What Keeps Independent Agents Awake at Night? Commissions Just One of Several Concerns

By | October 21, 2008

Independent insurance agents and brokers are concerned about the future of contingent commissions, according to a recent survey.

But that’s just one of several major concerns agents have. They also have doubts about the support of some of their insurance company partners for the agency system and about the insurance industry’s ability to attract quality people.

Whether contingent commissions will be reduced or cut altogether in coming years outranked real-time technology and agency branding as important concerns to agents in the “How Independent Agents View Carriers” survey conducted by Channel Harvest Research and sponsored by Insurance Journal.

The survey asked agents to rank five issues within the American Agency System in importance on a scale of 1 to 5. The property/casualty agents made their priorities known:

–Loss of contingent commission (4.6 out of 5)
–Real-time technology (4.4)
–Agency branding (4.0)
–Internet sales (3.4)
–Reduced coverage in catastrophe-prone areas (3.3)

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 agencies do business.

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.

Industry Image
Agents participating in the survey were also free to identify other issues they believe are of critical concern, with many placing the industry’s poor image and the related difficulties it has attracting talent at the top of their list.

“Agency respondents who discussed the industry’s image were unanimous in their sentiments that there is an identity crisis: They believe the industry seems boring, unprofitable, dead-end, and unattractive to young talent,” said Peter van Aartrijk, of The van Aartrijk Group.

Some respondents blamed weak or fragmented industry promotion, while others attributed the industry’s image woes to publicized scandals and uncomplimentary trends after recent catastrophes.

But agents did not let themselves off the hook, either.

“Many blame the independent agencies themselves, saying professionalism has declined,” according to John Campbell of Campbell Communications. He pointed to one agent comment in particular that seemed to capture concerns: “Agencies no longer seem to want to act as advisors to their clients.”

“This suggests that too many agents view their roles as product salesmen rather than trusted advisors or risk managers,” Campbell said.

Some agents also expressed concern that those entering the agency system are less qualified than needed.

Carrier Support
In addition to worrying about the industry’s lame image, agents are also upset over the quality of their relationships with some carriers and they have doubts about the commitment some carriers have to the independent agency system.

“Respondents generally long for a stronger partnership with carriers. Carrier competition with, and perceived lack of support for, independent agents drew the greatest ire from respondents,” said Campbell.

Those surveyed repeatedly singled out for criticism those carriers that promote Internet sales instead of encouraging prospects to go to independent agents.

Transfer of Work
Transfer of marketing responsibilities emerged as a real thorn in the side of agency respondents, with most indicating resentment that advertising costs for business—that will ultimately benefit the carrier— fall on the agency.

“It is difficult to compete when your commission is 8 percent, yet they pass the advertising budget to us,” complained one agent.

Along with their complaints about marketing costs, agents expressed a similar theme regarding carriers shifting duties to agencies, very often without compensation.

“There is an overall trend that companies are using technology to not only lower their workloads but also to pass responsibilities on to the agents,” said one respondent.

A number of agents expressed frustration over technology, with multiplicity and inconsistency of platforms the main complaint. With respondents ranking “real-time technology” a 4 out of a possible 5 on the scale of importance, “It is clear agents are looking for tools to more efficiently serve customers, driving higher customer and staff satisfaction as well as agency profitability,” said van Aartrijk.

The survey also explored other opinions of agents on a range of topics, as previously reported by Insurance Journal, including what performance criteria they use when evaluating their carriers and under what circumstances they might choose a market over a preferred carrier.

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.

For information on obtaining the full survey report, contact John Campbell: john@campbellsurveys.com or 202-363-2069.

Sources:
www.channelharvest.com
www.Aartrijk.com
www.campbellsurveys.com

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