By Tom Barrett, CIC, AAI

The trends that began in 2013, with carriers tightening appointment criteria, looking at profitability first and foremost, requiring us to sell multiple lines of coverage (e.g., auto with home), and reductions in commission continue into the second quarter of 2014. The pressure on the independent agent, as outlined in the McKinsey Report in 2013, is but one of the many indicators. Even though some refuse to admit it, insurance distribution is rapidly changing.

There are two main reasons for this:

1. The quiet movement on the part of some carriers to create a direct sales force (without you, the agent) to write small business, as they have done in personal lines. The commoditization of small commercial lines will look much like the personal lines direct marketing we see today.
2. The fact that companies like ours are putting aggressive agencies in communities. Their employees are well trained, understand value-added services, and are willing to do what it takes to expand market share. In our case that equates to 5,000 locations and $5 billion in written premium with a growth rate of more than 430 new locations a year and $700 million in new written premium into the independent agency channel.

Increasingly vital in this changing marketplace is what we refer to as the ability to justify your position and add extra value as the agent. There is a magnified void in many agents' ability to validate this value. We refer to it as the “value gap.”