Vendor Relationship Red Flags: What Agents Should Avoid

Perhaps you’ve seen the recent red flags trend online. It’s simple. People list their top three relationship red flags; some of them are funny, others are more serious. While these postings usually refer to peoples’ personal relationships, the exercise can be a good one for any type of relationship, including the ones agents have with technology vendors.

In the insurance industry, agent and vendor relationships are often complex. Agencies are seeking digital capabilities and need to partner with solution providers to acquire them. But there are a lot of options, and it seems as if new providers pop up every day.

The right vendor partnerships can take the agency operation to the next level. But the wrong vendor relationships are very detrimental, requiring workarounds, long learning curves, and lack of use.

Finding the right vendor match can be a big task. The influx of solutions entering the market every day means that agencies have so many choices. And with pressing client workloads, they usually don’t have the time to research and demo them all.

We talked to a variety of agencies about their red flags and compiled the top 5 things to watch for here:

Red flag #1: exaggerating competence. This may seem obvious. But some solutions are just too good to be true. Greg Aldridge, Founder and President of Aldridge Insurance based in South Bend, Indiana said, “Bold statements, like ‘we can solve all your problems,’ raise an alert for me. I have to wonder: maybe the solution is trying to do too much and can’t deliver on its promises.”

Always check references and listen to your team about any concerns they have. Address questions with the vendor and listen to their answers. Look for those that are transparent about the solutions’ capabilities.

Red flag #2: resisting feedback. Good vendors are open to all kinds of input and have systems for addressing comments and updating the solution accordingly. It should be a dialogue—one in which the tech vendors honestly explain what it can and can’t deliver.

Red flag #3: locking agent into long-term contracts. Does the vendor have a trial period? Can you test the solution before committing? With software-as-a-service (SaaS) formats and subscription pricing becoming more common, it is easier than ever for vendors to allow customers to test a solution and pay as they go. Steve Holley, Founder and Owner of Holley Insurance in Rocky Mount, Virginia shared, “Requiring long-term contracts is an immediate red flag for me. If your product is as good as you say, we will want to buy it. You won’t have to force us by locking us up in a contract.”

Red flag #4: no plan for post-implementation support. A good vendor relationship doesn’t end with the onboarding call. There should be regular check-ins to make sure the solution is meeting your needs and to provide updates on any new features or improvements the provider is making.

Red flag #5: retention of ownership and easy access to data. Some terms of service give the vendor ownership of customer information in the cloud and makes it difficult or expensive for the agent to move that data to a new solution. Before signing a contract, make sure you completely understand the rights to your data and how it’s being used by the vendor.

A partnership that’s a win-win

Agents want a product that will deliver on its promises, isn’t too complex to use, and will continue to evolve. Just as agents adapt for their customers, they expect the same from their service providers. Holley noted, “I want technical support in whatever form I prefer, whether that is phone, online chat or email.”

And with AI and ChatGPT gaining more and more prominence, agents don’t want to be talking to bots when they have questions about a solution or need to get help. Aldridge noted, “I want my vendors to have a phone number that connects me with a human that I can talk to and get answers. If I am trying to navigate an automated menu or chat assistant, I am spending a considerable amount of time to get an answer to a technical question. This is time that could be spent serving my clients.”

Being aware of vendor red flags can save agencies valuable time as they sort through the options. But knowing is only the first step, agents have to make sure the technology is solving real issues. Holley explained, “As basic as it sounds, I ask myself if the product that I am evaluating solves a problem that my agency has. There are a lot of great, elegant solutions available. It can be easy to get caught up in ‘shiny object syndrome’ where a product looks cool but ultimately it addresses an issue we don’t have. Often, just asking the question, does this solve a problem that we have?, helps me avoid mistakes.”

Brent Sheppard is president of Xanatek, an agency management system. He specializes in helping agents become more profitable by leveraging technology. As the leader of Xanatek and a former agent, he created an affordable agency management system that helps small- and medium-sized insurance agencies grow their businesses through increased client service and productivity.