Satisfied Independent Agents Are Growth Engines for P/C Carriers: J.D. Power

January 26, 2018

Despite the growth of both technology-based and direct-to-customer sales channels in the property/casualty (P/C) insurance industry, independent agents still control the lion’s share of P/C premiums and represent a significant growth engine for insurers that get the independent agent satisfaction formula right.

That’s the key finding of the inaugural J.D. Power 2018 U.S. Independent Insurance Agent Satisfaction Study.

The new study, which was developed in alliance with the Independent Insurance Agents and Brokers of America (IIABA), evaluates the independent P/C insurance agent’s business outlook, management strategy and overall satisfaction with personal lines and commercial lines insurers in the United States.

“Independent agents have continually found ways to stay relevant to customers in spite of the push toward digital and direct channel solutions,” said Tom Super, director, Property/Casualty Insurance Practice at J.D. Power. “Insurers that embrace the critical role independent agents play and work to find ways to partner with them have a significant opportunity to increase overall sales volume through improved customer acquisition and retention.”

Following are several findings of the study:

  • Independent agents face difficulty working with P/C insurers: Independent agents are the largest and most preferred channel for consumers, writing 35.5 percent of all personal P/C premiums and 83 percent of all commercial premiums, according to IIABA. Yet many insurers miss the mark when it comes to delivering for this key constituency. Among agents, overall satisfaction with insurers is just 696 (on a 1,000-point scale) for personal lines and 686 for commercial lines, which are among the lowest scores for business-to-business relationships in J.D. Power satisfaction studies.
  • Independent agents looking for P/C insurers with broader risk appetite: When it comes to policy coverage options, agent satisfaction is lowest when an insurer only offers standard options for policies (643 for personal lines and 634 for commercial lines). When insurers offer standard coverage but also accommodate specialty and unusual risks, overall satisfaction jumps to 756 for personal lines and 708 for commercial lines.
  • Huge cross-sell opportunities exist for insurers that get agency formula right: Agents have an average of eight different carrier relationships for personal lines and 11 relationships for commercial lines and indicate being able to provide bundled policies often to customers just 44 percent of the time for personal lines and 37 percent of the time for commercial lines. That missed bundling opportunity represents an enormous untapped premium opportunity for insurers.
  • Personal lines insurers with highest commission ratios also have highest satisfaction among independent agents and maintain the most profitable operating ratios: Personal lines insurers that provide the most satisfying experience for agents, in addition to the most competitive compensation, are able to achieve the highest profitability levels. A good relationship between agents and carriers leads to carriers gaining a relationship with the agent’s most valued customers and potential customers.

“The partnership between Trusted Choice independent insurance agents and insurers has never been more important,” said Bob Rusbuldt, IIABA president and CEO. “Competition is keen and growing, and carriers need to work with their agents in new and innovative ways. Agents also recognize the need to ensure they are doing business the way consumers want to do business, now and in the future. Carriers that understand their independent agency distribution force, work with their agents as true partners and provide resources to help address their needs are going to the be winners in the marketplace.”

Study Rankings

Auto-Owners Insurance earned the top score among personal lines, with an overall satisfaction score of 795. Auto-Owners Insurance is followed by Safeco (742) and Travelers (700). Liberty Mutual performed highest among commercial lines, with an overall satisfaction score of 714, followed by The Hartford with 710 and Travelers with 705.

The J.D. Power 2018 U.S. Independent Insurance Agent Satisfaction Study surveyed 1,380 P/C insurance independent agents for a total of 1,424 evaluations of personal lines insurers and 1,217 evaluations of commercial lines insurers that they had placed policies with in the prior 12 months. The study was fielded from September through November 2017.

Study Rankings
Overall Customer Care Index Ranking JDPower.com Power Circle Ratings
(Based on a 1,000-point scale) for Consumers:
Agents’ Overall Satisfaction Ranking of Personal Lines Insurers
Auto-Owners Insurance 795 5
Safeco 742 4
Travelers 700 3
Progressive 696 3
Industry Average 696
The Hartford 619 2
Metlife 617 2
Agents’ Overall Satisfaction Ranking of Commercial Lines Insurers
Liberty Mutual 714 5
The Hartford 710 5
Travelers 705 5
Chubb 695 3
CNA Financial Corporation 693 3
Industry Average 686
Zurich 668 3
AIG 585 2

Power Circle Ratings Legend
5 – Among the best
4 – Better than most
3 – About average
2 – The rest

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