Independent agents (IAs) are the dominant property & casualty distribution channel in the United States, representing 58 percent of all P&C sales. Their ability to provide personalized service, combined with local market knowledge and access to a mix of carriers, products and price points, forms the IA value proposition.

But the competitive environment is heating up. IAs identify carriers’ direct (online) solutions as their greatest source of competition, and also must contend with competition from formidable new competitors, including retailers and online giants who know a thing or two about the consumer space and are incredible data aggregators.

Accenture’s recently-published Independent Agent Survey identified a number of important market forces presenting both opportunities and threats to the IA channel.  These include:

  • Industry consolidation: Groups of agencies are being acquired by private equity firms and large brokerages. While this pressures smaller agencies, it can also mean infusions of cash for consolidated agencies, driving offer and efficiency enhancements.
  • Digital marketing: A number of large carriers are investing more than $1 billion a year in their marketing. IAs may have a harder time attracting notice, but utilizing social media can enable them to build inroads into local markets.
  • Distribution disruption: Powerful new distributors from outside the industry, with strong brands, loyal customers and robust distribution networks, are expanding into insurance. For example Walmart is selling auto and health insurance, IKEA is experimenting with child and home insurance and Google has just secured licenses to sell auto insurance in 26 states.
  • Omni-channel: Carriers have exploited digital to build a direct channel to customers. With omni-channel capability, carriers can make that virtual connection seamless and efficient, which could erode the IA’s natural “personal touch” advantage.

Our Independent Agent Survey examined the most pressing issues facing IAs, their business priorities, and the factors that influence their interactions with carriers and customers. It also recommends the actions that agents and carriers should take to sustain the vitality of the channel.

Next week: a look at some of the key survey findings.

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