Distribution Management: Maximizing Independent Producer Relationships

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Table of Contents The Evolving Landscape of Producer Management 03 The Enduring Value of the Independent Producer Channel 04 Optimizing the Distribution Management Lifecycle 06 Enhancing Producer Onboarding 07 Sustaining Productive Relationships 08 Optimizing Pipeline & Performance Management 08 Elevating Marketing & Communication Strategies 09 The Competitive Imperative 10 02 PS ADVISORY: White Paper Strengthening Producer Acquisition 07

The insurance industry's relationship with independent producers (independent agents and brokers) remains pivotal despite ongoing consolidation. While mergers and acquisitions reduced the number of agencies for decades, a recent resurgence in new firms suggests renewed opportunities. However, sustaining long-term, profitable partnerships with producers remains a key challenge. Independent producers play an essential role in complex risk placements and financial planning. Their expertise enhances client confidence and ensures tailored insurance solutions. While digital transformation has shifted some distribution models, professional producers continue to provide value beyond what clients can obtain through direct channels. Insurers that support producers in delivering superior client insights will establish stronger, more profitable relationships. Knowing this, insurers that rely upon independent producers are looking to not only improve the relationships with producers but are trying to tie the producer as tightly as possible to the insurer with exceptional service and products. The goal for most insurers is to be one of the top three markets in their producers’ offices. Higher commissions buys only so much loyalty, if an insurer is difficult to do business with, producers only have so much tolerance. 03 PS ADVISORY: White Paper

04 Source: Big I - 2024 Agency Universe Study Despite the rise of direct channels, independent producers remain a cornerstone of insurance distribution, particularly for complex and specialized risks. Their expertise in risk assessment, client consultation, and tailored insurance solutions is irreplaceable. Successful insurers still recognize independent producers as strategic partners and invest in their success by providing them with the resources, tools, and support necessary to thrive in a competitive market. The Enduring Value of the Independent Producer Channel Total Number of Independent Agencies by Year Professional producers, whether independent, affiliated, or broker/dealers, offer crucial guidance during insurance purchases. In property-casualty commercial lines, they often serve as risk managers, especially for smaller clients. Similarly, in life insurance, producers significantly impact financial planning. Client expectations however are rising. Clients seek guidance and insights beyond what they can find online. This elevates the bar for producers' expertise. PS ADVISORY: White Paper

Insurers aiming for profitable, long-term relationships with producers should focus on: Helping producers stay market-savvy Enabling producers to provide valuable insights to end clients Provide tools and insight that producers can leverage when working with and presenting solutions to clients. Consistently provide product and market updates to producers in the context of the book of business the producer has with the insurer as well as the producer’s target audience. These efforts will strengthen the insurer-producer relationship. These efforts will strengthen the insurer- producer relationship. Personal Lines All Property Casualty Commercial Lines 0.00% 20.00% 40.00% 60.00% 80.00% Producer Market Share - Property Casualty Source: Insurance Information Institute 05 PS ADVISORY: White Paper

Independent Agent Affiliated Agent Broker Dealers Agency Acquisition Onboarding Similar to client acquisition and management, producer acquisition and management also follows a lifecycle path that needs to be identified, mapped and managed. Insurers need to proactively manage the relationship with the producers throughout that lifecycle to create a productive, profitable relationship that is repeatable. Optimizing the Distribution Management Lifecycle Source: Insurance Information Institute Producer Market Share - Life Life Annuity 0.00% 20.00% 40.00% 60.00% Pipeline Marketing Relationship Management Relationship Management Relationship set up 06 PS ADVISORY: White Paper

07 Onboarding is a critical inflection point in the insurer-producer relationship. An efficient, well-structured process minimizes friction and establishes a positive foundation. The onboarding process sets the tone for the overall relationship. Onboarding can energize or irreparably harm a producer relationship from the start. Key onboarding components include: Licensing & Appointments: Automated verification ensures compliance and accelerates producer readiness. Commission & Book Analysis: Early insights into cross-sell and upsell opportunities create immediate business potential. Training & Product Education: Providing clear, concise product training prevents underwriting conflicts and enhances producer efficiency. Marketing Alignment: Developing collaborative marketing strategies strengthens engagement and positions producers for success. A well-executed onboarding process fosters early productivity and reinforces the insurer’s commitment to producer success. Enhancing Producer Onboarding PS ADVISORY: White Paper Strengthening Producer Acquisition Identifying and attracting the right producers is critical to long-term success. Data- driven targeting enables insurers to focus on producers who align with their strategic objectives. Leveraging third party sources such as NIPR and AgentSync provide valuable insights into producer licensing, experience, and specialization. A well-informed marketing approach ensures outreach efforts resonate with target producers based on their business focus—whether generalist or niche specialists. Negotiating partnership terms requires a balance between compensation, performance expectations, and flexibility. Utilizing analytics to assess past performance can guide optimal structuring of contracts. Beyond formal agreements, the onboarding process must be seamless, setting clear expectations for producers and ensuring a smooth integration into the insurer’s ecosystem.

Most insurers that leverage independent producers view the producer as their primary client, not the insured. A structured approach to successful relationship management includes: Comprehensive Producer Insights: A 360-degree view of producer performance, structure, and profitability enables informed decision- making. Proactive Engagement: Regularly scheduled visits, data-driven performance assessments, and milestone tracking ensure continuous alignment. Strategic Intervention: Identifying early warning signs—such as declining submissions or increased application abandonment—triggers targeted engagement to address underlying issues. A robust relationship management framework ensures insurers remain a top-choice partner for producers, increasing retention and loyalty. Sustaining Productive Relationships A sustainable distribution strategy requires continuous pipeline monitoring and proactive execution. Key considerations include: Pipeline Health Analysis: Evaluating submission volume, quality, hit ratios and profitability trends informs strategic adjustments. Issue Resolution: Addressing underwriting bottlenecks, submission inconsistencies, and profitability shifts preserves business momentum. Speed & Transparency: Adopting a “Get to No Faster” philosophy ensures prompt responses, preventing unnecessary delays and maintaining producer trust. Insurers that effectively manage their producer pipeline gain a competitive advantage by ensuring efficiency and predictability in new business acquisition. Optimizing Pipeline & Performance Management 08 PS ADVISORY: White Paper

Transparent, consistent communication strengthens producer relationships and fosters trust. A successful strategy includes: Product & Sales Enablement: Providing data-driven cross-sell and upsell recommendations enhances producer success. Market Intelligence Sharing: Delivering insights on regulatory changes, economic trends, and pricing shifts positions producers as informed advisors. Performance Transparency: Open discussions on business results and strategic direction build credibility and reinforce alignment. Elevating Marketing & Communication Strategies Marketing in distribution management extends beyond product promotion—it is about equipping producers with the tools and knowledge to maximize their business potential. 09 PS ADVISORY: White Paper

10 As insurers vie for producer loyalty, those who invest in seamless distribution management will emerge as preferred partners. Supporting producers in strengthening their expertise and market positioning creates a foundation for sustained growth and profitability. PS Advisory, in collaboration with Salesforce, offers tailored distribution management solutions for insurers, MGAs, and MGUs. Our expertise in digital transformation, pipeline optimization, and relationship management empowers insurers to stay ahead in an evolving marketplace. The Competitive Imperative [email protected] Baltimore, MD USA LET’S TALK +1-443-424-2857