I don’t see it possible for agents and companies to work together a partners in the independent agency channel. Most agents have numerous markets and little loyalty to any one in particular. The companies in turn, only pay attention to the agents sending them high volume. They both tolerate each other, but it is a far cry from partnership.
The direct writers and their exclusive agents / employees are partners. Both sides occassionally have shortcomings or let the other side down but they also leverage each others strengths.
The independent channel will continue to shrink in the future, particularly in personal lines.
Hey Jerry-
Get in line with the thousands of others who have predicted the demise of the Independent Agent. Smart people survive and thrive in any market by working hard and looking for opportunities. As far as I am concerned their are millions of sales prospects out there. My local State Farm and Allstate agents have been in my office and I can see by their faces that they would love to have to the same opportunities. Good luck to you.
I fully agree. There are smart, hardworking people that can be successful in any business. Both agency distribution and direct distribution has their share of those people.
But overall, the share of the personal lines market held by agency writers has shrunk over the past 20 years since I joined the industry. Moreover, there are few signs that it won’t continue along those trends.
Back to the point, the “opportunities” you have are exactly why agency distribution cannot establish partnership between insurer and agent. You don’t need to stick by your markets through thick and thin, and they don’t need to stick by you in the same way.
Disagree with the statement on lost market share and trends – after some initial gains by direct response carriers in personal auto ONLY in the early 2000’s, it’s headed the other direction.
Agency/company relationships function when you have the right partners. Any I/A should look at a move like this and question where the carrier’s interest lie. Then, they should align with companies that don’t waver in their commitment to the Independent Agency system.
Pat is correct, the IA distribution channel has grown its market share, true there are less independent agents due to acquisition but the market share of the independent channel has grown
Neither independent nor captive is a true “partner” with the insurers. In a partnership, the business is owned jointly by the partners. The independent agent owns his/her renewals; the captive’s renewals are owned by the company.
It’s not so bad that an insurer utilizes multiple channels; it is bad when its pricing differential is completely unjustified. Here’s an example: AIG pays our agency a meager 10% auto commission. Their quote for my own auto insurance through the IA channel was $742 for 6 months. For identical coverage, the DR channel quoted $484.92.
I can understand a slightly higher charge for the commission, but a 50% premium on my premium?
When IA companies pull shenanigans like this, the IAs can vote with their feet.
I believe all companies should have a direct distribution channel. They would better understand the difficulties faced by the IA. The pricing differential should be earned, if any. Typically, the placement of 100% of my business with any one carrier will produce a better loss result due to spread of risk rather than writing one app with 50 different markets. If the direct channel earns a lower rate by producing exclusively, it does not hurt the IA.
If agents quit whining and screwing off, they would make more money.
Loyalty? Partnership? Nope, the majority of agents today want price, price, price. Many of them don’t even take the time to consider the coverage offered – or not offered. Witness the heavy use and growth of Liberty Mutual’s regional markets. Yeah right, the agents complain about going up against Liberty and their underhanded tactics, and then feed them by placing business with Peerless, Indiana, etc. Oh yes, the independent agents are a special breed. Don’t get me wrong, there are some darned good ones. But they’re becoming fewer and fewer, and Liberty Mutual is feeding off of the carp and the suckers.
The survival of the Independent agency system is dependent upon many factors. One is Agents and Companies working together as partners…
I don’t see it possible for agents and companies to work together a partners in the independent agency channel. Most agents have numerous markets and little loyalty to any one in particular. The companies in turn, only pay attention to the agents sending them high volume. They both tolerate each other, but it is a far cry from partnership.
The direct writers and their exclusive agents / employees are partners. Both sides occassionally have shortcomings or let the other side down but they also leverage each others strengths.
The independent channel will continue to shrink in the future, particularly in personal lines.
Hey Jerry-
Get in line with the thousands of others who have predicted the demise of the Independent Agent. Smart people survive and thrive in any market by working hard and looking for opportunities. As far as I am concerned their are millions of sales prospects out there. My local State Farm and Allstate agents have been in my office and I can see by their faces that they would love to have to the same opportunities. Good luck to you.
I fully agree. There are smart, hardworking people that can be successful in any business. Both agency distribution and direct distribution has their share of those people.
But overall, the share of the personal lines market held by agency writers has shrunk over the past 20 years since I joined the industry. Moreover, there are few signs that it won’t continue along those trends.
Back to the point, the “opportunities” you have are exactly why agency distribution cannot establish partnership between insurer and agent. You don’t need to stick by your markets through thick and thin, and they don’t need to stick by you in the same way.
Disagree with the statement on lost market share and trends – after some initial gains by direct response carriers in personal auto ONLY in the early 2000’s, it’s headed the other direction.
Agency/company relationships function when you have the right partners. Any I/A should look at a move like this and question where the carrier’s interest lie. Then, they should align with companies that don’t waver in their commitment to the Independent Agency system.
Pat is correct, the IA distribution channel has grown its market share, true there are less independent agents due to acquisition but the market share of the independent channel has grown
Neither independent nor captive is a true “partner” with the insurers. In a partnership, the business is owned jointly by the partners. The independent agent owns his/her renewals; the captive’s renewals are owned by the company.
It’s not so bad that an insurer utilizes multiple channels; it is bad when its pricing differential is completely unjustified. Here’s an example: AIG pays our agency a meager 10% auto commission. Their quote for my own auto insurance through the IA channel was $742 for 6 months. For identical coverage, the DR channel quoted $484.92.
I can understand a slightly higher charge for the commission, but a 50% premium on my premium?
When IA companies pull shenanigans like this, the IAs can vote with their feet.
I believe all companies should have a direct distribution channel. They would better understand the difficulties faced by the IA. The pricing differential should be earned, if any. Typically, the placement of 100% of my business with any one carrier will produce a better loss result due to spread of risk rather than writing one app with 50 different markets. If the direct channel earns a lower rate by producing exclusively, it does not hurt the IA.
If agents quit whining and screwing off, they would make more money.
Loyalty? Partnership? Nope, the majority of agents today want price, price, price. Many of them don’t even take the time to consider the coverage offered – or not offered. Witness the heavy use and growth of Liberty Mutual’s regional markets. Yeah right, the agents complain about going up against Liberty and their underhanded tactics, and then feed them by placing business with Peerless, Indiana, etc. Oh yes, the independent agents are a special breed. Don’t get me wrong, there are some darned good ones. But they’re becoming fewer and fewer, and Liberty Mutual is feeding off of the carp and the suckers.