The Future of Insurance | Ep. 25

What makes a good service person in the insurance industry? Can you really compete with the lowest cost insurance models? What if you can’t sell? What do independent agents in Oklahoma need to do to stay relevant in today’s economy?

The changes we’ve seen in the insurance industry over the last few years have been, simply put, mind-blowing.  In this episode, I’m joined by Denise Johnson, CEO and Executive Director of the Oklahoma Independent Agency Association.

Denise and I discuss what independent insurance agents can do to:

  •  Become a better service person so that they can better provide for their clients
  •  Compete with the lowest cost insurance models used as bait to reel in customers (and whether that hurts or helps customers)
  • Learn to sell better
  •   Remain relevant in the Oklahoma economy, whether they work in a small town or a big city

As a second-generation agency owner who went on to become the founder of the Oklahoma Independent Agency Association after her daughter took over the agency, Denise also reveals her best advice for on-going success.

 

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Tony Caldwell:

Hi everybody, it's Tony Caldwell, and welcome to another episode of Uncaptive Agent. We're talking about the future of insurance distribution, the future of the independent insurance agency, and maybe the captive agency too, to the extent they survive. And anyway I have with me today as my guest, Denise Johnson. Denise is a long time friend of mine. She's been in the independent agency business really since she was in diapers. Her father, Ernie Cornelius had an independent agency in Oklahoma City, which Denise and her brother Scott, operated for a number of years. And now it's a third generation agency because Denise's daughter, Avery is running it.

Tony Caldwell:

A few years ago, Denise gave up the high-powered life of super producer and agency owner and operator to become the executive director and CEO of the Oklahoma Independent Agency Association. Denise and I served together on the board for many years and she's really been for the last few years, remaking the association in the face of what is happening to our industry: a lot of change. And so I asked Denise to join me today to talk about the future of the independent insurance agency from her perspective, and I think she's got a great one. So Denise, welcome.

Denise Johnson:

Well, thank you for having me. You and I have not got to talk in a while. So I'm looking forward to our discussion today.

Tony Caldwell:

Yeah, me too. I think the last time we saw one another was at a Thunder basketball game and they haven't been allowing an audience. So anyway.

Denise Johnson:

Yeah. 

Tony Caldwell:

Thanks for joining me. So let's start with COVID because, we're in the middle still of COVID that won't end. And, by the way, for our audience we're speaking at the end of August 2021, and we had all thought that it was over. It's not. It's having a lot of really interesting impacts on independent insurance agencies. From your perspective, how's it changing the way agencies are going to operate going forward?

Denise Johnson:

I feel like it has fast forwarded agencies to probably a new time that they probably wouldn't have done two years ago. So it's something that they may have evolved into over the next, say, four to five years. But suddenly they were catapulted into a new way to do business that they didn't have a choice about. And so I think at first, at the very beginning...so if we go back to March of 2020, everyone was apprehensive. We sent out so much information with the association of: how do you work remotely? How do you literally step by step 1, 2, 3, 4, 5. Because very, very few of them, I would say the vast majority 90% plus, just didn't know how to get there. So we literally sent out step by step “This is how you set up your agency and this is how you work remotely” and held their hand to get them there.

Denise Johnson:

And even like us, is that we thought? This would be for just a short period of time and then we would all get to turn around and we would just be done and it would magically go away? And what we found out was that it didn't magically go away and we had to continue to do it out of need. Well, the best part about that is that we just keep practicing it. So it's gotten better and better. And now I don't know that we can put the genie back into the bottle because I think that's the way we now do business, I think it's normal.

Tony Caldwell:

Yeah. So the genie is the interesting thing. There's a lot of conversation or around: how's business ever going to go back to the office? And I know in our office, not everybody has gone back to the office. There's a lot of angst around: what's the future of commercial real estate? Some agencies never changed their operations. I've got a friend in Dallas who's real proud of the fact they never shut down and thinks the whole thing...that working from home's crazy. On the other hand---

Denise Johnson:

Okay, wow.

Tony Caldwell:

...many agents think that they don't want to go back to the office. So what are we going to do with the genie? What does it look like? What's the typical agency, do you think, going to be like over the next few years, based on what COVID did to us?

Denise Johnson:

I think there's going to be a lot of different models for it. I think we're going to see a lot of hybrid models. The phone calls that I get right now are, "I don't know that I'm ready to be remote full time and sell the office building, but I also don't know if I'm ready to bring everyone back in and have an 8 to 5 office anymore because that doesn't work either." And as we know in HR world and with employees, our competition now is going to be what other places can offer. So we're going to have to be more nimble in what we do. So as we go forward, I think we're going to have to look at hybrid situations. What's going to be best? I don't know what's going to work in Hulbert, Oklahoma compared to Oklahoma City or Tulsa. It could look completely different.

Denise Johnson:

So the nimbleness of what we have to do as a small business, not just an insurance agency, but a small business, how are we going to do business differently? And I think the fear... this is just my personal opinion, but I think the fear of letting everyone work remotely like, "I don't think they'll get everything done. Are they going to be as efficient?" What they found out during that long stretch of COVID, is they woke up and they found out it was more efficient in many ways, they were able to do business, no one dropped the ball. I'm sure the ones that did, they didn't survive very well. And so what they found is they ended up with better quality employees in a lot of ways.

Denise Johnson:

So I think the thing people might have missed is the comradery and that is very important... If you and I haven't talked in any year, which you and I would talk pretty frequently, during the year we haven't spoken. So how do you get the comradery, if you have a sharing of ideas altogether, which is really important in an office setting. So I think a hybrid situation is maybe what we're going to see.

Tony Caldwell:

That's really interesting about the... I participate in a number of coaching groups, things like that, where we get together on a regular basis, and we're in each other's physical presence having dinner and talking about ideas, and we've tried to move that onto Zoom. In fact, I just got off of a Zoom call with a group that I normally meet with in Chicago. And it's good, it's just not quite the same. And I was having lunch this week with another close friend, and we hadn't seen each other in a while. And I was like, "You know I just really miss the personal interaction that we're not having, and we're still not having it." So I'm with you. I think that's really important, humans crave that.

Tony Caldwell:

But I think we have discovered something that is, if not equally valuable in a personal way, maybe more valuable in a business sense, and that is that geography is dead. So you mentioned Hulbert, Oklahoma and Oklahoma City, and some of our listeners probably don't know where those places are.

Denise Johnson:

Right.

Tony Caldwell:

They're Googling Hulbert right now. Like, "Where is that?" But, really, what you're talking about is small town America and bigger city in America. And the truth is whether you're in a big city or a small town, you can now sell insurance and have relationships and talk to people face to face wherever they're located. And so somebody in Hulbert can have clients in San Francisco or New York city if they want to, right?

Denise Johnson:

Oh, yeah.

Tony Caldwell:

Because now everybody is on Zoom or [use] some version of telecommunicating. And so, do you see agents... and I know you talked to folks all over the country. Do you see agents beginning to take advantage of that and to expand their geographic outreach?

Denise Johnson:

Oh yeah, definitely. I think that, let's call it the state lines, I think the state lines are now blurred in a way that they've never been blurred before. So it used to be you would have to be licensed in Oklahoma and you still have to do all this of course, but then you'd have to go get licensed in Kansas. Do I really want to do an account in Kansas? Well, I can see a day where everyone's just going to have some sort of, not a national license, but probably a license in say the contiguous, at least 48 states and just do business as if there [were] no lines at all.

Denise Johnson:

And because our clients are doing that... Our clients aren't just keeping their businesses within the state lines, our clients are buying businesses or buying homes or traveling or doing whatever in other states, they don't see that state line is a boundary, they see it as an opportunity, too. So if we're going to continue to service our clients, we're going to have to be able to do business in other states. So we just expand it from there. And that's what I see with agencies doing.

Tony Caldwell:

One of the things I think that COVID has done to your point, is to accelerate us to where we ought to be. It seems like agencies, we're always about five years behind the curve. It's a real traditional business and agents aren't typically on the cutting edge. But I remember, I guess it's 10, 15 years ago, in your agency, you and Scott had actually hired somebody to work in the hours when the agency wasn't open. And I think she was a single mom staying at home, taking calls at three o'clock in the morning. And so you were answering what many agencies are still not doing, which is to provide 24/7, 365 service through a really kind of a creative solution. What are agencies doing today that are on the cutting edge to provide 24 hours, 365, 7 days a week? But anyway, service people...when the people want the service, what's the cutting edge of that look like today from your vantage point?

Denise Johnson:

I think agencies of today, and even a small agency can do it now. So not just the little mom and pop that's two, three, four, or five people, which is really 72% of our agencies in our association. Right now, [the agencies in our association]  have seven employees or less. So they're not...they're mom and pop businesses in small towns, wherever on main street. I think what we're going to see with the trend of being able to provide, let's call it all time service, 24/7 service, is they're going to have to depend on technology in a way they've never done it before. And, luckily, I do think, and to go back to your point about COVID, I think COVID has created so much more in technology in the way that we do business and run business, that I think you're going to be able to see that expand.

Denise Johnson:

So when you start looking at AI, you start looking at virtual assistants things like that, that would've been two years ago. If I would've had someone come to speak at our conference about virtual assistants, they would've been like, "What? No, we're not going to do that." And now it's a very viable way that when we're looking for support, then we can do it, because I still think we're in a people business. So I think our people that are in our agency...if there's only five people there and they're needing to figure out how to expand their business, they're going to have to be able to push those tasks down. And no longer can it be that $10 or $15 an hour person. It's going to have to be something with more technology that can just be efficient for them so they can continue the relationships and working toward building better accounts.

Tony Caldwell:

So what's the deadline? If you're not providing continuous all time service as you called it, by when are you going to really not have a future? 

Denise Johnson:

I think as we see a change in generations... As you said earlier, my daughter is taking over the agency, and so she sees a timeline in a much different way than I see it. I would've said five years. I would've said seven years, as we transition out of, no offense, but most of the faces of agency owners are about the face of you and I. So as they start transitioning out over the next five, seven, maybe ten years, then we have that younger generation, I think the opportunity is incredible. But as those younger ones come in and very quickly, I think it's going to be quicker than we realize. They're going to put it on a fast paced scale that I could see in the next very quickly, three to five years, that they're going to have a lot more technology in place. So there's going to be a cross in all of that.

Tony Caldwell:

So let's talk about that changing agency ownership demographic for just a second. I remember back in the '90s, when I was in the Oklahoma legislature, there were 31 Republicans there. I think there's like 80 Republicans in the Oklahoma house today, there were 31 in my caucus. So it was an uphill battle to get something done, but we were really confident because what we used to say in those days, is not very kind, is that Democrats are dying and marching off the page of history. And we could see the demographic changing. And so we see the same thing happening today in the agency force where, to your point, there's a lot of old people running agencies. And I think the average agency owner is something around 60, but we know that... and about half of all the people, both agency owners and employees are going to retire in the next four or five years. And so that's one issue. So we got to have new blood to take over.

Tony Caldwell:

At the same time, agencies are selling at a rate and at prices that have never been seen before--

Denise Johnson:

Crazy.

Tony Caldwell:

--in history. There's 35,000 agencies still there's been 35,000 agencies for the last generation. Most estimates are now that in the next five to seven years, there'll be 25,000 agencies. Agencies are getting bigger and bigger and bigger. And so here's the question: Is there a future for the local community based independent agency, as opposed to the behemoths that are being created? And how fast does the transition need to happen in terms of agency ownership and leadership, really more importantly, for those local agencies to stand a chance against the big guys that are being created?

Denise Johnson:

So I actually do think there's a future for smaller agencies because I think we're still in the people business. I actually think that there's so many people that are still very entrepreneurial in the way that they look at business. So it's the guy that starts out mowing two lawns in their neighborhood and suddenly looks up ten years later, and he's got a conglomerate with 20 trucks and he's mowing the lawn for the entire city of Oklahoma City or something like that. I think the same opportunity is here with insurance agencies. Here's the thing. My dad's agency that he started in 1964: he loved being an independent agent because he always loved to say, "I'm independent. I can do this on my own." I don't think that's the thing anymore. So we don't have to fold into a very large agency anymore, be bought out by a large agency, if you still want to run your own small business, but I don't think you can be my dad's agency of standing there by yourself.

Denise Johnson:

I think you have to be part of... So now we have, I don't think they like to be called that, but we have cluster groups, alliances, even OAA is that, how do you depend on each other so that you can still maintain your autonomy or your independence, but still grow your business? I just don't think you can do it all by yourself anymore. So what I think we're going to see… Here's what we're looking at in our association. So if we look at 72% of our agencies have seven employees or less, but they're going to continue to grow. And then the rest of them are all bigger. And then I only have probably my top eight or 9% are large, maybe 100 employees or more.

Denise Johnson:

What I'm starting to see is that you're seeing more and more of them group together in cluster or alliance groups. And so that way they combine their loss ratios, their sales or revenues, all of that. And even their agency management systems and learn to work together, but still maintain their autonomy of what they want. I do think that is a trend of the future. And I think that's how you can keep... you're still going to have small mom and pop business, but have the ability to grow.

Tony Caldwell:

So if 52%, I think that's the last number I saw of all independent agencies belonging to some sort of organization like that... I think what I'm hearing you saying, unless you're a large national organization which by de facto means you're a big organization, you're going to have to be a part of something else to be able to compete with those big organizations.

Denise Johnson:

Yeah, I think so. Yeah.

Tony Caldwell:

Yeah. Okay.

Denise Johnson:

I think that's...

Tony Caldwell:

Well, that's interesting. So 48% of the agencies are going to be doing something different in the next few years apparently, or they're not going to be here?

Denise Johnson:

Yeah. They're going to have to join in and I think they can find a group that they can relate to. There's so many of them and they're all different. They all have different attitudes. They all have different long term plans. So I think they can find someone.

Tony Caldwell:

I totally agree with that. You mentioned my company, One Agents Alliance, OAA as we're often known by, we have 180, some odd...185 agencies today in a market territory that probably has 10,000 agencies. So we're a big player in that group but on the overall numbers, not that big. And the reason is because we're not for everybody, and there's a lot of choices to your point for that. But I think most of our members recognize they're better off in a bigger group than they are by themselves.

Denise Johnson:

Yeah. That's...

Tony Caldwell:

So the agency of the future, and again, we're just talking, what's it looks like in three to five years? One of the concerns that many people have is the viability of an agency that does much in the personal alliance business.

Tony Caldwell:

And so under a certain size, under a million dollars of revenue, about 60, 70% of the business is personal insurance in the typical agency. In independent agencies, just during our career, we went from a 15% market share in personal insurance to about 30%. So the independent agency system picked up a lot of personal insurance business in the last 25, 30 years. But direct sellers are gaining rapidly, both on independent agencies and also on exclusive direct writers and captives. And it's a transactional business, which transactions are driven by low cost. So if you're going to... transaction business, you've got to do it with whatever it means to be the low cost provider, which typically means you got to be fairly big to afford the things you have to do.

Tony Caldwell:

So I've talked to three agents this week, in fact, who [are] looking at [whether] they want to start or buy the business that they work in today. All of whom, real bearish on selling personal insurance going forward. How do you feel about that? Do you think that agencies that are going to survive in this five year transition, ten years that we're talking about, do they have to get out of personal insurance, or they have to do it differently? What does that look like from your perspective?

Denise Johnson:

That's a debate I probably have with a lot of my younger agency owners or producers because is it worth their time? And a lot of times, agencies don't necessarily want to hire a producer to go out and sell personal lines. And let's say for the guy that owns in Oklahoma a $250,000 house and has a nice car, whatever, that's great for the direct writers or the ones that are just being online. But very quickly as people progress in their careers and all that, insurance becomes a little bit more complicated. And no matter what, there's still a need to round out that account. So I think there's a need for it, but I think it's like whenever we go in and try to sell off our book of business, we shave off that bottom 20% because we're not needing it and all of that. That's what this will do.

Denise Johnson:

And I think it'll happen on a very large scale. So that's why we go to the direct writers or the captives or whatever, and shave that off. But I still think there's a level of personal lines that are going to be necessary, but I think it's more of a rounding out of account. So that way you control an entire account with someone that has probably a business account or more than one business, and then a variety of...I got a car, a boat, a lake house, an Airbnb, and I fly a plane and I live in the mountains part of the time. And so it gets more sophisticated the farther along that they get with clients. So I always laugh because I really love...

Denise Johnson:

Right now, I just love the Progressive commercials. I love them because I think they're really funny, I think they really get people's attention. And I also think that's a really good springboard for an agent to be able to take that conversation to the next level. So I figure if Progressive is spending hundreds of millions of dollars on advertising, I love it. Because I don't have to spend that hundreds of millions of dollars, but I can utilize it because it brings insurance into the conversation, so.

Tony Caldwell:

Okay. So I heard you say two different things. I heard you say that really the future for agents for personal insurance ought to be in larger, complex, more expensive accounts, account rounding for successful business owners. Then I heard you say that Progressive, which is one of the people that has commoditized, personal insurance. Making everyone focus on a price rather than coverage or any of the other relationships, which is what agents used to always believe was their value proposition, that those people are creating opportunity for independent agencies. So which is it? Can agents make it and be profitable, successful building a business and a future for their families in a commodity price game?

Denise Johnson:

I guess they could if they're going to use technology. That's how it's working with all the other ones. So they're going to have to be willing. If they have a small agency that they want to grow, they're going to have to use technology because they're not going to be able to afford employees to just do the commoditization of small accounts. They're going to have to do it and learn to grow it.

Tony Caldwell:

Okay. So they're going to have to get into competition with businesses that employ data scientists. That, and [they] are using artificial intelligence at a really high level. And they're going to compete with those people on a price basis and a commodity transaction, a game. And they're going to win. How? How are they going to win? How can they ever do that? How can they afford to do that?

Denise Johnson:

I don't know that they can unless they use it as a service center. Again, it could be just the springboard. So as you know, when you start selling insurance, if you're that young, fresh out of college, 25 years old, you use it as a springboard. So you sell to your parents and your cousins and your everything, and you just start spring-boarding with those small... I don't know that it's sustainable but that's what you'll be doing five or 10 years from then. So, because you'd have to have the technology that's able to do it. 

Tony Caldwell:

Okay. So I know a guy named Peter Diamandis. He has written a couple of books. The first book was Abundance, The Future's Better Than You Think. The second follow up book was, The Future's Faster Than You Think. Which is interesting, because his thesis was, it's coming faster than most people think. COVID certainly sped up the future.

Denise Johnson:

Yeah, it's true.

Tony Caldwell:

So Peter has, like, the five Ds. He's got a little formula called the five Ds. I won't remember them all, but one of them is that change is deceptive. And the idea is, is that when you're doubling one, it takes a long time for it to become exponential. But you go along and it's really deceptive and you change, and then it all of a sudden wham-o! It goes straight up and that's the power of compound interest, too.

Tony Caldwell:

So change is deceptive. And I think we certainly have seen that over the last two or three years, we've seen it over the last 18 months for sure. And I think that's going to happen in the future. So he says that change is deceptive until it's disruptive and that's very true. You look at things that completely revolutionize the world. Where did they come from? Well, they've been there for a long time. You just weren't noticing them because they were being deceptive. One of his other little Ds is that deceptive and disruptive technology becomes de-monetize. In other words, people find a way to do things without money.

Tony Caldwell:

And most of the internet is like that. Most of the internet is getting paid someplace else. But one of the other things is that it's democratized. And what he means by that is that technology cost plummets fairly rapidly in today's world. And so for agents, I think there's an argument to be made that the technology that agents will need to compete with people like Progressive, [who attract] customers on the idea that there's a transaction and it's a cheap one. That if they want to do, that technology's actually going to be affordable. Now the argument then becomes, "Well, is that good for the agent? Is it good for the consumer?" I'm one of the people who argue that it's bad for the consumer first of all, and if it's bad for the consumer, it's bad for the agent.

Tony Caldwell:

Because that consumer is buying something that's really complicated based on price. So therefore, they're probably not buying the right thing. And they didn't buy the right amount, when that shows up is when something bad happens. They get in a wreck and they find out that "Oh, I don't have enough coverage to take care of my car, the other guy's car, the person that I hurt, or their house." And we see this every time we have a big tornado in Oklahoma, they didn't buy enough insurance to rebuild their house, especially when... How many people do you think are underinsured in the United States on their homeowner's insurance?

Denise Johnson:

Oh gosh. I would say that's got to be a crazy number. 30%. 

Tony Caldwell:

No, it's 100%. You know why? Because Lumber's gone up by 100% in the last year. And appliances have gone up by 50%. Every component of a house has gone up by high double digits in the last year. What that means is if your house blows down, it's going to cost way more than you thought it was even six months ago to insure, so I believe 100% of homeowners are underinsured. And I think it's a challenge for agents to keep up with that. But I guarantee you that maybe it's better for the average independent or direct writer captive agent who sat down and had a conversation with their homeowner client about it. But if you bought your insurance from Geico, Progressive, or somebody like that, it's a guarantee they're underinsured.

Tony Caldwell:

Same thing is true if I ask you what's the percentage of people who are underinsured for physical damage on an automobile, what's the answer?

Denise Johnson:

Who knows?

Tony Caldwell:

100%.

Denise Johnson:

100%.

Tony Caldwell:

Used car prices, which is what essentially you're buying when you're buying actual cash value on an auto. Auto prices are up anywhere from 25 to 100% in the last 12 months. So everybody's underinsured. Now, how many conversations did an agent have with his total client base or her total client base in the last 12 months about that? Probably a high percentage. How many conversations did Geico or Progressive have with their customers about that issue? Zero.

Denise Johnson:

Probably zero. Yeah.

Tony Caldwell:

Okay. So here's my answer: everybody needs an agent even in a commodity price game. Everybody needs an agent and everybody that's not served by an agent is not being served. And this is just a great time, this happens... And it's not just related to COVID. This happens from time to time for a variety of reasons.

Denise Johnson:

Yeah. It's a great time to see the market shift.

Tony Caldwell:

Yeah. So kind of brings you to the [point of] looking at the agent of the future, though. How do they build their business? You can't provide that kind of service if you're just focused on doing transactions for the cheapest price. But I'll be interested to hear what you have to say about this. I think the young agent of today doesn't know any better and can't do any better.

Tony Caldwell:

And what I mean by that is [that] I think they don't know how to sell anything. We had a person recently [that]  one of my team told me about. Somebody came to him and said, "I don't know how to answer the objections that the people are raising for me when I'm talking to them about buying a policy." And I thought “Wow, that's interesting because when I got started in selling, that's what I was taught first.” Memorize 25 answers to objections. And I thought it was a lot of work and what was the point? But the point is every objection is [a] buying signal. If you don't know how to deal with those, you can't sell [someone]. And so now we have salespeople that don't even have that training.

Denise Johnson:

Know how to sell.

Tony Caldwell:

So if they don't know how to sell anything besides the, "Well, here's the cheapest price, you should buy it because it's cheapest." Well, okay. That's not selling; that's order taking. So from your perspective, from where you sit, how well trained as salespeople are today's insurance agents compared to, say, your dad's generation or even our generation?

Denise Johnson:

Yeah. That's interesting because here at the association over the last two years and a little bit, I'll say under the shadow of COVID, we went in and completely restructured our entire organization. In fact, we started a new department called Agency Opportunities. We have assessments that, as a member of the association, you get to take an assessment of where your agency is. So it might be financial, it might be operations. But one of the things we've done that I'm most excited about, because I feel this is a whole new generation of those trying to come in and sell insurance is a little bit sales focused, but mostly professional. We've concentrated so much on continuing education. It's very important. We have to be licensed. We understand the importance of all of that.

Denise Johnson:

We understand we need to be able to check everything off the box and know the answers. However, professional education is something that we have just ignored because if you don't get CE for it, then I don't want to do it. And we have a lot of agency owners with their younger producers that they don't talk a lot about networking. Part of that healthy competition is that you have healthy competition. So if you're out in the football field and you're competing against each other, well, it's the same as insurance. We haven't taught that very well and we haven't encouraged it. And really when we're bringing in young producers into our agencies, a lot of times it's been like, "Here's your computer, there's your desk over there, go get them Charlie, and you've got it."

Denise Johnson:

And we haven't done that well. So what do we need to do? So we've developed a professional network, we call it Elite Network. We have a next gen program. We kind of did a little bit of diversity and things like that. But how do you create a network of people that you can go to and learn sales approaches? Learn how to interact with people? Learn about the industry? Mentorships, things like that, that have just not been done?

Tony Caldwell:

So Denise, it sounds like you agree with me that today's agent can't sell. You need to help them.

 

Denise Johnson:

Unfortunately, I've seen a little bit of that. I'm a little bit mortified by it.

Tony Caldwell:

Okay. So you should go into politics because you're hard to pin down. But I'll say it, today's agents can't sell their way out of a wet paper bag. They don't know how to answer objections, they make claims about a product, but they don't relate it to what's in it for me, for people, they don't know the basics of salesmanship. So they know how to go in, they know how to do a questionnaire. "Well, give me your policy, I'm going to copy it." They know how to do an apples to apples comparison and they can use a multi-company rating system to give you 16 different quotes on what you've already got and then show you that my price is cheaper, and so you should do business with me, but like the conversation that was had in my organization a week or so ago, if you raise an objection besides the price, they don't know what to do with it.

Tony Caldwell:

So could we agree together that if the independent agency, the local independent... And, by the way, I'll make this comment that the big players that are buying agencies, they're buying sophisticated books of business, all the rest of that, they're pouring a ton of money into the data analytics around this and they're teaching and training their people how to sell. And you can't work as a service person, much less a sales person in those organizations, unless you can sell stuff.

Denise Johnson:

Yeah, that's true.

Tony Caldwell:

So if we're going to compete with this sort of local independent agency that wants to survive and compete, they've got to be technologically savvy. We've established that. But I would argue that they've got to be really good sales organizations, not order takers.

Denise Johnson:

Right.

Tony Caldwell:

Okay. And I think--

Denise Johnson:

I would agree with that.

Tony Caldwell:

I would by and large say that this is a generational problem. Because I go to restaurants a lot. We were kidding earlier about you [running] out of food with your illness and family tragedies, and we were kidding with your husband that you're going to have to cook. That resonated with me because my wife and I come to the same place. We're going to have to cook for ourselves because restaurants aren't open. So anyway, if I go to a restaurant and I order my meal and at the end of the meal, the waiter or waitress comes up and says, "Do you want anything else?" And I think, "Well, no, but you could sell me something else. You could make it irresistible, but you won't even make the effort. Because you're just an order taker, you're not really a great service person."

Tony Caldwell:

To me, if you're going to be a great service person in the industry that we're in, it means that you have to expose people to the choices and options, and you have to show them why it's in their best interest to do that. And you have to be able to do more than just take the order.

Denise Johnson:

And to your point, I do agree there's somewhat of it, generational. I wouldn't call it Millennial or Gen X or anything, but a little bit generational is that I would say. My dad's generation, maybe even our generation...my dad actually made it look really easy to sell things, he did. And he got relationships and still does to this day. And so they get relationships. We learn how to do that. And so we've made it look real easy to where you and I both know it's a fine art and it's something that we've practiced.

Tony Caldwell:

Well, he didn't have a multi-company rating system.

Denise Johnson:

No.

Tony Caldwell:

No, he didn't. And he didn't have Progressive making everybody think that price was what mattered. I once asked a really good professional bass fishermen, "If there was one piece of advice you could give me to become a fisherman, what would that be?" And he said, "Okay, what's your favorite lure?" And I told him, "It's a buzz bait." He goes, "Leave that on the bank." And his point was, if you want to get better at something, you have to learn to use the tools that you don't use all the time. And so if price is your number one tool, and you want to get to be a better salesperson, don't talk about the price. Don't use the price as the selling thing, find something else. And it works. It does work, so.

Denise Johnson:

To your point, I think the one thing we learned from COVID, to go back a little bit to what we talked about earlier is that, if we would've had an agent selling an insurance policy to a restaurant in, let's say January of 2020, so just prior to COVID, I'm not sure that they would've gone all the way down the rabbit hole of saying here's all the exclusions that are in a normal restaurant policy package. And they definitely wouldn't have gone down the rabbit hole, "Now, if there's ever a worldwide pandemic, there's going to be an exclusion on that." I just don't think any of that would've happened because that's just not how they do again. And I think any restaurant at that point wouldn't have questioned it, but you fast forward to April of 2020, and those restaurants would've paid any amount of money regardless of price, if they would've had that coverage there.

Tony Caldwell:

Right. Yeah. Well, so by the way, if anybody's still listening to us, Denise's organization can hook you up with some really great sales training, dynamics of selling, things like that. So which segues me to kind of the penultimate question I want to ask you, which is: as agencies change their professional organizations that represent them and collaborate with them have to change, how do you think that the independent agents, brokers of America and the independent agents of Oklahoma need to change from where you are today, say in the next five years, to continue to be relevant and really providing excellent service to your members? What does that change look like?

Denise Johnson:

We actually just finished our strategic plan meeting with our board last week, so we actually have been asking these very questions. And like I said, during the past year, under the shadow of COVID is when we developed agency opportunities because those small agencies don't have time to hire a personal coach or someone to come in and completely revamp their agencies. But we can do that by me being a member of the association. So what we started looking at [is] the biggest issue that I come up against as an association is that, we have so many resources available to our agencies that are small businesses that we just can't tell them about all of them enough. And we can’t hand them a nice little card that says, "Here's the 50 things that we can get. And thank you for your membership and hand me a check and you walk out the door."

Denise Johnson:

Well, we found that that wasn't beneficial. They didn't fully understand it. They have enough on their plate. They stick the folder in the file and they never do anything with it. So we started asking ourselves a year ago: what can we best do to make our agencies better? That seven employee and under agency and how do we assist them with what they already have by being a member of our association. So we develop what we call Agency Opportunities, and we have assessments that are available. And it's so simple, but it's for any size agency, anyone that's a member. It's done by a few of the different associations because we have a great collaboration between many states across the United States, because like our agents [and] our members, our lines have blurred also.

Denise Johnson:

So what used to just happen in Wisconsin doesn't just happen in Wisconsin anymore. It bleeds out. And so we said a year ago, what do we need to do to best assist our agencies with the products and services and resources that we have, that they're already paying for as members? And so we have six assessments that are available completely free of charge, that they can go through, they can assist their agency, they can assess all the different things that they have in it. And then they get a report at the end that says, "Here's all the resources that you have. If you need help with technology, if you need help with finance, we have an insurance bank. And we want to do things to help make our agencies better and to grow that small business." Because again, they can't do it by themselves.

Denise Johnson:

They can do it a little bit with cluster groups, but we're also a partner with them to make it better. We do the same with you. Whenever we partner with OAA in a lot of ways that we feel it makes our business better, we hope we make your business better.

Tony Caldwell:

Well, so what I hear you telling me is that in a very complex world with a million different things and the lots of opportunities from all over the place, that it's bewildering and overwhelming to the agency owner. What you're focusing on is simplifying and helping them to figure out how to make really good choices among the bewildering array of options. And that's a part of the future of the Independent Agency Association, is to simplify the lives of its members, that's what I heard you say, so.

Denise Johnson:

Yeah.

Tony Caldwell:

All right, last question. You are the proud mother of a really ambitious, aggressive, and successful daughter running the third generation of the family business. So I know you have a lot of confidence in the future of the independent agency system because of that alone. And if you had to give her one piece of advice to guarantee her future and her success over the next five to 10 years, what's the one thing you would tell her to do?

Denise Johnson:

And you can imagine we have had this conversation. So none of this will be a surprise to her. I would tell her [that] she doesn't have to do it alone and to rely on people that she knows that she doesn't have to always be the smartest person in the room because there's so many others in the industry that can help her.

Tony Caldwell:

Okay, great. Which is, again, I'm going to paraphrase you, but you've got to be willing to partner with people and be willing to be vulnerable enough to take the help freely offered that's available in our industry. And, to your point, one beautiful thing about our business is, and I remember this so well sitting across the conference room table at an independent agent's board meeting, laughing and talking with a guy who had just stolen one of my best accounts from me, and he's still my friend. And while we're chuckling and laughing about whatever we're talking about, I'm vowing to myself to get even. And so--

Denise Johnson:

Like it.

Tony Caldwell:

--that's the kind of business we have. We can be competitors, but we're also friends and we're collaborators. So it's a wonderful industry from that standpoint.

Denise Johnson:

Some of my best friends, I would say that.

Tony Caldwell:

Yeah. And you would take their best client from them any day of the week.

Denise Johnson:

Yeah, you're right.

Tony Caldwell:

So well, Denise, thank you so much for joining, it's been a wonderful conversation. I just looked at the clock and went, oh crap, we're way over time, because we could keep going. But I hope that somebody's gotten something useful out of this.

Denise Johnson:

Hope so too.

Tony Caldwell:

And I appreciate you being with me, especially since I know that next week you've got a big event and you're really busy, so thank you.

Denise Johnson:

Yeah. Happy to do it. We're looking forward to seeing everyone.

Tony Caldwell:

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 tonycaldwell.net/contact.

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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 tonyaldwell.net/contact.

 

CHECK OUT MORE EPISODES: https://www.tonycaldwell.net/uncaptive-agency-the-future-of-insurance-podcast

VIEW THE BLOG: https://www.tonycaldwell.net/blog

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29 minute read

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