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Succession simplified: ensure that your business can survive your departure. fill leadership positions fairly and effectively by following these three steps.


It's no secret the insurance industry is aging--along with the entire American workforce. According to U.S. Census data, there are about 79 million American baby boomers, with an increasing percentage of them older than 65 years. Meanwhile, population growth in the youngest age brackets is stagnant.

This opens companies to the perils of a leadership gap when boomers retire. For the many family businesses that comprise the insurance agency sector, filling that gap can be an issue fraught with political, emotional and familial issues. Further complicating matters for insurance entities are the inherent challenges in recruiting millennial. All of this combines to create an emerging crisis for the industry.

A strong succession plan can turn these intergenerational challenges into an opportunity for younger employees to move into leadership roles and older executives to act as mentors and pass on their expertise. Succession isn't a new concept to most insurance industry leaders, but few actually create an actionable plan. Agencies, brokerages and MGAs can use succession planning to fill leadership positions fairly and effectively, by identifying and mentoring the next generation of executives and vital employees.


Succession planning starts with an internal assessment that develops a detailed, written plan. Involve human resources staff and employee leaders from throughout the organization. Some companies focus on upper-level positions, but some include all positions in assessment and planning. There are merits to both approaches, but the latter strategy has the benefit of avoiding the creation of ill will among employees whose positions are not identified. Plus, the organization will be better prepared if it has a succession plan for each position.

For positions you assess, identify necessary skills, attitudes and years of experience for someone moving into that job. Ensure that those skills align with company goals and needs. Consider where your areas of most urgent need are, such as C-suite positions and any critical position where someone may retire soon, and identify several people most ready to move into each of those roles.

Employees' career goals are an important part of this mix. Talk to employees about where they see themselves in the future; help them understand their options and identify any important knowledge or skills they lack for moving into leadership roles. Create a formal development plan for current or future executives to formalize their on-the-job education.

By understanding how employees will progress through the organization, the succession plan becomes less of a static piece of paper and more of an integral component of company operations and culture. This is critically important to wholesalers and MGAs, who build their reputations on stability. Jennifer Barr, a human resources consultant with The Resources Group Inc., recommends developing an internal structure that makes room for development and succession planning.

In family businesses, executives often promote their relatives to C-suite positions. This is a tempting approach, as family often seems like the greatest source of stable, trusted allies. However, focusing succession efforts around family can discourage other top performers in your company and leave leadership potential untapped. To level the playing field, make company goals and employees skills and experience (not family ties) central to your succession plan.


Recruiting and promoting from within is the most cost-effective approach to filling leadership positions and allows you to nurture employee skills. Who wouldn't rather leave a company in the hands of a trusted, long-term colleague? Mentoring, training and employee development ensures current and potential executives will be ready to move up when needed.

Mentorship is more than just a buzzword; organizations can create mentorship programs that match younger talent with experienced executives to better ensure continuity of knowledge and company culture. "There is an advantage to having an aging workforce--they have knowledge and experience that should be used and tapped into before their retirement to mentor and develop others," Barr said. An effective mentorship relationship has clear goals and boundaries and encourages open two-way conversation.

A succession plan also should provide opportunities for high-potential employees to demonstrate their skills. This can be through special projects or so-called "stretch assignments" that put skills to the test. Supplement on-the-job training with classroom education or formal training programs.

Mentorship and on-the-job training can also be used to nurture the enthusiasm of young professionals, while externship and internship programs can be used to recruit them. Millennials are notoriously difficult to recruit to the insurance industry, and as a generation they do not possess the penchant for company loyalty that baby boomers have exhibited.

Many industry leaders agree there are plenty of opportunities for new graduates to enter and advance in insurance, but recruitment in the field isn't exactly setting records. Let's face it: "wholesale insurance" doesn't have the same ring as "Silicon Valley startup."

Combat the dated idea that the insurance industry is all door-to-door life insurance salesmen. Give students a taste of reality by inviting externs or interns to work at and network with others within your organization. "Insurance companies should be working hard with local colleges to recruit business students to their industry and company," Barr said. "Business college students are seeking opportunities and in the last 5 years they are having difficulties securing positions. This opens a wonderful opportunity for students and the insurance industry."

To effectively recruit or retain millennials, insurance brokers and MGAs will need to consider key infrastructure or culture changes. Younger generations require a high level of engagement and feedback, and you will be more likely to retain them if they have a clear path to promotion and greater responsibility. Additionally, millennials put a premium on flexibility and a work/life balance. Involve them in mentorship programs and training and provide opportunities for them to demonstrate skills, just as you are with higher-level employees.

"Many companies are creating work environments that are highly productive, but also offer the flexibility and employee growth that all employees are seeking, not just Gen Y workers," Barr said. "These companies are recognizing that some traditional management styles of the baby boomers, like 'hands off' management, is not working for Gen Y."


Your succession plan must become an integral part of how your company functions. All executives, management and board members must be aware and supportive of the plan, and communicate clearly to the company as whole the competencies necessary for future executives. Review the succession plan at least annually and revise it as necessary, using input from all stakeholders. Focus on the future. Concentrate on what are your needs today and tomorrow, then 5 years from now.

Monitor the progress of the employees identified in your succession plan. Institute performance reviews or tie current reviews to succession planning and company goals. Check in with employees about their goals and identify skills gaps that may prevent them from moving forward. Revise their development plan as necessary.

Overall, the effectiveness of any succession plan depends on an adaptive, responsive company culture that encourages all employees to succeed. For family businesses and companies built on tradition, being nimble may be a challenge. But tapping into the unique knowledge and talents of all employees can help you create a succession plan that will lead your company confidently into the future.

More on the Web:

> Perpetuation Cliff

> OMG! You Work With Millennial!

> New Study finds the Independent Agency generation gap is a Chasm

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A Personal Account of Succession Planning

Frank Mastowski, CPCU, CIW, is the resident of AAMGA and president and founder of Jimcor Agencies, an MGA and insurance wholesaler based in King of prussia, pa. He also served as vice president of western world insurance group for 16 years.

A Personal Account of Succession Planning

My wife and I founded Jimcor Agency, a managing general agent and insurance wholesaler, in 1986. we realized the importance and necessity of succession planning to the longevity of our company many years ago, and we realized it would be a process rather than just a short-term fix. ultimately, our current plan was based on input from numerous sources, including management courses, AAMGA university educational offerings and the knowledge of our executive staff. Over the years, it became part of our regular strategic meetings, and through that process, our plan came together.

we knew succession planning would be crucial for the continuity of a variety of senior positions. The key areas we recognized were executive and key management positions, as well as senior underwriting staff who would be looking to retire in the future. they possess a wealth of knowledge and connections that needs to be passed to younger employees.

Ongoing professional development and education has been a central part of our succession plan. Besides on-the-job training, newer managers know we have an open-door policy with our executive staff. when they come on board, they are assigned a mentor on whom they can rely for assistance. we use outside training classes for the more formal/classic leadership instruction, and we also perform in-house training sessions via webinars.

Over the past several years, we have recruited more millennials. the key to working with them is understanding that they are fast paced, make more use of social media and look at opportunities and challenges in unique ways that offer additional options.

Especially during soft insurance cycles, it can be challenging to move millennials along their careers paths at a faster pace, in accordance with their expectations and ours. Fortunately, we are now able to promote millennial employees from within, which gives them ample opportunity for advancement and ensures continuity at the agency.

At this point, our succession planning has been part of our company culture for several years and it has become an integral component of our operations as we continue looking forward. this planning ensures the future of our agency, both for our employees and for the insurance markets with whom we have developed longstanding relationships. they trust us to be available to underwrite and bind their business for years to come.

--Frank Mastowski, CPCU, CIW
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Author:Mastowski, Frank
Publication:American Agent & Broker
Article Type:Cover story
Date:Oct 1, 2013
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