I read Jim Holm’s recent piece, Are Reduced Commissions the Wave of the Future?, with a mixture of confusion and dread. At first I was confused, because it read like paid advertising for Travelers, but with ad copy full of inherent contradictions like this one: “Even though they sell value, our member agents are typical in that they often place the insured with the company that provides the lowest quote.” It was followed by dread when I realized that independent agents might actually view this as advice.
The subtitle of Mr. Holm’s article was, “Is our industry on the verge of killing the independent agency goose-that-lays-the-golden-egg?” One sure way to kill the golden goose is for independent agents to always recommend the lowest priced product to the consumer.
At first I was tempted to forgive Mr. Holm his point of view because he was articulating a business model focused on personal auto insurance in rural Minnesota, whereas most of the insurance we write covers the entire household in large population centers. But no. I decided I fundamentally disagree with his premise for independent agents.
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