1. Increase ease of doing business. A key benefit that independent agents bring to their customers is finding the best coverage for the right price. As a result, agents' access to competitive product structures and price is a standard feature in any successful relationship between the carrier and the independent agent. This relationship can be strengthened when carriers develop efficient and effective application, quoting and binding processes, giving agents, licensed sales professionals and customer service representatives a strong incentive to “prefer” particular carriers. Agents understand the advantage of being able to close four transactions per hour rather than three, making transaction throughput correlate directly with commission revenue.

2. Provide specialized knowledge and skills. Insurers can create affinity with independent agents by offering them better product intelligence, transaction support and collaboration options. These include quick, efficient and straightforward ways to educate agents on a range of products (auto and home) and help them sell more sophisticated products to grow their customer base.

3. Support effective agency operations. Carriers have long provided agencies with portals, interfaces, and business process support to help increase sales. Extending these offerings to help agencies run their own businesses, rather than just selling products, will tighten the carrier-agent relationship. For example, insurance agencies spend significant amounts on technology infrastructure, IT help, office equipment, tax services and employee benefits. Insurers can provide economy of scale to agencies, using the power of their large agent network to efficiently meet agent needs.

4. Clearly define customer ownership. Customer ownership is a key issue in independent agency/carrier relationships. Disputes over customer ownership can inhibit efficient and constructive agent-customer interactions. Carriers today are increasingly driving agents out of key customer interactions, such as first notice of loss, but agents also are growing wary of sharing customer data with carriers. Many agents guard data as a way to leave their options open in retaining an existing customer, by moving that customer to a competing carrier. To repair the lack of trust that has troubled the industry in recent years, carriers can help agents engage customers with more insightful messaging, and support agents' efforts to remain accessible and relevant to customers at all times.

5. Enable key agent-customer interactions. As monitoring and alert services become more prevalent across both commercial and personal lines, carriers have an opportunity to empower agents to more directly assist customers when issues arise. The increase in usage-based auto insurance in personal lines, for example, will create a market for additional services, such as vehicle theft tracking, automated emergency response, and vehicle wellness alerts. These services help to differentiate commoditized products but also create additional customer interactions for agents to help mitigate and respond to personal losses. They also create important customer data that carriers can analyze to alert and engage independent agents in providing new customer services.

6. Provide unique customer service capabilities. Agents are likely to place greater worth in after-hours and peak-hour service support if these services are provided on behalf of the agency, rather than the carrier. For example, contact centers that act as a true extension of high-performing or promising agencies will bolster agency loyalty and provide a more coherent customer experience. Channel and performance analytics are helping carriers reliably identify top agencies and agency/customer relationships. These insights can create a strong win/win value proposition.

7. Embrace third-party distribution capabilities. The independent agent market is filled with alliances, clusters and commission clubs that exist primarily to give agencies access to key insurance markets and additional services that support their operations. While these third parties offer some benefit to both agencies (in the form of increased commissions) and carriers in the form of bundled distribution entities) they have not been successful in providing the vast majority of agencies with the scale, skill, scope and capital that enable growth. Carriers can create an industry utility that both solves some of the operational inefficiencies inherent in the independent agent market and enables long-term growth beyond just a near-term commission boost.

8. Improve claims services coordination. Engaging with a customer during a loss is the most compelling moment for agents to provide tangible support for their customers. Though carriers are taking more control over the claims process to ensure that specific first notice of loss rules of engagement are followed, providing a mechanism for independent agents to play a role in the claims process is critical. It not only enhances the customer experience, it allows agents to engage with customers during a key moment of truth and to act as an advocate for them. Collaboration tools can enable insurers to give agents greater insights about claims outcomes, helping agents to mitigate adverse reactions. This creates a positive customer experience and gives agents stronger ownership of the customer relationship.

Despite significant investment—and much progress—over the past decade by carriers intent on establishing an alternative direct distribution channel, the agency distribution channel remains the dominant interface between consumers and insurance carriers. Carriers hoping to increase profitable growth should invest in creating preferred relationships with agency partners, helping them become more effective at sales and retention.

In Part II, posting on April 8, the authors discuss how carriers can establish a high-performance agency network.