Agencies that sell nothing but Auto Insurance are going to have a difficult time over the next few years if they don’t diversify their product offering. Brokers too dependent on Broker Fees or that sell one product (auto) will have a difficult time competing if they’re not already. As a fellow Broker who charged Broker Fees I agree that this is very frustrating. I can also tell you that a handful of Brokers ruined the ability to charge Broker Fees by overcharging and not providing proper service. We can discuss the pros and cons of Broker Fees for weeks but it’s not going to help you replace the revenue you’re eventually going to lose.

How can you replace your Broker Fee revenue? Increase your commissions. How do you increase your commissions? Sell additional products.

You can be assured at renewal, most of your policy holders will be online or the phone obtaining quotes from your competitors. It’s important to take a proactive approach to your renewals to make sure they renew. This means shopping your renewals and making sure your client is paying the lowest rate you have to offer. A phone call reminder, letter or email will do wonders for your retention.

I recall reading research from State Farm years ago that explained how the typical auto client stays with an agency for 9 months. If you add one line of business this increases to 2 years. Add an umbrella policy and they’re yours for 4-5 years. You get the idea here - the more lines of business a client has with your agency, the longer they stay.

We’ve heard agents say, it’s not worth their time to sell a motorcycle policy and make a $15.00 commission when they can be working on something else. We’ve even heard agents say that by selling HO insurance with the same carrier as the auto the discount makes it a wash and they’re “reducing their commissions” by selling the additional line.

What agents have to realize is that by selling the additional line you’re not only looking at the short term benefit (additional commission 99% of the time) but the long term benefit (retention, retention, retention!)

As you set your 2009 goals, put training and selling additional products at the top of your list. If your staff isn’t selling homeowners, renters, condo, motorcycle, dirt bike, boats, floaters, dwelling fire, motor home, camper,  Health or other coverage’s, chances are they don’t know how. Take the time to learn how to sell all of these products. Diversify your agency. You increase the chances of insuring your prospects by offering additional products.

If you wait until Broker Fees are eliminated, you’ll be scrambling to pay your bills, laying off staff and regretting not learning these other lines of business.

Take a proactive approach to making money and running your agency, not a reactive one.