To Specialize or Not to Specialize - What is a Producer to Do?

Have you ever been asked by a producer, young or old, if they should consider specializing in a specific industry? Over the years, I certainly have. If a producer or agency sales leader asked me this question, I would tell them that market specialization for insurance producers is crucial. While specialization was once considered an option, it has become increasingly important—dare I say required?

Business leaders have come to rely on the in-depth knowledge and understanding of specific risks and challenges in their sector that producers can help them navigate. Furthermore, as they become more familiar with their specific niche, producers with specialized knowledge can discuss the various common and less-common risks facing these leaders.

Years ago, many insurance professionals believed that specializing could only benefit producers in property and casualty (P&C) lines. However, market specialization has become important to buyers of employee benefits, as well. They realize it takes an insurance specialist to understand and cater to the unique needs and risks of specific industries and their employees. The advantage of working with a specialist applies to almost any significant purchase decision by a business or individual.

Imagine going to a boat dealership to purchase a motorboat and being approached by a salesperson. The salesperson is friendly and courteous, and asks some intelligent questions, but you learn through conversation that they have never owned or operated a boat with an engine. Rather, they have spent a lifetime on the water as an avid kayaker. Are a powerboat and a kayak both watercraft? Yes. Are they generally both owned by people who enjoy recreation on the water? Yes. But are they two very different types of watercraft with their own needs and requirements? Absolutely!

Obviously, you want to work with and buy from someone who is more aligned with your interests and who has the knowledge to help you make an informed decision about purchasing the type of boat you want. The same holds true when a business leader makes a buying decision in the workplace.

Trends in specialization

Besides enhancing the revenue potential for insurance agents and agencies, specialization provides valuable benefits to their clients.

Customized coverage. By specializing in a specific market, producers can work with carriers to develop insurance policies and coverage options that are specifically designed to meet the needs of businesses within that industry. This ensures that businesses are adequately protected against the risks they face, while minimizing coverage gaps and unnecessary costs that may not apply to their industry.

Risk assessment and mitigation. Specialized insurance providers are well-versed in the risks associated with a particular market. They can conduct thorough risk assessments for businesses within an industry and provide risk management advice and solutions to help mitigate those risks.

This proactive approach can help businesses prevent or minimize losses, ultimately saving them time, money, and potential disruptions. In addition, agents and brokers familiar with specific industries understand the competitive landscape and can guide the client toward benefits packages that will help attract new employees and retain current ones.

Industry connections. Insurance professionals who specialize often have extensive networks and connections within that industry. This allows them to collaborate with industry experts, risk managers, and benefits consultants, and better understand the challenges they can help their clients overcome.

Let’s say that you insure manufacturers exclusively, and a catastrophe in another part of the world is making it logistically impossible for them to obtain certain raw materials. Through your connections, you may have an alternative source for the critical components your clients need to stay in business.

By continually cultivating a professional network and staying on top of trends, you can ensure your clients are protected against events that could disrupt their business operations. Business interruption coverage is another option that a specialist may recommend, depending on the business involved and the types of interruptions their clients may encounter.

Trust and reputation. By focusing on a specific market, producers can build a strong reputation and establish themselves as trusted experts within that industry. This can also instill confidence in buyers, as they know they are working with a provider who understands their unique needs, industry trends that may affect them, and how competitive they are in the marketplace.

Industry trends and information from hundreds of sales leaders throughout North America clearly indicate that top performing producers in P&C and benefits have a deep understanding of an industry. And when I say the top performers, I’m referring to 80%-plus of the top performers at agencies of all sizes and types.

Customized benefits. What was once considered a one-size-fits-most approach to healthcare, life insurance and other employee benefits no longer applies. These days, employee benefits packages vary greatly and depend largely on the demographics and psychographics of specific workforce populations. That’s why specialization is more important than ever, no matter what line of business you’re taking to market in the insurance industry.

Employee benefits specialists understand how to create packages that will attract the appropriate candidates in a variety of competitive industries. For instance, you wouldn’t want to offer a traditional bank the same package that you might structure for a software development company, as their workforces vary greatly.

While a benefits package that includes a match for a 401(k) might appeal to a more experienced candidate, a match to repay student loans, flexible hours, or paid time off for a sabbatical probably would be more attractive to a recent college graduate.

Closing thoughts

How do you help your producers get started down the specialization path? There may be some things that naturally guide them, such as your agency’s location and area population. If your agency is in a rural town made up of mostly agricultural businesses, your producers would be well advised to specialize in farming, crops, or possibly livestock.

On the other hand, if your agency is in or near a densely populated metropolis, your producers may have a wide variety of specialties to choose from including hospitality, property management, real estate development, or financial institutions.

Whatever specialty your producers choose, one thing is clear: Because they specialize, their audience will be more apt to ask for their advice, trust the information they provide, and ultimately sign on the dotted line to work with your agency.

Happy selling!

The author

Kari Glennon, a sales and marketing professional within the insurance industry with nearly 25 years of experience, is a senior consultant at Sitkins Group, Inc. The majority of those years were spent in the independent agency world. She has been an owner and partner of a firm, perpetuated her firm externally, and spent time as the chief sales officer for one of the largest middle-market insurance agencies in the nation.

Her true passion is to deliver strategy, inspiration, insurance knowledge, and coaching for independent insurance agencies. She is fluent in property and casualty, employee benefits, life insurance, and captives.

Kari lives in the Pacific Northwest. In her free time, she enjoys traveling, sailing in the Puget Sound, nature walks with her dogs, and spending time with her three children.