5 Trends Driving Change in Insurance Distribution

The property and casualty (P/C) industry is in a great position for further growth in the upcoming year. Robust economic recovery along with the entry of new products and services have enhanced the industry’s outlook.

This is our second annual study on high-growth insurance agencies and changes in the distribution channel. This year’s survey offers insight into developments that are reshaping strategies in the P/C insurance industry.

For this study, we surveyed 32 insurance agencies, three insurance carriers, two insurance wholesalers and three insurance aggregators across the United States in late 2015. During the survey five themes emerged on growth and changes in the distribution channels.

What’s driving changes in the distribution channel? The one main driver forcing changes in the insurance distribution channel is the customer’s unprecedented change in how they select a partner for their insurance and risk management needs.

The survey highlighted five distinct findings:

1. Business clusters and insurance aggregators will play a fundamental role in re-shaping the distribution channels. Eighty-six percent of the firms we surveyed reported that they are actively evaluating various opportunities in distribution channels, including participation in insurance aggregators and business clusters.
2. Over half of the participants we surveyed believed that memberships in the right insurance aggregators and clusters are a way to accelerate growth, sharpen profit margins, improve expertise, capture additional market share and attract talent.
3. The role of analytics and use of creative technology will continue to transform the market landscape. If you are an organization that has not yet adopted the use of technology and analytics you will be left behind.
4. Organizations we surveyed recognized the need to take steps to compete more effectively. Most believed that faster growth could be achieved by carefully selecting the right aggregators and cluster to actively engage with.
5. Recruiting talent will become paramount as the distribution channel re-shapes the insurance industry. The industry will have to move beyond traditional technical and sales training and producer recruitment.

Evaluating Criteria

Our survey uncovered the top criteria that agencies seek when considering an insurance aggregator or cluster. It included: support in lead generation; further development of data analytics; sharpened approach to insurance specialties; access to more markets; higher commissions; and tools to position their agencies as industry experts.

Insurance wholesalers and carriers that we interviewed closely evaluated opportunities with insurance aggregators and clusters, as well. Criteria used in evaluation included: further development of specialties; increased market share; turnkey approaches to new product innovations; and opportunities to re-niche segments.

Transformational changes are occurring in the insurance industry. Winners of the future will be those that build technology and analytical resources, and build stronger talent and product specialties. Survey participants believed the fastest way to achieve above average growth was to carefully select partnerships that have a strong offering in these categories.

Topics Trends Talent Personal Auto Market Training Development Property Casualty