Conning's recent study on property-casualty insurance distribution made some pretty obvious observations about its competition: specifically, that Web aggregators are giving traditional agents and brokers a run for their money by allowing prospects to get quotes directly online. However, the report observes that this same system't built-in flaw is that most aggregator transactions are one-and-done deals that don't yield repeat business. On the other hand, banks — the other “threat” in the Conning report — are leveraging both the ability to compare rates on the Web and building relationships with customers to ensure repeat business.

I've been around long enough to remember the pre-Gramm-Leach-Bliley days when everyone was worried about banks stealing business from independent agents. For the most part, that threat has proven unfounded. While biggies like Wells Fargo are aggressively pursuing agencies and brokerages for acquisitions — a trend that will probably increase as struggling financial institutions seek diversification in profitable businesses — banks, like direct writers, can't really offer policyholders the service and relationship that agents can.

However, a while back another Conning study shed light on something that could be a more insidious threat to the independent insurance distribution system: property-casualty companies offshoring not only the “no-brainer” back-office functions they've been doing for 20 years, but “services requiring higher levels of intellectual capital,” including actuarial, claims and underwriting.