If your independent insurance agency’s service isn’t what you would like it to be, or you’re losing valued employees to retirement, competitors or relocation, the alternative of using carrier service centers to take care of your clients can be tempting. Is that the right step for your agency? The answer depends very much on your agency.
The three service centers he uses have been valuable supplements for Rob O’Neill of Hot Rod Insurance Services in California. Clients have grown accustomed to getting their needs met instantly. Service centers may have longer working hours than his agency does, giving clients a place to go when his office is closed.
Bob Klee’s experience wasn’t as positive. His Aspen, Colorado agency, Kelly Klee Insurance, found that clients became confused when using the two service centers he tried. Some clients would call one carrier’s service center about a past due bill for a different carrier’s policy.
Joe Totah, president of Strategic Agencies, LLC, publisher of this website and a former independent agency principal, had mixed experiences. “Sometimes it worked out fine and saved us time,” he recalls, “but sometimes we had to re-service these clients because something went wrong, was not properly done or not done to our agency standards.”
Service centers can reduce the need for staff, an important consideration in a challenging labor market. O’Neill likes that they provide valuable help during busy periods or when vacations leave the agency short-handed. “We can call the center ourselves and have them prepare a quote for a potential new client and send it directly to the client, so they become another sales person for the agency,” he says.
The agency’s phone system is set up so that, if a client calls when all the phones are busy, they have the option of being transferred to a service center if they don’t want to leave a message. Totah considers this to be essential when using service centers, along with posting carrier phone numbers on the agency’s website.
For Klee, the positives could not overcome concerns about how using the centers would impact his agency’s brand. “We feel it hurt our branding,” he says. “We want our clients to call Kelly Klee, not one of our carriers.”
Service centers are also an expense. O’Neill says his cost is 1 to 2% of commission, but it’s worth it for the additional sales and service help. “It is like having another person in the office to some degree,” he says. Totah, on the other hand, saw it as an extra cost for little benefit. “We were paying for the service center and then we still serviced many or even most of these accounts.”
Agencies have alternatives to service centers. Kelly Klee has clients in four time zones. They handle calls directly for 12 hours and use call centers and virtual assistants overnight. Totah found that 99% of off-hours calls were claim reports that could go to carriers providing 24/7 claim reporting services. Other callers could mark a message as urgent; the system would notify him to check voicemail.
So what should an agency considering service centers do? Run a cost-benefit analysis, says Totah. They’re not good for an agency wanting to provide personalized service, but they can be good for agencies like O’Neill’s when short-staffed or that want to focus on sales.
Klee advises agencies to think about their brands. “Is your agency what you want top of mind with your clients?” he asks. “Giving that up for the carrier call center’s ‘convenience’ is not worth it to us.” Even O’Neill admits, “If you handle your clients 100% directly, then the service center would not be a good fit for the agency.”
Service centers offer advantages at some cost on the expense side and to an agency’s brand. Whether they are right for your agency depends on whether you think the advantages outweigh those costs.
