How to Identify Producers with the Most Potential

For the most part, carrier marketing reps and field management have a pretty good sense of their agencies and of their business with that agency. Imagine, though, being able to quantify which among those agencies have the greatest capacity to grow with you, and to know why.

What kind of advantage could that be to:

• Prioritizing your time and resources,
• Devising breakthrough agency management tactics,
• Winning higher growth at lower acquisition costs?

Probably quite a bit.

MarketStance has developed the information resources and analytical techniques to:

• Define the marketplace of individual agencies,
• Measure your in-appetite premium within that market, and
• Assess the relative productivity of each agency.

The result quantifies the growth capacity of individual agencies, allowing you to champion those agencies that can best support penetration in high potential territories, and even monitor your progress with these agencies.

What MarketStance refers to as its agency headroom analysis significantly deepens a carrier's perspective on its agency resources, and clearly demonstrates how these resources align with territorial growth opportunities. Because the analysis successfully encompasses:

• Market-based premium data,
• Carrier underwriting appetite and relative market position,
• Individual agency demographic and production information,

it represents a rigorous and granular source of intelligence on production resources that can be leveraged to create a significant competitive advantage.

Determining Agency Growth Capacity

Without knowing the geographic extent of an agency's market, it is impossible to accurately assess what opportunities really exist for that agency.

MarketStance integrates carrier data into its analysis and uses that to establish a geographic framework for agency markets, using the actual submissions made by the agency to the client carrier.  MarketStance determines the drive time between the agency and its client insured locations (excluding outliers) to yield a picture of the territory that past performance indicates the agency routinely covers.

MarketStance determines the geographic reach
of an agent's market by assessing its
submissions and translating those locations
according to "drive time". Zip code level
analysis supports accurate results.

With this marketplace defined to the zip-code level, MarketStance then identifies the premium potential within it, counting only the premium that is consistent with the client carrier's appetites in business class, line of business and account size. To estimate how much of this potential volume an individual agency can be expected to produce, we look at growth in:

• Agency share of overall market
• The carrier's share of an agency's total production
• Organic market gains

MarketStance assesses how much an agency can be expected to grow its overall share of a market's premium by determining production per employee (based on agency total production with all carriers). Next, we rank this "productivity" measure for all appointed agencies in a given state and, in conjunction with the client, establish a benchmark performance level. Agencies operating below the benchmark level are assumed capable of improving to the benchmark,while agencies already performing at or above that level are presumed to maintain their current production.

To estimate the impact of a carrier's increased share of agency production, we compare each agency to its peers among the carrier's current agency force. We set expectations for improved performance for agencies in which the carrier is performing at the average or below. For example, if the carrier has an average penetration of 6% within its agencies in a given state, then agencies producing less than that are presumed to offer potential for modest gains in penetration.

Organic market growth is determined using the data and forecasts from the MarketStance data base.

Applying the insights

On an agency-by-agency basis, these three growth factors are combined to produce an estimate of agency headroom. To be sure, several assumptions are used to develop the agency growth estimates; however, the assessment includes more rigor, sound logic and information typically not available to carriers to produce reliable, quantifiable findings.

Using these individual agency headroom rankings can be extremely valuable in helping marketing reps prioritize energies and efforts. It is not uncommon, for example, to find that two-to-five agencies can hold the key to achieving objectives in specific high potential areas. This insight allows carriers an ability to focus, which can then be translated into special servicing support and other incentives to improve carrier success in premium growth.

Aggregated agency headroom can be compared to the market potential within a given territory to clarify those territories in which existing agencies can support growth objectives and establish whether — and where — additional agency resources are needed to maximize the available potential.

Significantly, because the MarketStance methodology focuses on growth and is based on market potential, currently high-performing agencies will not necessarily represent the best source of premium growth. This can prove to be a valuable insight, demonstrating where changed expectations and tactics can uncover fresh potential within your existing agency network.

MarketStance also offers carriers the option of incorporating its agency and marketplace data into an automated tool that enables field associates and management the ability to monitor progress — at the individual agency, territory and cumulative level — on an ongoing basis.

Conclusion

The MarketStance agency headroom methodology allows carriers to introduce new rigor and marketplace realities, including growth forecasts, into execution strategy and tactical planning. It provides an exciting and holistic view of agency commercial lines production and market potential that is within a carrier's underwriting appetite. More important from the field associate's perspective, it reveals vital facts about the growth potential of agencies than can guide priorities and servicing particulars to help make the most effective use of time.

It also strengthens a carrier's position in negotiating with agencies by supporting focused discussions of quantifiable market data.

The bottom line is that the MarketStance agency headroom methodology represents a dramatic step forward in agency management intelligence and a potent planning and execution tool.

MarketStance, 3-2005 © IntelliStance, LLC, 2005