I was playing with a tool of ours the other day.  The Soft Market Spreadsheet(tm).  I designed it as a blaring wake up call for agents entering this era of squishy soft pricing.  (In case you wondered where that sucking sound was coming from, it’s your premiums going down the drain.  We just finished our straight 4th year of premium erosion.)

The user of this handy little tool can input variables for agency income, price reduction, customer attrition, years of soft market, number of clients and so on…and the software shows you how UGLY the result can be at the predicted end of the soft market.  (Consider sedation when you punch in your numbers.)

For example, if you combine a 10% attrition (that’s a 90% client retention) with a 9% premium erosion, the software reveals that your million dollars turns into a paltry $449,920 in just 4 years.  OUCH. 

But, for fun – in a devilish, masochistic way – I added a new field.  My premise is that the internet represents a HUGE opportunity for agents…but INTERNET IGNORANCE will be the slow, quiet death of many thousands of agencies.  (Don’t believe me?  Ask your local Travel Agent.  What’s that?  Don’t have a local travel agent?  That’s my point.)  So, I added an INTERNET IGNORANCE cell.  Let’s say the influence of the Internet creeps in slowly to your agency, nibbling at the corners and fraying the edges – and slowly eats away 3% of your client base.

Add that to my first scenario and your $449,920 turns into a pain-inducing $392,864(!).  Even worse, over 4 years, that dings you for a cumulative loss of $181,453.

Hey.  GOOD NEWS.  Don’t despair.  ALL conditions are pointing to a turn in the market. It WILL harden.  Prices will go up.  (But neither as soon as you think nor as soon as you want.  More on that in the next few days.)  Also, more GOOD NEWS.  For the savvy agent, who’s willing to walk away from the dinosaur marketing strategies of the old days, the Internet is waiting like a hungry dog for you, begging to help you generate leads, convert leads into clients, sell more policies per client and retain your clients.  (And more on that later, too!)

Meanwhile, smart agents should mark their calendar for The Internet Marketing Mega-Conference for Insurance Agents in Chicago, April 16-17.  (If you have questions about that, please post a COMMENT.  I’ll get back to everyone.)

Dominate Your Marketplace!

Michael

PS: Quantum Club Members, you can download both copies of this software – free – from The Navigator. If not today, tomorrow!