Robert Rusbuldt, president and CEO of the Independent Insurance Agents & Brokers of America says he finds serious flaws in a recently-released study by McKinsey & Co. on the future of agents.

“McKinsey's proclamation that it is 'The End of an Era for the Local Insurance Agent' is dead wrong,” says Rusbuldt, in a statement. “A number of studies over the last several decades have decreed the demise of the independent agency system, and they have all been wrong. Independent agents are resilient entrepreneurs who know how to adapt to marketplace changes.” 

READ: McKinsey to Agents: Adapt or Find Another Line of Work

At the Big “I” boad of directors meeting in San Antonio, Rusbuldt outlined a series of deficiencies in McKinsey's report, “Agents of the Future: the Evolution of Property and Casualty Insurance Distribution.” 

Rusbudlt says: 

• The report ignores the growing trend to “buying local” and the independent agents' use of social media to magnify their local presence and involvement in the community to drive more traffic to their agency.
• McKinsey uses an oversimplified comparison to travel agents and dis-intermediation. Despite rhetoric to the contrary by the direct carriers, personal lines is more complex than basic travel reservations.
• McKinsey doesn't adequately take into account the IA channel market segmentation towards affluent customers who prefer relationships for personal lines.
• McKinsey assumes that the investment in digital capabilities marginalizes the agent rather than aids the agent-customer relationship to add value.
• Agents have the opportunity to organically leverage SEO so that they are well positioned for digital consumer searches. McKinsey's conclusions encompass all agents, exclusive and independent, and there are fundamental differences between them: independent agency carriers compete for the business of their agents, causing them to take different considerations into account in managing their agency force vs. exclusive carrier relationships with their agencies. 

”The Consumer Agent Portal, LLC is providing consumers an electronic pathway to finding and doing business with independent agents, and they are working with agencies on digital marketing, social media, local optimization, and much more, enabling agencies to do business the way consumers want to do business, while adding the value that independent agencies provide,” continued Rusbuldt. “TrustedChoice.com is quickly becoming the way more consumers search for an agent, and everything points to the fact that consumers still want to do business with a local agent if at all possible.” 

Rusbuldt did credit the McKensey report for providing agents with some recommendations to position themselves for success, such as on communication with clients, defining markets, using technology and increasing scale.   

“While independent agency market share in personal lines has been relatively static in recent years, many things are converging for the IA system to increase its personal lines marketshare,” continues Rusbuldt. “While McKinsey says 'Auto insurance – which accounts for 70 percent of personal lines premiums – is fast becoming commoditized,' agents can successfully counter the emerging perception of auto insurance as a commodity by 'going opposite' with their marketing strategy and fully embracing a local, relationship based strategy leveraging technology and fully embracing the Consumer Agent Portal (CAP).”

Rusbuldt also noted the independent agency system is growing. The 2012 Future One Agency Universe Study showed that between 2010 and 2012 more than 1,000 new independent agencies were formed.