The surprising evolution of the independent insurance agent

Matt was recently honored with the Insurance Business America ‘Hot 100’ Award which recognizes leaders who are shaping the future of insurance – and there’s no wonder why when you realize SIAA has 13% of all independent agencies in their alliance, has created 4,487 new agencies since 1995, and saw $690 million in premium growth in 2018 alone. One way or another, Matt is influencing your agency.

This brief hour with Matt will clarify your own thinking about how to succeed in the Modern Age of Insurance. Listen to this discussion to learn about:

  • Millennials: the secret to making them happy in the workplace… and ‘being the agency’ millennials want to do business with.
  • Should your agency consider outsourcing to a service center? (Matt’s perspective may make this choice easier for you).
  • The Battle for the Customer – Matt’s unique insight on how the exclusive and independent channels are fighting for the future of the personal lines and small commercial lines customer.

Some people can see the future… and some people shape it – listen to this conversation and you’ll see why Matt Masiello, CEO of SIAA and the SAN Group, can do both.

What are other agents & brokers doing to thrive? What are the biggest trends affecting the retail insurance agent & broker? What are the most important strategies and tactics you need to grow faster? Find out here in the Connected Insurance Podcast, where Michael Jans discusses the biggest issues affecting the independent insurance agent and broker with the industry’s leading figures.

One More Thing! What do you think? How will you and your peers use this to grow your agency or brokerage? Share your thoughts in the comment section below, subscribe to get updates delivered to you and *please share this if you found it informative


Michael: Matt. Hey, thank you so much for joining us. How are you?

Matt: Michael, I’m doing great. I appreciate the opportunity to chat tonight.

Michael: For us, tremendous privilege. I really, really appreciate it. Normally, I don’t spend a lot of time at the very beginning on bio and history, but I am going to ask you for short thumbnail of how you got to be where you are and what your role is in the industry right now.

Matt: Sure. As of December 1st of last year, I’m currently Chief Executive Officer of SIA, so I’ll wet behind the ears and that role at this point. However, I’ve been with the organization since 1993, which was San Group, our original master agents here in the Northeast. Then I was also with SIA at our inception in 1995 and have really been involved in every aspect of the organization and sales and recruiting, but more of a focus on the operational side and the strategic side.

Michael: Got It. Matt, I would like to read a few numbers to you which might quickly seem familiar to you. [laughs] They will establish a sense of why our audience should listen. You ready?

Matt: Sounds great.

Michael: $8.1 billion of total premium. Now, some of these figures, maybe they’re old. I got him off of your site. $8.1 billion of total premium, organic growth of 76%, 13% of independent insurance agencies have signed with SIAA, they’re over well, over 4,400 agencies created. I could go on and on and on. We are talking about a serious force in the industry itself.

Matt: Thank you. We’re comprised of not just SIAA but 48 master agencies around the country that operate regionally and exclusive territories. The collective group is really what makes the overall business model work. It’s a business model that’s based on the overall growth of its member agencies. We’re not just a transactional organization. I think one of the great parts is as we all know, organic growth is incredibly difficult in this industry.

We found a whole bunch of agencies and a whole bunch of services and benefits that grow organically to the benefit of the agencies, the benefit of the industry and the benefit of the insurance companies that we do business with.

Michael: Got it, all right. There’s, peculiarities may not be the best word in the world, but SIAA as a network is different in my mind than a lot of the other networks, I’ve interviewed, a number of representatives from them, obviously a lot of my clients have been in them over the years. SIAA is a little bit different.

At some point, I want to circle back and we’ll talk about, to some extent the unique role that it fills within the industry and why it’s so successful at that role. Few questions first. [laughs] Kind of an interesting observation I’ve made, I’ve now interviewed more than a hundred of industry thought leaders and business leaders and so on and so forth. Observation that I make is in general, there’s a relatively optimistic mood about the industry as a whole. It’s perhaps seasoned with a little bit of realism. I don’t hear a lot of pessimism from my guests. Now I realize my guests are not a cross-section of the industry itself.

I will more frequently here concern on things that sound like pessimism occasionally coming from a certain segment of agencies. [coughs] Now, I ask myself why? Because these are turbulent times. Everybody seems to agree on that. Are we optimistic because we have to be or because, for example, your business model really relies on the success of the independent agency system? Or are we optimistic because there’s certain strengths and opportunities to face the independent agency today?

First of all, my sense is, number one, you’re relatively optimistic about the system, yes?

Matt: Yes, we’re extremely optimistic about the channel. I came up through the industry as many of us did hearing about the demise of the independent agency. While we see obviously the constriction around merger and acquisition, you shared a statistic a minute ago with us actually helping 4,400 insurance professionals start going into independent agency. These are producers and account executives wanting to go out and hang out their own shingle.

More importantly, these are exclusive agencies making the transition over to the independent agencies. It now looks like it’s the exclusive channel that is in much more risk of extinction and to the benefit of the independent agency channel. We see certainly market share and private passenger auto, some of it’s going to go direct but we see a great opportunity for independent agencies in their communities to pull some of that market share back into our agencies and back to our independent agency markets.

I think it’s exciting to see the evolution of the independent agency. There are some huge opportunities out there for the independent agencies that step up, embrace technology, understand how to communicate with the customers today and the customer tomorrow. I actually think it’s a great time to be in the industry for the folks that are leaning forward into the change. For the front of folks are running an independent agency the way it was run 15 or 20 years, they’ve got some challenges.

Michael: [laughs] We’re going to dig into the distinction between that old school agency and the new school agency. Let me ask you a few questions first because you just dropped a truckload of information on me there. You had said you think that now the exclusive channel might be in more trouble than the independent channel. Why do you think that is?

Matt: It’s interesting. We’ve seen the merger of the distribution systems in this industry. We always saw that traditional three forms of distribution; direct, exclusive and independent agency. We know the direct channel is growing certainly in private passenger auto, but we’re seeing the exclusive channel shrink in both auto and homeowners.

We’re also seeing on the personal line side, none of them have huge market share in commercial. I should add, by the way, we play mostly in the small to medium size agency arena, the big eye and iconic those a little differently, but let’s call it under a million in revenue is where we’re playing right now.

Michael: That’s a typical SIAA member is under a million in revenue?

Matt: Probably closer to half a million dollars. What we’re seeing on the exclusive agency side is companies like Nationwide that are transitioning their exclusive agencies over to become independent agencies. Three years ago, we heard they had a 10-year plan to get out of the exclusive agency plan or distribution system. Now, they will be out of the exclusive agency distribution system by 2020.

Those agencies, probably a third if not more of them will become independent agencies. At one point, Liberty Mutual had 3,000 or 4,000 exclusive agencies. They’re down to 1,700 exclusive agencies. I always joke that when you see the ad for Jake from State Farm, even though State Farm doesn’t have an independent agency distribution, Jake from State Farm is not your local State Farm agent. He is a direct channel. That channel contraction is really a great opportunity for-

Michael: Jake from State Farm is the guy you can call at 2:00 AM?

Matt: Yes.

Michael: Let’s circle into a conversation that you and I had before, because there are similar or you could call them hybrid opportunities available to the independent agent, where they could also have a Jake answering the phone presumably at two o’clock in the morning or at least on hours that are expanded beyond their own through service centers. You’ve got some insight on possible and effective use of service centers in the industry. What do you think?

Matt: I do. Some of this was again, reading the tea leaves of the leading indicators that are happening in the industry. We’re in a fortunate position. At SIAA, we have some very large books of business where the carriers will share analytics on those books of business and so we can see what some of these trends are. The industry has traditionally struggled, the independent agencies have traditionally struggled with moving their business into service centers.

They want to maintain that control, but it’s hard to argue against some of the economies of scale, the better retention of the extended service hours that service vendors provide independent agencies. I think there’s a real important trend within the independent agency system is, this goes back to your organic growth, we have to move to be more sales and business development focused. In doing so less service focused.

What you and I shared a couple of days ago was a trend that we’re starting to see on some of our books of business, which is that the consumer is actually driving the decision making process on how they want a service there. We all know in our personal lives and as consumers that in many instances we have the ability to perform self-service in the face of what we’re ding with the exception of our insurance.

What we’re starting to see is the percentage of consumers that are enrolling themselves in self-service capabilities or direct into the carrier sites to pay their bills.

Michael: How do they do that? How can they do that?

Matt: A lot of the times the carriers are offering them this service when the policies are being issued.

Michael: Right.

Matt: Or just like we all do with other parts of our life, we’re going through our vendors’ website and create an account. When we get in there, it’s there and so we’re seeing a higher percentage of consumers enrolling in self-service than we are agencies going into service centers and what that tells us-

Michael: Okay, got it. Got it. All right. Now, let me ask you a question about that, and I don’t know if the research can prove this out. Between nine and five, are still likely to call the agency or feel they have a relationship with the agency even though they’ve enrolled?

Matt: Yes. I think it’s anecdotal at that point. With that, so not that level of data yet but again, we use ourselves as consumers, are we sitting at our desk or are we thinking during the day, “Hey, I’m busy now but now’s the time to call my insurance-“

Michael: Can’t wait, right?

Matt: That’s right, and that’s not part of realizing what it is our customers or our clients want and how they want us to interact with them.

Michael: All right, let’s drill down into the argument against service centers. Then I want your insight on whether it’s a sound argument, okay? I think the argument against it tends to be that we own that customer, and we’re going to be responsible for that customer. That ultimately, and this is a premise that I would agree with, that the money’s in the relationship.

In other words, we don’t want to just focus on getting the customers into the agency like making a sale, we also want to focus on delivering an outstanding experience. They stay with the agency. They have loyalty to the agency. They give us referrals, they retain longer. They buy more policies per customer and so on and so forth. How do we address that one? What are the facts to the extent we know them when we can separate away the opinions?

Matt: Yeah, we own the customer walk as independent agencies and we all came up through as independent agencies, we own the customer, we believe we own the customers the value of our business, we have the relationship, but I’ll just go back again to the self-service capabilities at night or early in the morning or nobody answered the phone or they just don’t want to talk to somebody where they can follow through some of those self-service capabilities.

I think agencies do have to continue to deliver on the experience, but it comes into where the agency or the agent is going to fit within the insurance process. Is our time better spent on the relationship, on the business development, on making sure the coverages are okay versus performing processing function, and if processing functions can be performed elsewhere, can we spend more time talking to that customer saying, “Hey, I see you added a vehicle, we should probably look at increasing your umbrella,” or “I see you’re adding more employees, we really need to revisit EPLI.” Having more productive conversations with the customer versus taking orders and making change.

Michael: All right, so let me ask you a question for purely for clarification. Is it your opinion and from what you’ve said, I think it is. But I don’t want to put words in your mouth, that when an agent does register a role, create a partnership with a service center or multiple service centers, they still have to own and be responsible for the depth and link to the relationship with the customer.

Matt: Yes, okay. They do. I look at the future of the independent agency system and well, how we transact the business is going to change. We have a very important role within that insurance transaction. One, as an advisor and helping them get the right coverage, and two, as an advocate, because self-service technology, service centers don’t solve all of the problems. At some point, they are going to want to talk to a human and they’ll be available to be their advocate.

Michael: Got you. All right, one last question on this point, and I just absolutely do not know the answer, and presumably, the answer would probably come from carriers. Do we know, has anybody done analysis on whether or not service center participation has a positive impact on client retention?

Matt: The carriers will share their statistics that say it does and that’s really the only-

Michael: Fair enough. [crosstalk] Okay. Now, by a point, two points, do we know how much?

Matt: We traditionally would hear from the carriers but it’s a couple of points?

Michael: Well, a couple of points is a lot. Somebody throw a revenue number at me and I can show you what the impact of a couple of points is on cumulative income over the next five or ten years, it can be fairly dramatic. Okay. In general, of course, the carriers, presumably they’re saying that they’re retaining longer with that agency. [laughs] Some of these things are hard to measure, right? Or if they left the carrier, they’re staying with the agency and going to another carrier, but in general, your observation the trend is positive.

Matt: It is, but I want to put a caveat on there. The funders are something that are available today, to independent agencies to maybe allow them to pass off some resources so they can focus on business development. I also believe that there’s a service that’s available today, for us to redirect our staffing, right? If we’ve got three people or five people staffed for service, maybe we can move that number down one or two a year, and are bringing people that are more focused on new business.

I also want to go one step further, if we own the business and we want to control the lifecycle of the customer, what the other thing that we need to do as independent agencies is we need to make sure we have all the data in our management systems, in our AMS, and we need to make sure that we’re moving forward. If we want to be the one providing these services to our clients, then we should be utilizing technology partners that will ultimately give that capability.

Michael: Okay. [laughs] Well, get a good data into management systems is a subject that dear to my heart. Having once upon a time run a software company that relied on that data and knowing how beautiful and blissful it can make marketing or how messy it could be because a lot of agencies have just done a terrible job with it. I love them enough. I can criticize them on that.

All right, so you had mentioned a distinction between the agencies who want to run like it was 10 or 15 years ago and the agencies, I think in your term, leaning forward or leaning to the future. All right, so I’m going to break this into a couple of chunks. First of all, there’s something that’s making us be different and I want to focus on that first. What are the forces that make 1995 impossibly yesteryear and make today different? What’s different about the industry or the world that we live in?

Michael: I don’t want to sound like a broken record on it, but it really is a lot of it’s been driven by the consumer. We’re an industry that has not been forced to be consumer-centric, but has a prime for disruption and to be driven by the consumer. Maybe five years ago, we would be out traveling and talking to agencies and the agencies would say, “Those darn companies, they’re going to put us out of business and they’re going to do this.” They’re making these decisions that aren’t good for us and what the agencies finally needed to understand and still need to understand is the insurance companies are trying to survive, and they’re trying to evolve as well.

A lot of times, they’re making these decisions, whether it’s to merge their forms of distribution or go to a single platform or change products. These are being driven by the consumer trust, and so that goes back to the agency of the past. When we provided insurance coverage to people and we did business with insurance companies, as an agency, when we dealt with a customer. We dealt with the customer the way our process works as an independent agency.

We then turned around and we dealt with the carriers based on how their process work, we needed to follow their procedures. I think you’re rapidly getting into a time in the industry where the consumer is going to dictate how these businesses were. One of the concerns I have, is if you have agencies that are trying to act the way they used to act then they will be creating a barrier for how the consumer wants to do business, and as we all know, the consumer will ultimately find their way on the path of least resistance.

Michael: What do you think, and first of all I know it’s probably impossible and not wise to lump all consumers in the same bucket, because they do have some different values, right? That’s maybe a conversation for different time, but there’s certain consumers who are just terribly well suited for the direct channel, right? There may be some consumers who are just terribly well suited for a digital-only channel, right? They can get their renters insurance from lemonade and be tickled pink

Matt: Agreed.

Michael: Our consumer, whoever they are, and I think I have a strong sense of who they are, but our consumer, what do you think they want now that makes them different than back in the old days?

Matt: I think that- so you flag it perfectly right. We know that there is some consumers that they’re going to want to save 15% in 15 minutes and that’s not the future of the industry-

Michael: That’s such an important point. I don’t want you to just blow through it.

Matt: Yes, independent agencies we believe, and again, we deal very strongly in the personal lines arena as well as small commercial. Independent agencies that spend their day trying to give everybody that calls the lowest quote and the lowest price by the way including on their renewal book, that business model is going to struggle because the direct channel of the world, I don’t want to use the names, they have the ability to pile that commission into rate. Those products are going to be more and more difficult for us to compete with. Then those of us obviously in the agency world know that it’s very hard to run an agency on high transaction and reducing premium therefore reducing commission.

Independent agencies need to really focus on transitioning to that whole account on personal lines. We’ve been cross-selling to death but it’s really a matter of life or death for independent agencies moving forward to move into whether it’s mass affluent or whether it’s just multiple policies per customer, move into the small business arena for our local agencies we do business with. I think that– It’s not necessarily that the consumers change and they’re looking for something different from the independent agency. I think the independent agency is targeting that consumer because we know they’re a better future for us.

Michael: My listeners should go back two minutes and just re-listen to what you just said because that’s a really good road map right there. Thank you for that.

Matt: Thank you.

Michael: Well, okay. Moving along, today’s– In order to connect with today’s consumer and to build and deepen and strengthen those relationships, how do you think today’s agency behaves differently? What are– The good ones, the successful ones, what are they doing?

Matt: Successful ones are focusing on building a local brand. Local brands are built many different ways. They’re not built just one way. There’s not a social media silver bullet out there to build a local brand. We believe again, in our world of the small to medium size independent agency, you have the ability to use traditional marketing within your community. Certainly should be using and promoting your community involvement and the community involvement of your team. Now you start to bring in social media into some of that stuff. You should be a resource to other small businesses in your town, because they would like business to stay local as well.

Obviously, the traditional website needs to be out there but that needs to be interactive and provide valuable content. I believe if the independent agency– Just one other real quick thing is early in the pay per click world many of us tried to compete in that space and we realized very quickly that we don’t have the hundreds of thousands of dollars to compete in pay per click and Search Engine Optimization. But you know what, locally as an independent agency, as a local in the agency, you do have the ability to add that to your overall community branding.

Michael: Yes, got it. There’s another change out there in the marketplace that I think is fairly significant and I’m sure your agencies encounter this every single day, and that’s that we’ve got a millennial generation that’s now buying more and more insurance. That’s a little different, right? For boomers it might even be very different. How do you see your best agencies leaning into that marketplace?

Matt: We do have some younger agency principles. Hope to have some experience within the property casualty industry and starting their own agency. It’s fairly seamless to them. They just assume this is how business is done on how they’re communicating with them. It’s part of that old thing that we’ve always tried to do as independent agencies which is know your customer and communicate with them the way they want to be communicated with, which could be texting, the female social media, it most likely may not be e-mail. It’s certainly not paper newsletters.

Knowing that customer– I’ll even take it in another direction for you Michael, is the fact that independent agencies hiring millennials opens up an opportunity in that they know how to communicate with their peers. If you’re an independent agency and you’re not using your technology and you’re not forward thinking, you’re not going to be attractive for a millennial to come and work there, but if you’re using the technology and if you bring them in and you give them which they’re looking for, the opportunity to participate, the opportunity to help and the opportunity to bring their skill set in, in communication and using the technology that they were born with, I believe that’s a good way to enhance agency’s communication with that customer group.

Michael: Okay, all right. You took a page out of my playbook on that one. I think your argument is that if you want a modern agency and you want to attract millennials and keep them at your agency you better use– You better not have clunky old technology, right?

Matt: Agreed.

Michael: Yes, you have to have a workplace that feels good to a millennial. A millennial does not want to come to work, hate the technology that they work on all day, so that they just can’t wait to go home and use cool technology.

Matt: That’s correct. I believe that they have the ability to take what you have and make it better comparing to them.

Michael: Okay, got it. There are other changes that are afoot in the industry. The last 10 or so years, investors have thought that this would be an awfully good place to invest in disruptive or transformative or enabling technologies in the insure tech world. How do you think that’s going to affect the independent insurance agency of today?

Matt: Well, just as a topic it’s near and dear to our organization because we do operate now as almost a form of distribution within the independent agency channels, so relevancy, especially around technology and disruption is really important to us. I just read the other day that in 2011 Insured Tech was about 140 million dollar industry. In the first three quarters of 2018 it was 2.6 billion. When there’s that much money coming into our industry there’s going to be disruption and change.

When you read an article from two or three years ago, this goes back to the sky is falling. Now technology was going to put us out of business as agencies. I’ve read articles where people will say that agents are no longer going to be around because AI and technology will replace us. I even read an article at one point, it was actually written by an Insured Tech vendor, that said, “Hey, maybe agencies and brokers could put the carriers out of business.” Which is foolish though.

Michael: Explain that one.

Matt: Well, exactly, right? There’s no basis of that. There’s three reasons, and what I believe is a lot of these Insured Tech vendors who were very smart people entering our business from a technology standpoint, but they didn’t have enough insurance knowledge and experience. I’m always careful at how I say that. I think they ran into three barriers coming into the insurance industry. One is you have to have surplus in capital in order to be in our industry. You’re not replacing the carriers because of that. Number two, we don’t have one regulatory body in this industry. We have 50 regulatory bodies, and that’s very difficult to navigate and manage through technology.

I think the third part is we have a very successful distribution system and what I believe you’ve seen and there’s been some– There’s a great McKinsey study on this and I believe Corning did a study on this as well, it’s talked about how Insured Tech for the most part has begun to shift over towards the incumbents. What I mean by that is they thought they could come into this industry and shake us up and disrupt us. What they’re realizing is, “Hey, maybe the companies and maybe the distribution system within the industry, maybe they’re not all bad. Maybe our disruption could be to make them more consumer-centric.”

You see those Insured Tech investments now moving to either improve the client or the customer experience in the insurance transaction or which is where we’re seeing a lot of it, is improving the interaction between the agent and the company and making that a smoother process.

Michael: Clearly. My observation is that a lot of that money is moving in to places that support the existing or enhance the incumbent system in various places.

Matt: Completely agree.

Michael: Let’s face it. Agency revolution was an Insured Tech that started before the word Insured tech was invented. It was intended to build upon and enhance the existing system not the other way around. Yes, there are some friendly examples out there. I’ll give you one last shot at this. When you look at your– You’ve got a lot of agencies, 4000 plus or something like that. Surely you probably see some shining stars. Some who really rise above the crowd in regards to organic growth which is an awfully good way to measure success. What do you think it is?

Actually I’ll break it down. First is what do you think the difference is in terms of attitude or qualities and characteristics? Set aside the to do list. What do you think the differences in the character of what are you really– Of one of your shining stars versus the messy middle?

Matt: Yes, that attitude is 100% of it, but I also think they’re more sales and business development focus. There is a whole industry and you work in that industry and I work in that industry where we’ve been trying to convince agencies that organic growth is important. These agencies tend to be much more focused on business development and not as focused on only servicing the policy. I just never want to downplay even with the service center on the self-service stuff, the importance of service. We have to retain the business but these folks understand that there’s other ways to service the business. They understand that there are efficiencies that can be created in their business through technology utilization and their sales and business development focus. They’re out knocking on doors and building their community brand and getting business in the door.

Michael: You had mentioned technology– A number of times you’ve mentioned technology. My presumption is also that they have a willingness to embrace technology.

Matt: They do.

Michael: Yes.

Matt: They do. You would probably know the statistic better than I, but the average independent agency uses what? 20% of their AMF. One of the common calls that we’ll get from an agency is they need a new management system because my AMF doesn’t do X, and when we dig a little deeper we’ll say to them, “Well, maybe you should ask them because they very well may do that.”

Michael: Yes, right. Have you been to the class that the user group supports teachers X?

Matt: Right.

Michael: Okay. All right. Well, tell us a little bit about SIAA. Here’s one of the things I’m curious about. You don’t look like other networks and organizations, and I think I know them all. You’re just different. What is it that makes,and you can say better, I’m going to say different because I think you’ve got just you look different. You’ve got thousands of agencies in your organization and they do– It’s inclined towards small to medium, right? By your own admission. Why do you think SIAA has been so successful in that arena, and what is it about the industry that permits it or encourages that success?

Matt: Yes, that’s great. I appreciate that. Like a lot of organizations we did start as a market access provider. What we have learned now over the last years, 10 or 15 years ago there was only three or four of us doing this. What we’ve learned now as we move forward is, the ability to provide access to markets to independent agencies, they can get that anywhere. It’s a matter of the model that fits the best for them and what they want to pay for. That’s kind of the price of admission.

What we’ve done over the years is we’ve evolved our model to be a total solution for an independent agency. We’ve invested in resources, training tools, people in the field. We have over 140 people in the field around the country in FAA and the master agencies supporting independent agencies. We’ve tried to position ourselves to be the total solution for an independent agency, whether you’re a startup agency coming from the exclusive channel or whether you’re on the high end of that small medium sized agency that’s looking to grow organically, looking to increase revenue, increase efficiency.

That total solution has been a big deal for us. Our business model is much more long-term with our agencies which allows us to plan a little bit longer. It allows us to make these types of investments, but one of the coolest things about the evolution of our model over the last probably five or six years is the transition from being an agency carrier relationship or a broker carrier relationship or a cluster or network quick carrier relationship where we’ve actually moved into really being a proven subset distribution system within an independent agency carriers model.

We’re not just now– Although our primary focus is supporting independent agencies, we’re now working with the carriers and saying, “Okay, look, we know that there are challenges with carriers from an expense ratio with doing business with smaller producing agencies, let us sit in the middle there and let us augment your marketing. Let us help lower your new business acquisition costs. Let us help manage some of these agencies to the agency’s benefit but also to the carriers benefit power.” I think that’s been a cool evolution to say, “Look, the agency as our world but we need to recognize that we need to help the carriers produce and be successful.”

Michael: Okay, interesting. What do you think is going on in the heart and the mind of an agency principal who thinks, “Yes, it’s time for me to reach out to SIAA?” What’s going on inside them?

Matt: Well, there’s still some that will reach out because they need market access but we really try and show them that, “Look, market access is just one part of it. We want to show you how you can solve your problems.” One of the first things we’ll say to an agency is, tell us what you’re three or four greatest challenges are and let us show you if we can how we can get you past those.

Michael: That’s an interesting question. I have to ask you, and your answer might be anecdotal but like what are the one or two things that consistently show up in that list of the three big challenges?

Matt: First one’s revenue.

Michael: Okay. [chuckles]

Matt: We all see it. We do see commissions certainly on private passenger automobile being reduced not just through the carrier’s actions but through rate and data and business flow into the other forms of distribution. They have to offset that. The days of profit sharing and contingencies being an option for independent agencies are gone. We have to have them to run our business. That’s got to be the first thing that we’re talking to agencies about, but then as an independent agency it’s lonely out there. How do they know what they’re doing is what they need to do to evolve and be better.

Michael: Got it.

Matt: What we try and do is understand what their strengths are, have them share what they believe their weaknesses are and then we talk about the different areas where we can help fill those weaknesses to get them to their next plateau and then push them through that one as well.

Michael: Got it. All right. I have one last serious question for you. All right, automobile insurance, depending on what somebody’s strategic horizon is, in other words, how many years between now and the end of their perpetuation? This issue could take on increasing or decreasing importance. I think we can look at the automobile market and certainly say that there are a lot of unknowns about its future.

We might have self-driving cars. There may be more and more ride sharing opportunities. The millennial generation seems to have less of an affinity for automobile ownership and more of an affinity for car ride sharing. There may be some transfer risk from the individual consumer to manufacturers or fleet owners. Clearly by your own admission, autos a big deal in our space and it is for you. When you look at that, what kind of strategic decisions do you think an agency principal needs to begin to think about now?

Matt: First of it is, and we hit on a little bit earlier is get out of that high transaction, low premium automobile business. By the way which is– Look, the lowest commission level with a lot of the even the standard markets as well. One, they need to transition out. Two, they need to be targeting the households that do have multiple vehicles but also have multiple policies. Those folks are going to be more likely to drive a little bit further.

They’re still going to have some cars they may even have some toys and so now you get into offering access as the product on the ancillary lines of business to both the Harley, the second home, because I think agencies need to be looking at their accounts now and understanding that auto is not going to be the lead in the future.

You’re going to have families that call up and say, “I just leased a car. I no longer need automobile insurance, or at least don’t need parts of my automobile insurance with that.” The carriers have to evolve the products for that. I think life, and we’ve talked about it for years, I think life really fits into the independent, the property and casualty space now. There is no reason why we can’t provide term indications-

Michael: Life insurance?

Matt: Yes, absolutely.

Michael: What’s the deal there, Matt? That’s baffled me for 25 years. Why do PNC agents just do such a poor job at providing that insurance to their customers?

Matt: I think we all have our opinions on it and some of it in difference between the face telling you need auto insurance, and then the agent trying to convince the customer that they should buy life insurance, so it’s the order taking versus the selling. We have all the information when we do a homeowner’s and automobile quote to present somebody with a $250,000 or $300,000.

We have a term indication that’s very simple to do and I think there’s some training that can be done there. We’ve traditionally done a horrible job at it in the property and casualty agency industry. We’re getting to the point with your automobile scenario that we have to move in that direction.

Michael: Got it. All right. Well, so my observation is, in general, the industry is just terrible at that. Number two, the agencies that I’ve worked with where they actually have internal systems that support it, excel at it. If you want to know the research, I won’t get into it now, but there’s been some rather mind-boggling research that demonstrates how incredibly powerful that life policy is on client retention.

Matt: Yes, absolutely. [crosstalk]

Michael: State Farm and Bain did some research in the 90s on it that just continue to blow my mind. Even after sharing it and teaching it, it’s a point of resistance. It’s probably because it’s different. It’s a different kind of say on. It’s just agencies have to set up the internal system to make it happen.

Matt: I think you said that before, process and procedure will make that successful.

Michael: Process and procedure. All right. Matt, if somebody wants to learn more about SIAA, or reach out, I’m not going to ask you to give your email or phone, unless that’s what you want, but I doubt it, but if they want to find out more or something, and start to move your direction, how should they do that?

Matt: Yes, we welcome everybody to visit There is a loads of information there and there’s contact information to get in touch with us or any of our local master agencies located throughout the country.

Michael: Got it. Very good. You’ve mentioned master agency. Explain that concept really quickly, because somebody, conceivably, they could reach out to a master agency directly within their own region, right?

Matt: They could, if they’re aware of who the master agency is in their region, that would be the way to do it, but we do have a finder that will get them there. Like I said, we began about 48 master agencies around the country who operate in exclusive territories and they execute and deliver on all the services and benefits that we provide locally and regionally in addition to our national providing of those things as well. Gives our member agencies the benefit of being part of a national organization with local representation, local flair, and local relationships.

Michael: Got it. All right, Matt. is the site?

Matt: Yes, sir.

Michael: Okay. Matt, this has been a pleasure. I really, really appreciate the time. I want to thank you very much.

Matt: This has been fun. I really enjoyed our time together and appreciate the opportunity.

Michael: Right on.

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