One of the best articles I’ve read in the 25 years i’ve been in this business, but what Burand fails to make note of is that carriers don’t need economies of scale from either an aggregator or a large agency which was once a bunch of small agencies. With today’s technology, it probably costs less to work closely with several small, aggressive agents than it does to work with a few lumbering large agencies, while second or third tiering and ignoring smaller agents strictly based on volume.
The contracts are geared to force failure of smaller agents, or at least to keep them perpetually at a disadvantage. What kind of parent would impede their child’s opportunity to succeed?
That is precisely what most carriers contracts and underwriting practices do to their smaller agents, and then they have the disconnect to lament the aging ownership base?
I have been in the insurance business since 1972 and have witnessed the turn of events outlined in Mr. Burand’s article. I have cherished the “Independent” in Independent Agent but recently found that I needed to join an agent alliance (aggregator) to get and maintain company contracts. This was true even though my 21 year old son joined the agency and provides a path to agency perpetuation. This used to be a huge deal with carriers but the prospect of a stable producer for years to come takes a back seat to premium volumn in today’s environment. This is not about whining its just one observation of the way it is. We intend to adapt and continue to make a living whatever the business model.
Spot on regarding what you mention as an independent agency (please note, not a capitalized “i”), and the scope of what you’ve discussed.
There are large numbers of one-man shops who are “direct or captive” agencies that write business with MGA’s, MGU’s, wholesalers, program administrators, etc. Nationwide and Farmers agencies are prominent in this. The amount of business they produce is generally small compared to what they do with their benevolent parent, but some are quite successful and producing this niche business.
For the producer types who who want to write smaller accounts, there is a plethora of these programs out there, and there are many carriers that do not want “agents”, they want “programs”.
There are a lot of one man shops in the independent channel as well. These are the folks that usually end up selling their book, merging, or joining an agent alliance. Frankly merging or joining an agent alliance aren’t bad things. The more sets of eyes you have, the better your work flows, the more profitable the agency.
This is the best overview of what’s happening in the business that I have seen in many years. Chris has a way of understanding the complexities of insurance marketing…better than anyone else I know.
With IJ’s permission, I am going to send this article to every AgencesOnlline mameber agency and their entire staff.
I have worked for small (3-14 people) Independent Agencies for 40 years and if I were a customer I would prefer the better service you can get from them. In 4 out of the 5 agencies I worked for the knowledge and experience of the agents was the important factor in giving the clients the best service. Age and experience are a good thing. Good article.
One of the best articles I’ve read in the 25 years i’ve been in this business, but what Burand fails to make note of is that carriers don’t need economies of scale from either an aggregator or a large agency which was once a bunch of small agencies. With today’s technology, it probably costs less to work closely with several small, aggressive agents than it does to work with a few lumbering large agencies, while second or third tiering and ignoring smaller agents strictly based on volume.
The contracts are geared to force failure of smaller agents, or at least to keep them perpetually at a disadvantage. What kind of parent would impede their child’s opportunity to succeed?
That is precisely what most carriers contracts and underwriting practices do to their smaller agents, and then they have the disconnect to lament the aging ownership base?
I have been in the insurance business since 1972 and have witnessed the turn of events outlined in Mr. Burand’s article. I have cherished the “Independent” in Independent Agent but recently found that I needed to join an agent alliance (aggregator) to get and maintain company contracts. This was true even though my 21 year old son joined the agency and provides a path to agency perpetuation. This used to be a huge deal with carriers but the prospect of a stable producer for years to come takes a back seat to premium volumn in today’s environment. This is not about whining its just one observation of the way it is. We intend to adapt and continue to make a living whatever the business model.
Spot on regarding what you mention as an independent agency (please note, not a capitalized “i”), and the scope of what you’ve discussed.
There are large numbers of one-man shops who are “direct or captive” agencies that write business with MGA’s, MGU’s, wholesalers, program administrators, etc. Nationwide and Farmers agencies are prominent in this. The amount of business they produce is generally small compared to what they do with their benevolent parent, but some are quite successful and producing this niche business.
For the producer types who who want to write smaller accounts, there is a plethora of these programs out there, and there are many carriers that do not want “agents”, they want “programs”.
There are a lot of one man shops in the independent channel as well. These are the folks that usually end up selling their book, merging, or joining an agent alliance. Frankly merging or joining an agent alliance aren’t bad things. The more sets of eyes you have, the better your work flows, the more profitable the agency.
This is the best overview of what’s happening in the business that I have seen in many years. Chris has a way of understanding the complexities of insurance marketing…better than anyone else I know.
With IJ’s permission, I am going to send this article to every AgencesOnlline mameber agency and their entire staff.
I have worked for small (3-14 people) Independent Agencies for 40 years and if I were a customer I would prefer the better service you can get from them. In 4 out of the 5 agencies I worked for the knowledge and experience of the agents was the important factor in giving the clients the best service. Age and experience are a good thing. Good article.