!-- templateType: none isAvailableForNewContent: false --> The Future of Insurance Distribution | Ep. 26


The Future of Insurance Distribution | Ep. 26


In this week’s Uncaptive Agent, I’m joined by the Executive Director of the National Association of Professional Allstate Agents, Ted Paris. We have a fascinating conversation about captive agents and independent agents.

Are traditional insurance companies beginning to feel threatened by independent agencies or are they looking to earn money in a new and novel way? Will more captive agents turn toward commercial lines to make money to avoid the on-going competitive nature of personal lines?  

Yet, although this might create more captive agencies, it puts those captive agents at serious disadvantages as I discussed with my guest Ted Paris.

In actuality, despite the attempts of certain carriers to create captive agents, is the total number of captive agents shrinking? Why is this happening? Keeping the doors open and continuing to grow to compete against independent agents has never been more important. The captive agent has to find a way to survive in the new insurance model where productive competitiveness has hit an all-time high.

Captive agents don’t have the same advantage as independent agents when it comes to providing options to the savvy shoppers looking for advice and better price points, so what happens then?

Also, what do captive and independent agents have in common? They both need to rely on business plans! Each year, agents need to create and implement a business plan.

This conversation is absolutely riveting and you’ll have a lot to consider, regardless of whether you’re a captive agent or independent agent.




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Tony Caldwell:

One of the things we always tell folks who are captives thinking about coming on to the independent agency side is, "Look, there are some really legitimate business reasons why independent agencies get paid more commission than captives, and it's because they have to do more things for themselves."

Alright, so, welcome everybody to another episode of Uncaptive Agent, where we're talking about the future of insurance distribution. I'm Tony Caldwell, and today is a beautiful fall day, both in Indiana and in Oklahoma, on October 1st, 2021. And my guest today is Ted Paris. Ted is the Executive Director of the National Association of Professional Allstate Agents. Ted and I have gotten to know each other over the last year or so as we've been visiting on the telephone about what's going on in the industry, and I just thought, Ted, that you would be a fascinating guest for us to have on. So, welcome.

Ted Paris:

Well, thank you. I appreciate the offer to get on and chat with folks. My background in the insurance business, if we want to go there for a moment-

Tony Caldwell:


Ted Paris:

I started in my mid '30s in the insurance business as a Farmers Insurance district manager. I was actually silly enough to start a scratch district with no agents and no money, but I made it through Farmers for almost 20 years, converting about 70 agents to full-time staff during my nearly 20-year career with Farmers. After that, I figured it was more of a young man's game than an old man’s game, so I bought my first Allstate agency in 2005, after Farmers. In 2009, I bought a second one, and was fortunate enough to be able to merge those two together.

In 2012, I decided that I was ready to hang up and just play golf and run around the house and do gardening, all that kind of stuff, but got rather bored. About six months after I sold my agencies in 2012, Allstate called up and asked me to take over another agency, which I did. And then I finally sold that third agency in 2017. And then NAPAA asked me to become the executive director. I don't know whether they couldn't find anyone else or whether it was my 20-year background as a manager and my nearly 14-year background as a EA, owning multiple agencies.

But the greatest thing I enjoyed about being a Farmers district manager, I was more of a teacher and a coach and a mentor than anything else. And getting back into the position at NAPAA lets me get back to those roots where most of my time is consulting and mentoring agents on what to do, what they shouldn't have done, and how to go forward. So, that's where I stand at now. I've been doing this for a little bit over four-and-a-half years, and I enjoy it.

Tony Caldwell:

Well, we have a lot in common. Obviously, my company, One Agents Alliance, a big part of what we do is mentoring and coaching, and we actually help people create agencies from scratch. But, as contemporaries, we had a similar path. You went on the captive agent side, I've been an independent insurance agent for all of my career, and no longer really in the agency business any longer either. So, it's interesting because, in the last 25 or 30 years, we've been seeing the same industry from two different perspectives.

And I always think that perspective is interesting because, many years ago, I got some photographs taken on a family trip to England. And my wife was showing me the pictures, and I was perplexed because there was a fellow standing down by this river, wearing a coat just like mine, and he was holding the hands of my two children. But I didn't recognize him because that fellow was bald. My perspective is that I wasn't bald. And so, anyway, it's interesting, we don't always see things the same way just from where we stand.

And that's why I wanted to have you on today because I think you share a unique viewpoint on the insurance distribution industry, which is made up of both independent agents and captive agents and the carriers that we mutually support. And so with that in mind, I'm just really curious, as you look forward with the lens from where you sit at NAPAA, as well as your background, what do you think the next five, maybe ten years, in insurance agency business looks like and how's it going to be different than the way it is today?

Ted Paris:

A little bit of a history background, when I first started in the mid '80s, the captive world had been and continued to take control of the personal lines market. When you would look at the top four insurance companies, which were State Farm, Allstate, Farmers, and Nationwide, held those top [spots] since 1950, 1960, 1970, 1980. That's kind of going down, there's a lot of change now, but back in those days, the captive agents were so much involved in the personal lines, the personal auto or the home, that the independent agencies were focusing on small businesses and commercial accounts.

Now, it seems like the independent world is getting more and more of that personal lines market back. Plus, the onset of the relentless advertising of the GEICOs and Progressives and 21st Century, all these companies now are going direct, it's squeezing out the captive agents' share of the personal lines market. And most companies, whether you're looking at Allstate, and I do have to make my disclaimer here is that NAPAA, which is the National Association of Professional Allstate Agencies, is not associated with Allstate in any way, manner, or form. I don't speak for them, and they can't speak for me. So, we're totally different entities, not joined anywhere together. I just want to make that clear.

So, when you ask what I think is going to happen in the future, as you see more and more people trying to do the do-it-yourself insurance and thinking that they can be smart enough and intelligent enough to go online and buy the right coverages at the right price, and hope and pray that when a claim happens, they actually were correct, more of those people are going to go to the direct channel, and then you got independents who are looking to take back some of the market share. So, I think that the captive agency system is going to experience a decline.

And you can already see that at Farmers, you can see it at Allstate. Nationwide went completely independent. You can see it in American Family, even though they're not a national player, but they're a large regional-based company, having lost probably half of their agency force over the last few years. I just think that the captive companies have the opinion that the captive agent system is way too expensive for them to continue to operate.

And most of that is their own doing about having a manager report to a manager who reports to a manager who reports to a manager who reports to someone who actually does something. Don't want to nag any out there. They were just top-heavy on middle management, top-heavy on bureaucracy, and so it did become expensive. And so they have to do something to offset that. Allstate went through and reduced their employee force by almost 4,000 people last year. But they're still at 40,000+ employees, with 8,000 agency owners, whereas State Farm, which has almost 20,000, is just right at 50. So, a lot of the companies are still top-heavy.

Tony Caldwell:

That's interesting. You made a couple points I want to explore just for a minute. So, I agree with you that the direct writing, or the GEICOs and Progressives of the world, have a huge opportunity, moving forward, because technology is making it easier and easier to distribute insurance electronically. And they certainly are taking market share in personal insurance, both from the captive channel, but also from some smaller independents as well, a big challenge. And carriers clearly want to be in every channel.

It's interesting to me, Allstate, as you know, announced recently that they're interested in acquiring independent agencies, not just having independent agencies represent them, which my organization does, and they're a great insurance company, but to actually own independent insurance agencies. So, it almost seems like this is maybe the beginning point of some companies trying to get in different parts of the business than they've been in traditionally because they feel threatened in their traditional business. Do you see it that way or do you see something different?

Ted Paris:

No, I would have to mainly agree with your assumption and your statement. When I look at what Allstate is trying to do, GEICO is opening up new offices, and the reason GEICO is opening up offices is they need a new channel of revenue.

Tony Caldwell:

They're going the other direction.

Ted Paris:

So, they're going to keep expanding their direct, but they're also going to try to create this other channel that's going to bring in new revenue for them. Progressive has been pretty masterful about working with the independents, and then also going with their Progressive direct. So, I think they have room to still expand. It seemed like Allstate has taken a little bit different approach, a little bit unique approach, and this is my perspective, no inside information.

But it looks like, to me, that, as a corporation, they want to get one-fourth of their business or some percentage of their business in the square trade, the warranty business, the cell phone business. They want to get more and more business in their Allstate direct, which used to be Esurance, and now they've modified that, merging that into Allstate direct. And for, I think, the first quarter, 29% of new business was generated by Allstate direct.

So, they are getting that wrapped up. And then they also are out there, buying independents and appointing more independent agencies. They got their official IA contracts. You can have an Independent Allstate contract. But they also offer those contracts to a lot of aggregates, a lot of networking forums and cluster groups. This company out of North Carolina, Smart Choice, and Smart Choice got 8,000 agents or so that can write Allstate. And then, recently, Allstate bought National General to do so.

So, I think they're looking at ... If we can have one-third of our insurance business direct and one-third with independents, and one-third with Allstate, it might be a little insulated from too much exposure about change. So, my personal opinion is Allstate is going to reduce the captive agent force and are wanting to have larger agencies represent them for economies of scale.

Tony Caldwell:

So, in terms of competitiveness at the agent level though, let's just shift gears for a second, bearing in mind you talked about the competitiveness in personal insurance, and that's going on, certainly. Also, there's a cloudy future for personal auto, which drives most of the premium and commission in the personal insurance business, just because of technology and some other things. So, unclear how that's going to turn out, but it doesn't look really favorable for agents from a commission standpoint, going forward.

With that in mind, you have more people turning to commercial. So, the weakness in personal lines is creating more competitors at the small end of the commercial market because, again, most smaller agencies don't write middle market and larger accounts. From your perspective, how does that bode for the typical captive, not just the Allstate agent, but the Farmers, American Family, State Farm agent who's traditionally been a producer of personal insurance and whose carrier that they work for or primarily represent is also predominantly a personal insurance carrier? So, do those agents pivot, start selling commercial lines? Do their carriers pivot and get to be more expert in commercial lines? Or do they just lose market share and dwindle?

Ted Paris:

Well, that's a very good question out there. Most of the captive companies have commercial departments, but their risk aversion to most of them is high. So, it's real difficult for a captive agent to be successful in competing in the commercial markets unless their company has agreements with other commercial entities, which I know that Allstate does. So, you can go into that market. The problem is car insurance, while a complex product, is relatively simple to do that concept, but when you get into commercial coverages, you've got to be educated, you got to be knowledgeable in what you're doing, or you'll get yourself into a whole world of difficulties.

[The problem with] doing BOP policies is that most of the coverages people need are in there, so you don't have some exposure, but to do a small manufacturing risk or to do an over-the-road trucking company, a lot of these things are more difficult and more complex. And if you're good at it, then you can make a great deal of money, but most of the people who buy that insurance don't want to have on-the-job training for the agents trying to sell them something.

I think that between the auto market, which is so strong, but I understand self-driving cars and technology and all this stuff is going to come on, that they predict that, in the future, the auto premium, most captive agencies, it's probably 65%, 70% of their income. They're going to need to pivot for that, and when that dwindles to 30% or 40%. They're going to have to be making less money or reducing expenses or finding another stream of revenue. And commercial is one of them, but it is more and more competitive. And the average captive agent who has not been involved in that market will find, I think, it difficult to get moving forward.

Tony Caldwell:

So, what I'm taking away from our conversation is that there's been a dwindling over time in the exclusive agent, captive agent ranks because of a variety of things up ‘til now, but the future for smaller agents in general is a little suspect, just from the personal lines competition standpoint. There's going to be more competition in the small and the commercial space as people look for ways to maintain their standard of living, their agency, income, and so forth, and the cost structures of the typical direct writing captive carrier put them at a competitive disadvantage.

So, with all of that in mind, and you're, I know, deeply tied to the exclusive agent channel with the Allstate agent in particular, but with all that in mind, is the defection or abandonment, I would say, of the captive channel, from an agency perspective, is that going to accelerate over the next few years, or is it just going to keep leaking the way it is now?

Ted Paris:

I think anytime you have a hole in the bottom of your bucket, the hole gets bigger. So, as that hole gets bigger, that means more and more agents are going to be leaving. One time, it might have been ten years ago when this statistic was out there, it was something like 70% of the insurance agents are 55+, especially in the captive world. So, there's a challenge that those guys leave, and the company tries to replace them with younger people to go out there, and then, at the same time, the market for the captive is shrinking somewhat.

So, when you, at one time, had 15,000 Farmers agents at one time, 13,000 Allstate agents, and then you also had 10,000 Nationwide agents and 5,000 American Family, now all those numbers have shrunk down. At Allstate, my database shows there's 7,500 agents, but there's a little bit over 10,000 offices, so some of them own more than one. At Farmers, I think they're down around 10,000 agencies. American Family, it's been cut in half. Just attrition, and the company is not actively replacing them like they used to in the past. And they're looking to the agency to grow. So, if you're a $3 million agency, which is really nothing in the IA world, that $3 million agency needs to get to six, and the $6 million agency needs to get to 12.

So, I look at it as, probably, the average independent agent is usually larger than the average captive agent, but that captive agent's going to have to increase their market share and the size of their agency to be able to afford the reduction in commissions. Because most companies aren't reducing commissions on auto. They're reducing commissions on renewals and offering more money for new business to offset that. But if you have a large agency and you lose 10% or 80% of your business, you got to write a whole bucketful of new business, no matter what the rate is, to offset your reduction in income.

Tony Caldwell:

So, is the way forward for the survivors in the captive channel to just buy the guys that are bailing out? If product competitiveness is tough and market share is dwindling, and the carriers themselves are not recruiting as many replacements for the people exiting, is it just a question of buying up the guys that remain until it's the last man standing, or is there a future?

Ted Paris:

We used to call that "building on bones," the bones of a failed agent before you. But I do think that you're going to see a consolidation of agencies. I don't want to be doomsday, but the days back when we started in the '80s where you could have the mom-and-pop shop on Main Street and have one lady working for you, and they see you in the grocery store and you're the local insurance expert, those days are dwindling fast and they're moving really, really quick out there, where if you're not at the scale where you can afford to continuing to do the advertising, especially with all the technology is good, all technology's bad now, I mean with all the cell phone, no-texting, no-call list ...

I was fortunate in Indiana, Indiana laws are a little bit easier than the other states on who you can call and who can’t call. But all those are putting more pressure, which means you got to have more and more leads because your ratio is going down as a captive, which comes back to the advantage of the independent agent is you got this easy rated program out there that you're putting information in, all of a sudden you got eight different companies or 10 different companies shooting you a price.

And if you're at an Allstate or a State Farm or a Farmers, you don't have that luxury, your price has to be right. And people will pay more than the cheap ... price is not always the determination. There's still a great number of people who want a personal relationship, there's still a great number of people who want to have advice. When do you want your insurance cheap, when you buy it or when you have a claim out there? So, all that makes a big difference.

There's a number of people who want to do that. Here, again, even the younger folks, the millennials, are much more astute shoppers than some of us give them credit for because they do go on the internet and they do shop, and then they have a tendency to call to verify. And if you can win them on that phone call, then you get them; if you don't win them, then they just buy online.

Tony Caldwell:

You mentioned the comparative rater, and so that has been a boon to independent agency agents, so the market share has actually shifted back over the last 10 or 15 years as both the carriers had an increased appetite for personal insurance, on the independent agency side of the distribution, and agents had an easier time to write it. But it did also, along with the direct writers' relentless advertising, drive us to a commodity business, where consumers are focused on price and, in turn, agents focused on price, and we lost the traditional value proposition that you just talked about, which is the relationship and the personal advice, and maybe you don't need minimum limits, you need something different than that.

One of the things that's happening now is that that kind of comparative rating system has eluded the small commercial marketplace until now. Now, there are several companies in the marketplace, providing comparative ratings. Carriers are a little resistive to getting on board with that because they saw what happened to them with the personal lines comparative rating. But agents are demanding it. It seems to me that that's the future over the next two or three years, and it actually disadvantages captives again because, now, independents can much more rapidly, easily, and cheaply provide a multitude of options for small business consumers. So, is that something that your members are concerned about with respect to their commercial books? Or is it just a small enough part of their business, they don't really worry about?

Ted Paris:

Well, it depends on what part of the country agents are in. No, you are correct, the raters do get companies out there to quote at a different price. I would say that one defense of the captive system is that if you're an insurance novice, your only option to become an insurance professional was to go to a captive system or go to work for a large independent agency and do your service there until you got smart enough. Because the carrier's not going to let someone who is an unknown quality go out and have a contract with someone.

So, for a lot of people, they had to start [as a] captive [agent], but that was the only way to get started in the business. And when I was at Farmers, and even at Allstate, I always tell people that it's a lot easier to get your foot in the door when you say, "I represent Farmers, I represent State Farm, I represent Allstate," versus representing some regional company that someone might not know of. COUNTRY Companies. Well, who's COUNTRY Companies? Well, COUNTRY Companies is a very great company in Illinois, it's Farm Bureau of Illinois, but if you just moved in, you would have no idea who COUNTRY Companies was.

So, that part of the business, where you could easily get into the business, you had the training, you had the backing, you had the claims, you had training, you had education, all those were good things that would lead you to want to go to the captive system, but some of those benefits that were there to get people there have eroded. And you are right, the personal lines market is going back more and more to the independent channel, mainly because, other than State Farm, I don't know of any of the captive companies are growing agencies anymore, they're going backwards.

Tony Caldwell:

And I want to touch on that just for a second because as long as you and I have been in the business, the issue on either side of the distribution channel, one of the big concerns of agency owners has been perpetuation because they have known, "Okay, I've got a great life and lifestyle, but to capture the future for my family and the value that I've created here, I've got to perpetuate this business, sell it some day to somebody, to capture the wealth that I've created." And, traditionally, in smaller insurance agencies, in particular in the captive channel, often, you sold it to your son or your daughter. You brought them into the business, and it's the second or third generation. I'm curious, now, I mean you've got thousands of members around the country. Do you see that happening at the same rate as, say, ten years ago, or is that diminishing?

Ted Paris:

No, you do not. Ten years ago, it was still pretty common to bring kids and people in. Nowadays, they go, "Wow, this is an ever-changing world that's moving at warp speed. Here was the change today, what's going to be the change tomorrow?" And we all seem to think that change only occurs at our company, which we all know isn't true. It's changing everywhere, making it more difficult. And then you have to do the risk/reward about, "Okay, it was great for me," read your tea leaves, look at your crystal ball and say, "What does the future bring?"

I think there's always going to be captive agents. I think that their market share, being captive is going to dwindle. And I think that when you look at what companies are doing, even State Farm has bought a couple other companies to do some other channels, recently, and with Allstate buying National General, and then getting more and more of the cluster groups, their ability to write Allstate, and then doing their Allstate direct, to me, it's going to be one-third, one-third, one-third. Five years ago, 90% of the business from Allstate was written by captive agents; 20 years ago, 100% was written by captive agents. Probably, today, it's closer to 80, maybe even less. I don't know, I haven't seen the latest figures.

Tony Caldwell:

Okay. So, less multi-generational agencies means really, at the end of the day, more pessimism on the part of agency owners about the future, frankly, because they don't want to bring their kids into something they're, themselves, unsure about. And that makes sense to me. I want to come back and talk though for a second about this bigness thing because you've mentioned clusters and aggregation groups, which are taking place on the independent agency side, and the reason for that is really simple, it's that size has never mattered as much as it does today, and that's going to continue into the future, I believe.

Carriers need to reduce their cost. They go to fewer places to get the business, it reduces their cost, it increases their profitability, and so they give advantages to those big groups. The same thing appears to be happening from what you said earlier in the exclusive agency channel, where agents are selling to other agents who are getting bigger, have this drive and demand to get bigger, and I guess with reducing commissions, the only option you've got to maintain profitability or increase it is to cut expense, which usually means getting bigger. So, how do you see that taking place? You mentioned going from three to six, six to 12. But just in terms of your own membership, what do you think, in a decade, is it half as many people with twice as much volume? Or is it going to not happen that fast?

Ted Paris:

I think the companies are driving the speed. They're forcing the issue, they're forcing people to ... There's no more fence-sitters. You got to either determine yourself quickly, and I think quickly is the next couple/three years, in my mind. In the next couple/three years, you need to determine whether or not you want to remain captive, and if you do remain captive, you got to figure out how you're going to jump in, jump all in, and go for it, or whether you're going to try to ride it out, which I think is a very bad decision to try to ride it out.

We talked about the agents being over 55 years of age, and that was a few years ago, now you're talking about a whole bunch of people being over 60, and they thought they could easily sell their agency at a certain multiple or pass it on to their kids. Now, all of a sudden, those multiples are less than what they were, and then they don't know whether they want their family to maintain that legacy growth out there. So, a lot of people got a lot of hard decisions to make, going forward. And as you get older, time is not necessarily on your time. You can afford a mistake at age 50, you can't afford to make too many mistakes at age 60. You just don't have the time to recoup.

Tony Caldwell:

Well, that's a really interesting point of difference, I guess, between maybe the captive channel and the independent agency channel because values have never been higher for independent agents, and probably for a different set of reasons. So, the same demographic factors are affecting independent agencies. In fact, the most recent statistics have been something like 50-70% are age-eligible for retirement employed in the system, that's owners, agents, and support people, over the next five years. And so where are the new people coming from?

But the difference is that private equity firms and other large players are gobbling up independent agencies at a rate, and have over the last three to four years, that have driven prices to all-time highs. What's interesting about the timing of that, though, is that it's, in part, driven by really low interest rates, and we can't be guaranteed that that's going to continue into the future. Part of it is just PE firms, because of low investment rates, have had more money coming their way, as investors look for return. And that's not likely to maybe continue at the same historically high rates that it has over the last five years.

But PE firms also don't hold forever. They usually have a three to five-year hold window, then they sell. So, one of the things that's not getting talked a lot about in the independent channel is, today's 2021, so what happens in 2024, '25, '26, when a whole bunch of agency production starts getting dumped back on the marketplace and independent agency prices get depressed. So, I guess what I'm saying is it sounds to me like we're moving like this, independent agency values are coming up, captive agencies are coming down. But I think that independent agency prices are going to get depressed in the next few years, just because of market forces. But do captive agency prices stay down, or do they have a chance to ever come back when there's fewer agency owners?

Ted Paris:

I think they'll inch back upward. There's been a ton of change at Allstate and there have been a ton of agents being upset, disgruntled, and other agents are saying, "Hey, this is the greatest opportunity out there." So, it's the way you look at the thing.

If you're used to being the small shop with two or three employees, and your goal was to have a high retention and a low loss ratio, and you maximize whatever kind of bonuses you can get, and you're concerned with maintaining your agency, versus growing your agencies, they have a different problem to look at than the guys who's coming and thinking, "Well, I'm going to go all in. I'm going to defer current income for future income, and I'm going to build this, and I'm going to go invest, I'm going to hire more staff, and go forward."

And the value of the agencies are being sold [in] multiples they're getting really depends upon how the agency has been run for the last three to five years. So, an agency that has been maintained for three to five years, versus a growing agency, the growing agency is getting more money when they sell than the one that is maintained.

Tony Caldwell:

Sure. So I want to take you back to the beginning of your career when you were a Farmers district manager, and you said what you really did was you trained, developed, mentored, and coached people. My observation is that newer agency owners coming into the independent agency channel from the captive channel, and we've helped a couple of hundred forward captives start independent agencies. So, from my perspective, the thing that they need the most isn't something to sell, which is where they usually come to us, they usually say, "I need carriers," and the truth is carriers will give people contracts if you can fog a mirror today, pretty much.

But what they really need is coaching, mentoring, training on how to really be great business people because it's a tougher business than it used to be. And it sounds like you and I are kind of saying the same thing, which is you go to be, into the future, a better and better business person, not just a better insurance agent, to be successful. Is that kind of what I hear you saying?

Ted Paris:

Back in the '80s and '90s, we would hire people to be insurance agents, "You're going to own your own business, but you're going to be an insurance agent. You're an insurance agent. You're an insurance agent. You're an insurance agent." And if you were growing, you didn't ever have to worry about managing the bottom line because as you grew and as inflation was hitting, you had more and more income, so you could make mistakes all day long.

About five years ago, when I took this over, one of the first things I did with our members would say, "You are not an insurance agent. You are a small business owner who specializes in selling insurance products. So, you're not an insurance agent anymore. You're a business owner. And as a business owner, you need to make sure that you have your budget, you need to make sure you have your goals, and you need to make sure that you can change those and you can pivot to make other opportunities available for you. You're just not someone who sells auto and home, call people up and say, "Hey, I hope you renew, I hope you still love me." So, if you're not a business person, first, you're not going to be long to the world."

Tony Caldwell:

Well, it sounds like you and I have been on the same page for a long time, and we still are. I'm just curious, with that message to your members, how has it been received?

Ted Paris:

Most of them understand and most of them are very receptive. The more tenured ones say, "Yes, yes, yes," but they're slow to act because they're not forced to act, they're still comfortable where they're at. And until someone makes them move off of that stuff, they're going to be there. But most of them, I think, over the period of the almost five years I've been here ...

I remember, I was a manager for a long time, when I first came became an Allstate agent, the sales manager, or whatever you called them, they've changed names quite often, would come to me in January and tell me, "Well, have you started your business plan yet?" And I look at him, I go, "It's January. You want my business plan for next year? Because if I haven't done my business plan in the third quarter, fourth quarter, for the next year, then I'm already done. I'm going to fly by my seat."

And so we've always preached that business plans, if you're an agent out there today with a captive company or independent company, what are your trends? What are you going to plan for next year? And maybe I got this because I used to work for Woolworth when I was right out of college, and I always found it really difficult to understand, first, why I was ordering back-to-school supplies in December. So, as an insurance agent, you really need to be thinking a couple seasons ahead as well. So, if your plans are not already set or you're not working on your plans, this is October 1st, you're almost too late. You really need to get out there.

So, as a business owner, you owe it to your family and to your employees and to your clients that you're preparing for the future and you're going to have contingency plans on how to move forward. And if it's going to be that you're going to be faced with reduced renewals, then you need to figure out a way to offset that loss of income, reduce expenses, or that loss of income would [hurt your business, create] new business at the higher rate of new business that you're going to maintain your agency. Failure to do so, you're sending the message that you're going to fail.

Tony Caldwell:

So, Jeff Bezos, I think, is now the richest man in the world, certainly he's running what's arguably the biggest and most complex organization in the world. And I heard, recently, on an interview with him, he made the comment that he's going to make 25 or 30 decisions this year. So, he's limiting, and saying "no" is much more important than saying "yes," frankly, to growing. And he said the decisions he's making are things that aren't going to happen for three to five years. So, 100% of his focus on a fairly small number of things is all out there in the future because he knows he cannot impact Amazon's top or bottom line for 2022 with his decisions today.

And so with that in mind, business people, depending on the size and complexity of their business, need to be living, at some point, in the future. That's why we're talking about the future of insurance distribution here in the hopes that agents will understand, "Hey, I got to be living in 2023, '24, preparing for that," if they want to build successful businesses. So, you're saying exactly the same thing, and I think it's well-put and very wise. Do you do things with your members to get them to plan two, three, four, five years in advance, or is it mostly focused on the next 12 to 18 months?

Ted Paris:

Normally, I don't want to use the word "preach," but we do a weekly newsletter to our members, and then we do a biweekly newsletter to our non-members. So, all the Allstate agents hear from us at least twice a month. We also have an Allstate Facebook page that people can participate in, and we have a large number of agents who participate on that on a regular basis. I will continually be putting out there, in October, November, December, what are your one, three, and five-year-plans?

Allstate does one, three, five, and 10-year plans. So, when they tell you, "We're going to make a change," that change was made two years ago or three years ago. They knew exactly what they're going to do. And my big complaint with captive companies, and probably even the independents because I've never played in that arena, is that, at the end of the year, the company's saying, "Here's our goals for next year," so you have three or five days to respond on something they've been planning for three or five years.

Tony Caldwell:

Yeah, we're getting ready to go into planning season in the next couple months with carriers, and it's interesting to find the common ground because the truth is they're only sharing the tip of the iceberg with you, and vice versa. Ted, this has been a really interesting conversation. I think that you've said a couple things I just want to highlight, and then I want to give you a second to make sure everybody that may want to tap into some of the resources you have knows how to reach you. And I know that there's things that even people on the other side of the aisle, so to speak, could use on the independent side.

Just to end on a positive note, I think I heard you, earlier, say in our conversation, "Look, there's always going to be a captive channel, an exclusive channel. That's going to continue. It's going to be different, but it's going to be out there." And that's an optimistic assessment. Almost everyone that I have on our podcast is optimistic about the role of the agent, captive or independent, in the lives and businesses of their customers because not everybody wants to deal with an algorithm. So, you've confirmed that today, and I think that's great that it's different and that your organization is there to support the folks who want to stay on the captive side, at least with Allstate, exclusive agent side with Allstate. How does somebody reach you and get hooked up with the resources that you have to offer, if they want to do that?

Ted Paris:

Well, my email address is T-E-D, dot, P-A-R-I-S, at N-A-P-A-A-U-S-A, dot, O-R-G. So, it's Ted.Paris@NAPAAUSA.org. Our webpage is www.NAPAAUSA.org. If you have an urgent need, my cell number is 812-605-1237.

Tony Caldwell:

You are a brave man. You just gave your cell phone away. Well, hey, I hope that anybody who wants to have a Ted talk will take that number, and we will put it down here on the website where this is published so people can get it, and it'll also be on the screen, so it should be up there now so that people can get ahold of you. And, Ted, I really appreciate today. I've enjoyed our conversation, I've enjoyed our earlier conversations this year, and I hope we'll do it again.

Ted Paris:

Okay. Thank you, Tony.

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.

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

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