While independent agents have their favorite carriers for certain risks, on occasion they end up choosing a carrier other than their preferred carrier. Most often the reason they do is pricing.
Independent agents named customer price as the leading factor that influences them to select another market over their preferred market in the recently released “How Independent Agents View Carriers” survey conducted by Channel Harvest Research and sponsored by Insurance Journal.
Channel Harvest Research, a partnership of The van Aartrijk Group and Campbell Communications, conducted the national survey of more than 1,600 independent insurance agents this past spring to determine their attitudes toward the carriers with which their firms do business.
According to the survey, more than six out of 10 (63 percent) respondents cite pricing as the reason they go with a carrier other than their preferred company.
“Rates clearly drive where independent agents say they place business with a carrier other than a preferred carrier,” said John Campbell of Campbell Communications.
Next in line are coverage (55 percent), customer need or request (53 percent), or underwriting restrictions (51 percent).
A previous Insurance Journal report from the extensive survey results identified the 10 factors agents use to evaluate the performance of their carriers, with claims service, pricing, underwriting and financial strength as the top criteria. Compensation did not even rank in the top 10 in that portion of the survey.
It turns out compensation doesn’t rank high as a reason to switch markets either. Agency compensation – at only 17 percent —is way down on the list of reasons agents say they choose other markets. It came in eighth out of nine.
In considering markets outside preferred carriers, “agency compensation just does not have the influence on placement decisions that outsiders might think it does,” said Peter van Aartrijk, of The van Aartrijk Group.
Why Agents Avoid Carriers
Just as they have carriers they like doing business with, agents also have carriers they prefer to avoid. Asked why they will not work with selected carriers, agents cite three issues: poor service, muddled carrier organization and erratic underwriting.
“Service, service, service—it’s primary to almost all respondents,” said Campbell.
Service to clients is most important, according to respondents, one of whom explained why: “We will work with anybody that treats clients fairly. We will not use any carrier that does not have a good claims paying reputation regardless of all other consideration.”
But service to the agency also matters. “Refusal to use a carrier often is linked to poor service to the agency,” Campbell said.
One agent described a worst-case situation that caused it to sever ties with a carrier: “Underwriter is very sloppy; hard to reach—no return calls; difficult to deal with via the Internet; we don’t have the time to be constantly following up to get something done.”
The survey found that carrier organization — or disorganization — also drives away agents.
“This problem is especially flagged for big-name insurers,” said van Aartrijk, highlighting one agent’s comment:
“It is very hard to navigate inside this carrier. You have to make too many phone calls just to find the correct department and underwriter that can help with your matters.”
The third reason agents avoid certain insurers is erratic underwriting. This can be too many exclusions or a changing underwriting appetite with each renewal season, sometimes even from quote to quote.
“They change their appetite too often and terminate accounts when the do,” complained one agent about one of his ex-carriers.
The survey was sponsored by Insurance Journal, a leading insurance industry magazine reaching 42,000 readers in all 50 states, and its popular property and casualty Web site, www.insurancejournal.com.
The first report from the survey, For Independent Agents, Carriers’ Claims Service is Top Performance Measure, is available online.
Insurance Journal will report more selected findings, including agent attitudes on industry issues, in subsequent articles.
About the survey: The survey instrument covered more than 65 separate questions. A total of 1,609 agents responded to the survey and passed validation criteria. For most general questions in the survey, the number of responses yielded a margin of error of 3 percent and a 95 percent confidence level. Quantitative survey results are presented in a variety of formats, including rankings of frequently used carriers, ratings of individual carriers, and comparisons of carrier ratings. The “How Independent Agents View Carriers,” is the first in a projected series tracking agents’ views on issues in the insurance marketplace. To order the survey report, contact John Campbell: email@example.com or (202) 363-2069.
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