Agents Seek Better Compensation Deal with Carriers

On a first quarter results call W.R. Berkley Corp. President and CEO Robert Berkley cited a growing and alarming level of tension between carriers and distributors, driven by what he called a fight to grow margins in the face of declining rates. Berkley concluded that he fears this struggle will get in the way of carriers and agents working together to “bring more value to the customer.”

A recent Channel Harvest Research survey addressed this dynamic by asking independent agents what they desire the most from their carriers and what they feel are the keys to a profitable relationship.

It’s no surprise compensation is a key factor, with nearly 90 percent of respondents saying it is either “very important” or “somewhat important” when they think about carriers. Yet, many agents are less than satisfied with their compensation agreement with their lead companies. Nearly 40 percent say their top carrier is average or below average when it comes to compensation.

This is among the findings of the national survey of agents conducted by Channel Harvest and sponsored by Insurance Journal. The study, “The Carrier Relationship: What Matters Most to Agents & Brokers,” is the ninth in an annual series examining agents’ views on property/casualty insurers and various marketplace issues.

“Market forces can squeeze everyone along the value chain and this survey indicates agents want to have a constructive dialogue with carriers about how to overcome margin issues,” says Peter van Aartrijk, principal of Channel Harvest. “Compensation is a hot button that carriers should not leave to chance or a business-as-usual attitude — if they truly seek to attract or retain valuable agencies.”

Commercial Business

Other than compensation, where there appears to be a disconnect between agents’ expectations and their assessment of their lead carrier’s performance, the survey reveals general alignment between commercial carrier performance and agency expectations. While agents are less than enthusiastic about their lead carrier’s tech support, training, marketing support and digital/social media support, those attributes also fall to the bottom of the list of agent expectations.

Agents who place commercial lines business gave their top carriers high marks for financial strength, underwriting responsiveness and expertise, customer service and brand reputation. When asked why they placed so much business with that carrier, agents mentioned things such as:

  • “Underwriter seems to be committed to helping us write business. Willing to look at each account and analyze it on its own merit.”
  • “Fully automated. Competitively priced.”
  • “Ease of quoting and writing business.”
  • “High level loss control and claim talent.”

About 1,900 agency personnel responded to this year’s survey, conducted in February and March. Respondents ranging from principals to producers to CSRs answered 100 questions about personal lines and commercial lines carriers.

The full Channel Harvest report explores how carriers can capitalize on agents’ interest in adding new companies. It also outlines agents’ ratings and rankings of the carriers with which they presently do business, and it will examine agents’ views on a variety of insurance marketplace issues.