, or maybe the core carriers don't provide, we advise agents to really take a hard look at that. And make sure you're partnering with organizations that have the same mindset, are looking at investing the same way that you are for for future success, and really a partner that you can continue to build your long term business around. So the book consolidation is very active for us in personal lines, small commercial, we see that as a significant opportunity in the next three or five years as well.

TC: Yeah, my own opinion is if you're under a couple million dollars revenue, and you have 12, personalized carriers, I mean, you're not managing business very well. I mean, that's crazy, you can't possibly maximize the opportunity with 12 carriers, you know, in most small to medium sized insurance agencies. So, you know, from a business perspective, that I agree that that's got to, you know, that's got to consolidate and it's probably likely that of the 12 some of those aren't going to survive anyway, they're going to be you know, consumed or subsumed into another, another carrier, you know, so thinking about all of that and thinking about you know, one of the the relationship keys between the agent and the carrier has always been really understanding what each partner needs to put to be a successful relationship. And typically, traditionally, you know, insurance companies have needed agents to produce a enough business with them to make the relationship, you know, profitable from a service perspective. And then you want good loss ratios. And you want to have a reasonable opportunity to continue organic growth inside that agency. So I would say that, from my perspective, anyway, those seem to be the three things the curious have asked over time. But insurance companies have a real cost issue to deal with, because all this technology that they're having to invest in is very expensive. And there's the traditional loss ratio issues and a host of other things, driving expense factors, insurance companies, certainly, the captive insurance companies have an even bigger cost problem because their distribution expenses are higher. So how does the way in which carriers, generally speaking, evaluate their satisfaction with their distribution force? Is that going to change over the next five years? stay the same, you know, what's the nuance there?

TA: Today, we're looking at partners that are, you know, 1. willing to continue to engage and partner with us, 2. our relationship, investing in future growth and are like minded in that. And then 3., obviously, we want to be able to collectively make money. So I'd say those kind of core tenants will likely, you know, remain and there's, there's a lot of agents we don't do business with for that reason, like, we're just not aligned on those interests, either, you know, agents that are more focused on the lower end of the market where profitability is harder over time. Or perhaps they're unwilling to, you know, really strategically partner in a way that's going to drive mutual success over time. So I think those three things to me are core. But I do think going forward there's probably for us more attention on, are we seeing partners take the steps they need to to be successful over time. So, you know, we provide a lot of tools to help agents assess where they are digitally, including the ability to, you know, proactively via our search score, with a social score tool, we actually rank agents websites, we'll give them a grade, how effective is the website? Is it mobile optimized? Does it show up in SEO? And we provide that free to any agency? But we're also getting to the point, where could you run that, you know, in advance, could you constantly monitor, you know, how agents are showing up digitally? How they're engaging, how they're showing up in social? are they responding to ratings and reviews? Are they leveraging our digital tools. And so you know, just on that, Tony, I'd say, three years ago, we really embarked on trying to drive digital in a big way. And it came from the realization that only one in four new business customers were being set up to take advantage of all the digital capabilities that we invest in, only 25% and enforce was probably like, 17, to 18%. And that's been a huge focus for us, and we're happy to report, you know, we've driven that adoption much higher, you know, 65% of new customers are set up and over 50% in force. But if we think about that, relative to direct riders, it's still substantially less. And so for us going forward, we really are paying more attention to those things to our agents in the spirit of our partnership together. So a little bit of a softer element, but it's really just trying to get a sense for you know, how aligned are we moving towards the future? And are we, you know, in a position where we're driving in the same direction and kind of rolling together.

TC: An executive with another carrier that I spoke with recently, he was fairly direct and saying that, you know, from their perspective, the way in which agents used the tools that they were providing, so a submission tools and marketing tools and things like that, were becoming an increasingly important part of how they evaluated their relationship with the agency, because those tools allow them to, to write in service business for less money. And so if, if the agent wasn't going to take advantage of the tools, the agency was literally driving their costs. And that was impacting profitability of the relationship and causing them to say, in some cases, you know, this is somebody that, you know, if you're not going to learn the new ways of doing business with us, we aren't going to continue to do business with you. And that was interesting, because, you know, I think that's an area where agents really haven't thought about the relationship historically with their carriers in terms of, you know, they think about Okay, we've got to do a good job. Yeah, making money on the premium relationship with the loss ratio. But actually, the cost of doing business with us in the carrier hasn't been something that agents have thought about. But from this executive’s perspective, it was something that that agents were going to really need to deal with over the next three to five years if they wanted to be successful.

TA: Yeah, it's symbiotic. Right? I mean, it's, it's, you know, for our standpoint, being more efficient doesn't necessarily mean more profit to us, you know, we actually price our products to a target combined ratio, and we're generally there. So what generally means more efficient means is we can take less rate, we can make our products more competitive. And that's, that's to the benefit of all agents as well. And so our ability to continue to put prices in the market that compete with anybody, whether in the channel or direct riders is critically important. So a lot of times, it just comes down to you maybe don't connect those dots as directly as we could, but like, being efficient in terms of how we work together, actually enables us to be more competitive collectively. And there's some huge potential advantage there. Yeah, I think every company will take a different approach, you know, is it? Is it heavy handed? Were you looking at agency management? Like, should we part ways? Or is it more like we're trying to drive a little bit of the wide digital so important, we're kind of on that front end, where we're trying to just really talk about the importance of it and get the agents kind of bought in and, and but it is going to be important for all of us, you know, as we head.

TC: So I was on, on a call recently with one of your colleagues, one of your regional executives. And, you know, the question was raised, it was an agent group. Her comment was that you were seeing inside your company, a lot of agencies that were really doing well with new business production in 2020, in that the COVID environment seemed to be really springing home. Okay. And then I thought that was interesting, because my contention was, you know, what, we got to an economic recession and a whole bunch of care, there's got to be a lot of business on the streets. Okay. It would, I love hard markets for the same reason, because there's a lot of business on the streets and opportunity to really grow, if you're, if you're ready for that, and then are coming was, you know, that was about half of the agency portion that she was saying, the other half of the course was really seem to be in a bunker mentality not doing well, retention wasn't great, you know, and so it was a tale of two mindsets. And maybe that explains it. But I am curious. I mean, that's what you're still seeing, I'm assuming, what do you see as the hallmarks of those agencies that are, that are really doing well, in this environment? How are they different from other agents? 

TA: Yeah, it's been very interesting to watch, and for us, it's personal lines and commercial lines are two different places. So personal lines, you know, we had a couple weeks slow down as people really got used to working from home. And then it was right back to the races, and we've been growing substantially this year. And so it's been almost like, we didn't skip a beat on business lines, obviously, much more impacted by business closures, by potential recession, and etc. So, a little bit of a different story. But I'd say even within personalized, if you look at the agents that continue to grow, and you go talk to them, you know, it was it was more than mentality, like, hey, everyone's home, they're going to take my phone call, they're going to get back to me more quickly, this is an opportunity for us. And they found success, as we've kind of peel back the onion, like what's really underneath that? Sometimes it comes down to diversity of lead sources. So if you look, and talk to different agents, is actually one of the data things you know, that's so important is does an agency really understand where their business is coming from. And we do a lot in our producer development program, etc. And the first thing we do is track where your business has come in from. And because a lot of times, you know, agents don't really know, or they might say, Hey, you know, 95% of my business is referral. And then you start peeling back the onion, and it's like, okay, now you've got a good chunk of referral. But you also have some sense of influence, whether that's, you know, mortgage brokers, or dealerships or real estate agents, or other professional services, referrals, and you start really understanding where the leads come from. The agents that have shown the most resilience have pretty good diversity in their lead sources. So if there was a particularly hard hit segment, they've got other leads that are continuing to flow in. So to me, that's been like the biggest difference if someone was purely I'm gonna rely 100% on referrals and hey, everyone's busy right now. They're trying to figure out if their family is safe, if their kids are learning, you know, I'm just not getting as much referral business as I used to. And so my advice on that would be just really understand where your leads come from. Do you have a good you know, diversity in the lead source? You know, business lines have been tougher in that one, you know, we have seen Business closures, etc. But even still there, we're seeing some optimism. So after two or three months, we're seeing submissions come back in. So we're seeing agents out finding, you know, opportunities and lead sources. And so their cover has been a little bit slower. But really, it's ramping back up. And I think I'd say the same thing there. You know, if agents were waiting on, you know, a referral or the phone to ring versus really being proactive. That's huge. That's a huge difference.

TC: Yeah. Well, that's really helpful. And I think those hallmarks, diversification of being aggressive marketing, or an aggressive marketer, those are things that are fundamental, but they're also really important to the next five years. So if there's an agent watching us today, and they're going, you know, what, this has been a breakeven year for me, what they're missing is probably those two things. And then you add to that the need for investment in the business, adding more talent to your organization, having a mindset of growth. And you've got the whole package right there about how to be successful in the coming five years. Absolutely. Yeah. So any, any, any other thoughts? Any questions? I haven't asked you, that you think about it, as you think about that three to five year future in front of us that are that's important that we ought to touch on?

TA: No, I may just, you know, comment generally by saying, you know, we've, we've been fortunate now to partner with agents for Well, since 1923. So we're coming up on 100 years. And so we've seen a lot, and we've seen various, you know, evolutions of the channel. And, and I just want to kind of, you know, maybe close on a tone of optimism, that one of the hallmarks of our success as a channel has been our ability to evolve our ability to adapt our ability to really meet customers where they are, and we've we've had numbers of pivots over that 100 years. And we have a lot of confidence in the channel today to do that, again, here. And the pivots are a little bit different, you know, it's digital enablement. It's bringing in new talent, it's focusing on DNI, it's focusing on culture. But it's something that we've seen agents respond to time and time again. And this year for us, you know, given the impressive year we've had with, you know, COVID, and it's been an active catastrophe season two, it really has put to test what we do as a channel. And and by all objective measures, agents across the country have really risen to meet that. And the resilience shown is something that's truly inspiring for us and makes us proud to do what we do. And so yes, there's work for us to do, yes, there's a lot we need to invest in to prepare for the next three 510 years. But we couldn't be more excited about the future of the channel, and our ability together to continue to win.

TC: You know, I love the optimism, I feel the same way. And I'm looking forward, not just the next 10 years, but really the next 25 years to see where we all end up because I think it's going to be in a much bigger and better place. So Tyler, thank you for joining me today. I've really enjoyed the conversation. And I look forward to seeing you soon and hopefully we'll be just on zoom. 

TA: Thanks, Tony. Appreciate you having me.

TC: I'm talking to independent agency owners about this all the time. If you'd like to have a more personalized conversation, click on the button or the link in the description. And we'll make that happen. You can also reach out to me at Tony caldwell.net slash contact