The 100-plus year-old independent agency distribution system is expanding. According to Future One’s “2012 Agency Universe Study,” the number of independent agencies has recently increased to 38,500.
Still, some voices claim that the agency business is past its sell-by date. Yet just because sales are made via other channels, some without agents, doesn’t mean independents are obsolete. There are countless consumers and businesses for independents, captives, and direct marketers to insure, both online and off. The bad news is that your individual agency’s survival is never assured. Here’s what to watch for in 2013.
Online marketing is the main reason independents worry about their future. Almost every insurance conference, publication, and vendor berates attendees, readers and prospects about the threat. Digital/mobile marketing is where commerce is headed, but it’s not a panacea for every problem facing independents. Rather, it’s a channel that grows wider every day — but not so wide that all traditional techniques are passe. During the past presidential campaign, nearly twice as much was spent on direct mail versus Internet marketing [Oct. 12, 2012, Washington Post]. So join in the digital conversation, but recognize that online rivals aren’t your only concern.
Aggressive Baby Boomers
The average age of today’s independent agency owner is pushing 60. That means many principals are thinking about retirement. If these baby boomers don’t have a perpetuation plan, then selling the agency to finance their retirement is at the top of their to-do list. If your office is competing with a retirement-minded agency owner, watch out. These guys can be aggressive in building up their book before selling, making them tougher competitors.
Agency networks and franchises sign up new members every month. Members gain greater carrier representation and enjoy various support services. Agencies that take maximum advantage of added markets can become local powerhouses of production. A small office can jump from white noise to a cacophony almost overnight.
Wholesale clubs, carmakers, and retail chains have promoted insurance sales to their customers for years — via email, direct mail, in-store brochures, etc. But MetLife is now selling term life policies at 200 Wal-Mart stores in South Carolina and Georgia [Oct. 19, 2012, Bloomberg BusinessWeek]. Selling policies off the shelf is a bold move, inasmuch as it’s the exact opposite of digital marketing. If this experiment is successful, what other boxed policies are next?
While some carriers are dedicated to the independent agency system, others employ whichever distribution system generates the most efficient results, as long as it doesn’t overly cannibalize their agency force. Look for continued and potential competition from companies you may represent.
The agency business is facing endless encroachment from an endless number of rivals and competitive methodologies. It’s the nature of innovative capitalism. So, be innovative back. Grow by being as aggressive and creative as your skill set and budget allows. Make 2013 your smartest, luckiest, and most successful year ever.