During the market slowdown of the past year, The Agency has developed ancillary services such as home inspections, mortgage banking, title insurance, and in late July, a joint venture with an insurance company to provide home, life and auto policies.
The joint venture, called Agencia Insurance Solutions powered by Bubble Insurance, will offer policies in California and Arizona, and will roll out to 16 more states later this year, said Burke Smith, The Agency’s executive vice president of affiliated businesses. Smith, a former broker owner, has worked at Beverly Hills-based The Agency since last year seeking alternative streams of revenue for the brokerage.
“We’re focused on creating equal or more revenue on ancillary services outside of real estate transactions. That is what the future of the business is. How do we make money when there isn’t a real estate transaction?” Smith said.
The timing of this venture is good, because several large carriers have stepped back from offering new home and property policies in California, including Farmers and State Farm. Also, Smith sees the joint venture as something that can help close deals for homes.
The Agency will serve as a marketer and as a lead generator for the joint venture. “The Agency is the rainmaker. Bubble is the product pricing engine and places policies with the right carriers. They’re taking on the role of the traditional insurance agent,” Burke said.
The model is that The Agency’s salespeople will mention Agencia as a service option. Bubble’s website, which describes itself as a “recommendation engine,” will offer quotes from carriers currently working in the market where a client lives. Agents, who are independent and not employees of The Agency, are not required to sell insurance services for the boutique brokerage, Smith said.
Brokerages have always looked for different revenue streams, but the search takes more urgency in the current gridlocked market when inventory is low, said Michael Nourmand, president of boutique brokerage Nourmand & Associates.
He said insurance was a good choice to develop business, but he believed that The Agency’s joint venture will have to provide an alternative.
“Most people have an insurance broker,” he said. “If they can get people insured in challenging areas, such as high fire zones, they’ll have more success than offering garden-variety homeowners insurance.”
Nourmand also cautioned against weighing agents down with too many company requirements. “You can only ask your agents to support so many company initiatives. People want to be in real estate because they like the freedom. As a company, you have to pick and choose your spots,” he explained.
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