Long live the independent agency channel

Adapting to become their P&C personal lines carrier of choice

Price is still king in the highly commoditized property and casualty (p/c) personal lines realm, so carriers should continuously evolve their value proposition with sustainable strategies. Over the past two decades, largely unfulfilled predictions held that the P&C insurance IA distribution channel was positioned for extinction, as disruption from InsurTech solutions and direct-to-consumer distribution (digital, contact center) used up much of the oxygen in conversations about the future of insurance sales.¹

While the exclusive agent channel may have taken the brunt of the consumer’s shift to direct-to-consumer distribution, the IA channel appears to be holding strong. Shifting wants, needs, and expectations among customers and producers appear to be driving a trend toward independent agencies as a preferred distribution strategy over the captive agency model for many carriers.²

Becoming the carrier of choice for the independent sales force, which now represents 37% of all personal line premiums written³, will likely require a deeper understanding of what IAs seek out most from their relationships with carriers. They may require more sophisticated analytics capabilities, carrier support in writing new business, and exceptional customer servicing capabilities that resonate above other carriers.

Deloitte recently surveyed 300 IAs to find out what matters most in fostering relationships with personal lines carriers, and our findings offer insights to guide carriers as they develop a successful P&C insurance distribution channel strategy.

Dig deeper to understand independent agent priorities

When asked to rank their highest priority when selecting a carrier to place business with, “writing new business” and “servicing” were chosen nearly equally by the overall respondent pool.

However, under closer examination, a dichotomy appeared, based on the tenure of the IAs surveyed. Agents new to the business reported that they valued writing new business more than twice as much as those operating between 3 and 10 years. However, respondents with the highest tenure (11+ years) also seemed to favor writing new business, possibly to replenish their book as older policies go into “set it and forget it” mode and long-term policyholders start to shop around for coverage.

Bottom line, deeper and more meaningful relationships may be established if carriers can successfully segment IAs to understand their essential priorities and approach them in the most meaningful way.

Digital experiences can be key differentiators

Faster and seamless front-end systems and platforms may have become table stakes for carriers.

The survey suggests that IAs highly value self-service tools, including digital policy and service administration, agent portal and dashboard capabilities, and integrated analytics/tools to automatically pull in key quote information.

As they roll out more streamlined digital capabilities for IAs, carriers may consider a counter-intuitive approach: building momentum by focusing first on the “movable middle,” segmenting and targeting smaller or newer players, as they may be hungrier for growth, as well as more open to innovation and adoption of digital tools.

Maximize value of engaging IA channel through analytics

One of the advantages to using the IA channel is that they are often deeply embedded in their communities, and they might be able to more accurately understand clients’ needs and build strong, trusted relationships with them. An IA who speaks the same language as the customer or understands the cultural dynamics of a specific community’s demographics may be more appealing to that potential client base as a trusted “translator” of insurance products.

For carriers to benefit from these deep-rooted connections, they may need to develop a better understanding of the demographics and communities the IAs accommodate. This could require more sophisticated analytics capabilities to precisely predict and recommend the “best fit” agent for a consumer, rather than just assigning the nearest agent available within an acceptable geographical radius. With the current spotlight on diversity and financial inclusion, this strategy could be a win-win for all stakeholders in the personal lines equation.

Provide appropriate support to let IAs concentrate on what they do best

Carriers will need to develop more nimble and relevant engagement models to ensure servicing capabilities are seamless and smooth. Less time addressing customer queries can free up IA capacity for activities that help retain clients, pursue new customers, and build community networks.

The importance of personal relationships, whether with the carrier’s underwriting staff or an insurer point of contact, is important as it can free agents up to generate new business that would potentially benefit all stakeholders.

The easier you are to do business with, the more business you will do

Despite a proliferation of digital advancements that could challenge insurance distribution, the independent agency channel has maintained prominence among the shifting sands of the personal lines landscape. Carriers may need to continually evolve their relationships with IAs as the continued strength of this distribution force is poised to possibly rebalance the power equation.

¹ Sam Friedman, “40 years of watching independent agents adapt to survive: Despite emerging challenges, independent agents are not likely 'going the way of the milkman' anytime soon.”, PropertyCasualty360, September 14, 2021

² Independent agents poised to gain greater marketshare, says SIAA panel, THE STANDARD, September, 20, 2022, THE_STANDARD-September_30_2022_Reprint.pdf (siaa.com)

³ “2022 Market Share Report,” Independent Insurance Agents & Brokers of America (IIABA) Big 'I' Research, August 8, 2022