The real concern with this ongoing trickle of data on the agency system going extinct is that what has happened in private passenger auto could happen in other lines. We've written extensively about whether small commercial insurance buyers will use technology to simply shop and buy their own coverage. Can some monolithic direct writer do for commercial lines what the geckos and cavemen did for auto?

According to AA&B tech columnist Rick Gilman, who also heads up the Personal Lines Growth Alliance, the answer is–not yet. But he concedes that small commercial lines business could lend itself to this since small business owners are constantly under pressure to hold down costs. And if turning business insurance into a commodity like auto will bring prices to rock-bottom, why not?

In fact, technology and social media—those tools that are helping independent agencies compete in a crazy competitive market—could also be the tools of their undoing, he said.

“Before social media, agents had walk-in business from individuals and businesses in their community,” Gilman said. “You have to recognize that as you grow your business through social media interaction and marketing, the footprint of your client base shouldn't necessarily get so large that you struggle with the strengthening of those relationships.”

On the flip side, these same tech tools can help a determined agency to market and sell personal lines auto the way the direct writers do, Gilman said. “Auto insurance is not a complex coverage; it is a commodity. From a small agent perspective, if you want to go after that business, you can find a way to mass produce a brand. Methods as simple as Constant Contact, social media, and YouTube videos can help you brand much the same as GEICO and State Farm.”

So should you fight for personal lines auto?

“It's absolutely worth fighting for,” said Chris Paradiso, president of Paradiso Insurance in Stafford Springs, Ct. About 30 percent of his agency's business is in personal lines auto, which generates great profits and retentions.

“We're not under attack from direct writers at all. We're not losing business to them, we're taking business from them.”

Paradiso encourages prospects and customers to shop direct writers–who in their lust for churning new business encourage the purchase of state minimum coverages and in some cases, actually discourage buyers from requesting umbrella coverage to keep costs low.

And while he concedes that personal lines auto is a volume business, standard commissions are 15 percent or higher–and at his agency, retentions are high. This is important because the agency only breaks even 9 months into the second year of a policy, he said.

Like Gilman, Paradiso believes that smart brand identity combined with technology makes all the difference in whether an agency will succeed. ”I think we have to wake up and start marketing our business by finding our identity and branding it through the Internet. We don't cold call or do anything for new business except marketing thru Internet,” he said.

For Paradiso, it's all about education–explaining to a homeowner why cheap auto coverage could jeopardize everything he owns if there's a claim, and that if his auto coverage goes up at renewal time, Paradiso as an independent agency can shop the risk to other carriers.

And that's a service that direct writers can't compete with.