Today’s competitive insurance environment is saturated with generalized agencies who cover basic policies such as worker’s compensation and property insurance. In addition, direct insurers such as Embroker and CoverWallet have arrived on the scene, targeting the general commercial insurance market.
Now, more than ever, there is a unique opportunity within insurance to become a specialized agency. Many businesses need specialized insurance assistance — businesses operating in verticals such as cannabis that are unsure about their risk exposure or what coverage they need. Helping them is an excellent way to build your agency around a profitable niche.
Specialization also supports a client-centric operating model. Within the next few years, the number of accounts needed to be handled by specialized producers focused on a specific industry or line of business will increase to 66%.
Other key specialization benefits include:
- Improved industry relationships. When an agency is specialized around a certain industry, they can build positive relationships with industry associations and groups (for example, a truckers’ association for a specific state). These relationships can generate more business.
- Stronger carrier relationships. Specialization also strengthens the relationship with the carrier who specializes in writing insurance for specific types of businesses. Carriers might be more willing to create a special program for the agent due to the amount of business they bring in.
- Increased productivity. An agency’s operations become much more streamlined in processing specialized clients because the clients are all similar.Their questions are often the same, as well as their applications. Agents also work with a select few carriers.
- Efficient operations. Agents are more efficient as a result of specialization — they understand the market they’re working in and don’t waste time writing policies for every new client. They also have contacts and resources to fall back on for new clients.
Becoming a specialized agency is not without its challenges. You’ll need to carefully consider current agency talent, specialty options, market research, technology, and promotion strategies to establish your agency as a specialized insurance expert.
How to Become a Specialized Agency
Specialization is an intersect of personalization and being a trusted adviser. As you offer personal recommendations and policies, your clients gain trust in your assessment of the risk in their industry. But how do you go about becoming a specialization expert?
There are two specialization routes your agency can take. You can specialize in a certain line of business in a geographic area (i.e., servicing restaurants in the San Francisco Bay area). Or you can specialize in certain types of industries, such as cybersecurity or financial technology. This second option is becoming more and more relevant as emerging risks take a front seat in the insurance world.
Whatever path you choose, specialization requires hiring the right people, choosing your specialty, researching the industry/space, and building relationships with current clients.
Find the talent.
Look first within your own agency at your current employees and their skills. Do you have agents in-house who have specialized in the past or have in-depth knowledge about a specific industry? Meet with these agents to discuss their expertise and gauge their interest in owning specialized accounts.
If you don’t have current experts, hire specialized agents who bring their book of business from their last agency. Or find industry specialists who you can train about insurance. Before hiring either type, carefully discuss their network, carrier relationships, and years in the industry.
For current agents who aren’t specialized, advising a client outside of their expertise might be intimidating. Use your internal or hired experts as “specialized” advisers for training these agents and help them get up to speed on industry nuances.
Carve out your specialty.
Agencies don’t have to choose just one industry or space to specifically specialize in. Rather, agencies can find a combination of niches to grow their expertise and build their reputation as a trusted adviser (as long as you focus on doing each one well).
Review your current book of business. What are your current markets? Further, break down markets into customer segments such as by coverage type. Do you already have a list of similar accounts? For example, maybe you have three to five life sciences clients — life sciences could, therefore, be a possible specialization.
If you’re wanting to become an expert in specific emerging industries, you have several options. Cannabis, autonomous vehicles, and cybersecurity are just a few growing industries:
Legal Adult Use and Medical Marijuana Markets have a 31% compound annual growth rate.
- Cannabis. Thirty-three states and D.C. have legalized medical marijuana and ten have legalized recreational marijuana. However, until marijuana is decriminalized at the federal level, many agencies refuse to service these types of businesses — it’s a risky industry ripe for insurance experts.
- Autonomous vehicles. The self-driving vehicle market is experiencing exponential growth. Allied Market Research found that the global market for autonomous vehicles will increase to $556.67 billion by 2026. Accidents are a major concern within this industry and autonomous vehicle companies need the right coverage.
- Cybersecurity. Cyberattacks are becoming more and more prevalent, damaging company brand images and revenue in their wake. According to a research report by Global Market Insights, the global cybersecurity market is projected to grow from a market value of over $120 billion to over $300 billion by 2024.
Choose a specialization based on internal interest from your agents, competency (do you have resources or specialized carrier contacts?), and feasibility (i.e., specializing in cannabis might not be the best option if you’re located in a state where the industry is still illegal).
Specialization is a process and it will take time to brand your agency as an expert. Consider an insurance agent who starts with one client in the trucking industry. Over time, she develops relationships with specific carriers that insure trucking businesses. She begins to recognize trends in the industry that might impact the client. As she grows her expertise, she is able to offer more specialized advice to the client and grow her customer base as a result.
Know your market.
Your clients have specific problems and vulnerability in an unfamiliar coverage landscape. Demonstrate that you understand their industry and that you are their advocate in a world of risk. Fall back on your internal experts and determine the specific needs of each client.
Or if you have little experience in an industry or line of business, contact carriers who already specialize in those arenas. Ask for their advice and insights on the industry. Specialized carriers are motivated to work with specialized agents — some even offer training seminars that you can attend on industry topics. Join industry associations and groups such as the National Cannabis Industry Association or American Trucking Associations to learn more about each vertical.
Also, always stay one step ahead in whatever verticals you choose to specialize in. Constantly review trends, news, and changes that might affect your client. Assess risk on a regular basis and ask “What risks are unique to this vertical? What events are occurring that might have a negative impact on my client?”
Take this information and advise clients on their risk exposure. Survey the insurance market and give them policy options to choose from. For example, many technology companies require coverage for patent or copyright infringement. If your specialization is technology, tailor your solutions to protect your client’s specific assets.
Above all, delight your clients. Being a specialist means that your clients shouldn’t be just “satisfied.” They should be surprised and “wowed” at your attention to detail and knowledge of their industry. Communicate on a regular basis with the client (not just at renewal periods). Go beyond the role of an insurance agent — be your client’s trusted adviser rather than the transactional middleman.
Further, strengthen your specialization capabilities with technology. Insurance-specific tools are important for two aspects of your business: operational efficiency and providing a consistent digital experience for the client.
Too often, agencies waste time and energy on manual tasks such as composing renewal emails or sending reminders about application deadlines. This waste means spending less time on meeting your client’s specialization needs. One technological solution is to implement an online digital portal where all of your client’s applications and documents live. Instead of attaching multiple files via email, you can send a single link that directs the client to the portal.
And rather than using PDF and paper applications, you can turn docs into smart forms that operate within the digital portal. Clients can then easily fill out information, sign the applications, and submit them all online in one platform. Other technologies such as automations (i.e., automapping of answers and automated reminders) and e-signatures make your operations more efficient and add value to your client’s experience.
Woodruff Sawyer markets their industry specializations on the home page of their website.
Market your agency as an expert in your specialization. Include clear copy on your website promoting your specialized services. Also, post quotes from satisfied clients or even case studies and videos. Share your Net Promoter Score to provide percentage proof of happy clients.
And while your website and social media platforms are powerful communication tools, word of mouth is still the best way to generate new clients in the insurance world. If your clients are thrilled with your services and view you as a partner, they’re more likely to share with colleagues.
And don’t be afraid to ask your client for referrals. Contact your most profitable customers (typically the top 20%) and discuss associates in their industry who might benefit from your services. While there’s nothing wrong with contacting your less profitable clients, your top clients are more likely to have associates that match in revenue.
It will take time to establish your agency as an expert in a specialization and build your referral base. But the effort now will be worth it later. Two-thirds of the middle-market brokers surveyed by McKinsey expect to shift to a more specialized model in five years, with producers focused on targeted industries or lines, compared to 46 percent that takes this approach today. Start your specialization process early to remain relevant and one step ahead of the competition.