Ullrich Insurance in Arvada, Colorado, was founded seven years ago in the middle of a recession.

But the economic downturn was not a bad omen for the fledgling agency’s future. The firm has not only grown dramatically ever since—it has done so by focusing almost solely on personal lines.

Jared Ullrich, junior partner at Ullrich Insurance, says leading with his agency’s strength makes competing against captives and direct writers “easy—the more [their] television commercials try to make people focus on price, the more we change the conversation to value and coverage,” he says.

Commercial lines accounts may command higher premiums, but many independent agencies are taking a fresh look at personal lines. Even though captive writers and direct writers leverage massive advertising budgets to increase brand visibility, some independent agencies are finding other ways to grow their market share.

Sidestep ‘Andre’

It’s working: According to the most recent Big “I” Market Share Report, independent agents grew personal lines premiums by $3.2 billion for a total of $266.1 billion in 2013.

And it’s worth it—sheer numbers show agents have a major opportunity. Auto and home insurance represent half of the p-c premium pie totaling some $530 billion. Private-passenger auto alone makes up a full third of that total.

Al Diamond, president of Agency Consulting Group, Inc., sees advantages in leveraging personal lines. “The same agents who were running scared from the direct writers are now realizing that they can very effectively compete with them,” he says.

But it takes a savvy strategy. “You’re not going to wrestle with Andre the Giant and come out a winner,” Diamond says—the smart agency doesn’t pit itself against the pricing strength of the direct writer. “You go after them with the strength of the agency system, and that strength is personal relationships and knowledge base. If you use your knowledge base and the fact that you’re a local professional to your benefit, you can beat the direct writers pretty much every time.”

The strategy works for Brightway Insurance, which focuses on personal lines and offers commercial coverage only as an accommodation. The franchise shop has some 100 stores in Florida and 17 elsewhere, with a central support office that provides back-office services.

“We focus on establishing an agent in the community,” says Talman Howard, president. “Our stores and the people who work locally are completely focused on networking and building relationships in the community. They don’t have to take care of office work, and that allows them to really focus on giving true personal service.”

That service means knowing customers well enough to understand what coverages align with their protection needs, Howard says. For example, the local agent should know if a homeowner’s hardwood floors require extra water-damage protection.

Make It Personal

Mark Atkinson, an agency owner in Beaverton, Oregon, takes a personal approach to personal lines. “We like going deep,” he says of his agency, Atkinson Insurance Group. “We like to have personal relationships with our clients.”

The owner of 28 years sold most of his commercial book three years ago to focus on personal lines. “It’s working well for us,” Atkinson says: Staff cross-sells 5,700 homeowner policies at 90% and enjoys a 93% retention rate. The agency reports a 6.5% increase in policies in force last year and an 18% increase in revenue.

Atkinson approaches personal lines by making friends with clients. His team sends 5,000 handwritten notes to clients every year, makes personal calls to every homeowner for renewal and sends a newsletter that includes “nothing about insurance,” he says.

Client appreciation events form the cornerstone of Atkinson’s strategy. In June, he hosted 60 families for the opening game of a local baseball team, buying everyone tickets and dinner. Every Thanksgiving season, he hosts a “gratitude open house” in his home.

Atkinson’s favorite event of the year is the annual Christmas tree farm open house. He invites 120 client families to a farm for hot chocolate and snacks, festivities and a free Christmas tree. While the event makes him as happy as the smiling kids, it’s also an effective and efficient marketing operation. “It’s an opportunity for my team to see 100-plus clients in a three-hour period,” he says. “We could never drive to 100 homes to say ‘thank you.’”

Focus on the Cross-Sell

Cross-selling is the key to retention and ultimately an agency’s sustainability, Diamond says: “If you’re not cross-selling, you’re probably declining as an agency. It’s that important.”

The agencies most successful in personal lines are “concentrating on fewer clients and more business from each one,” Diamond says. That means more effort goes into understanding the entire insurance picture for individual customers. If you sell more to fewer clients, “the workload is much easier,” Diamond adds. “The relationship is much longer. The retention goes to 90–95%.”

Brightway is “very focused on the cross-sell. Internally, we reward our agents for effective multi-lining within the household,” Howard says. “You’re giving the customer the best service if you look to protect all their assets. You don’t want to have a gap in coverage.”

And the strategy should extend beyond personal lines-exclusive cross-selling.  “Commercial lines give you gold, but personal lines keeps the doors open in your agency,” Diamond says, adding that keeping both enhances agency value. “It’s a negative valuation position to have only one line or the other.”

According to Lisa Murman, director of business technology at The Main Street America Group, small commercial accounts can be the “bread and butter” for an agency. Those “stable mom-and-pops are not looking to shop,” she says. “And they’re not as influenced by fluctuations and market conditions.”

And Diamond says his consulting firm sees many commercial-lines driven agencies missing an untapped opportunity to sell personal lines to their clients’ employees. They sell personal lines coverage to a business owner, but “completely disregard the hundreds of employees they have,” he points out. “Why? They’re a captive network. If you impress the owner, they will support you in talking to their employees.”

A Best Practices agency since 2007, William B. Parry & Son in Langhorne, Pennsylvania cross-sells personal lines to its business accounts more than half the time, endeavoring to understand a client’s entire risk and design an individual coverage plan up front. “We want to work with people who value our professional recommendations—who are interested in protecting all their assets,” says agency principal Lisa Parry-Becker.

And selling value is as vital as cross-selling. Parry-Becker politely declines price-based and monoline business. “We’re not a price-based shop,” she says. “We’re value based, and it doesn’t make sense for us to spend time working on a monoline account.”

Make the Workflow Work

While keeping up with customer outreach, the back end needs to operate efficiently in order to make personal lines profitable.

“To compete with larger agencies as well as captives and direct writers, we have to do it faster, smarter, better,” Parry-Becker says. “But we’re just a seven-person agency, so how are we going to do that? Technology.”

William B. Parry & Son was one of the first to adopt real-time rating workflows when they became available through Applied Systems with Ohio Casualty and Progressive. Parry-Becker admits her agency is “a bit late to the paperless party,” but she credits technology with enabling the agency to get back to selling personal lines.

Before the advent of agent-carrier workflows in real time, “personal lines was so time-consuming,” Parry-Becker says. But now, the agency uses CSR24 for certificate processing and will soon use CSR24 to roll out a customer portal for clients to access ID cards, policies, endorsements and more. “Where we’re going as an independent agency is predicated on technology,” Parry-Becker says.

“We want to assemble the most current technology that’s going to help us achieve customer-service and operational efficiency,” Howard agrees, noting Brightway utilizes Vertafore AMS as a policy management system as well as DocuSign e-signature and other digital resources. “We embarked on a strategy of complete private and public cloud usage.”

Agents not only need better technology—that technology needs to be standardized, Murman says. “We as carriers have to help and push standardization so agents can do business in an efficient manner without having to learn to do business 12 different ways for 12 different companies,” she says.

The Big “I” Agents Council for Technology, a joint effort involving carriers, vendors, ACORD and independent agents, helps provide those uniform solutions. “We’re helping support the service opportunity for them, which certainly helps them become a more efficient office,” Murman says. “That keeps the agent focused on the sales opportunities.”