In many instances, the agent knew almost nothing about commercial coverage and my knowledge was extremely important. The insurance company paid my expenses, because I was bringing the agent's business in our corporate doors.

Over the years, agents have outsourced more and more of their sales process. Agents have outsourced sales leads prospecting to lead generators. They have also taken advantage of company service centers, which upsell and account-round, selling home insurance to those who only have auto insurance through the agency — on the agent's behalf. Companies charge agents 1% to 2% for this help.

Other companies have facilitated direct sales for agents, when clients are referred to them by the agent. Hartford commercial has had their "warm leads" program, and many other companies sell personal auto and home for agents through the Internet.

However, the newest development on the horizon is the digital insurance store. This easy to execute attachment to the agent's existing website allows clients to purchase insurance policies and an array of financial products 24 hours a day, seven days a week.

I've introduced the 212 insurance agents in our Insurance Partners aggregation to this new concept, but are other agencies ready to take this step?

(Photo: Shutterstock)

Why are agents looking for new answers?

Consider these headlines:

"Insurance Via Internet Is Squeezing Agents" – New York Times 1/18/2015

"Google Wants to Sell You Insurance" – Wall Street Journal 1/8/2015

"Overstock.com Brings Insurance Sales to Retail Site" – Insurance Journal 5/19/2014

"Walmart to Offer Auto Insurance" – Money CNN 4/30/2014

"IKEA Now Sells Insurance" – Fast Company  10/9/2014

Some of the above headlines represent wishful thinking by marketers who apparently haven't studied the history of Sears and Allstate. Few people realize that Sears had been selling the Allstate tire brand for a few years before it created Allstate Insurance Company. For decades, Sears sold Allstate Insurance through direct mail and in booths at their retail stores. Sears divested the insurance company in stages and ended their relationship with Allstate in 1995. Allstate which has sold through a captive agent field force since the early days now makes eSurance (built on line to sell on line) offers available for direct to consumer purchases of P&C products in direct competition with their own agents.

It is clear, though, that the insurance-buying public wants to buy policies on their terms in their own time. Obviously there is little that can be done to impact the cost of claims and ultimate premiums, so companies are seeking to differentiate themselves by varying their distribution methods. Some have taken the debatable position that the Internet is the ultimate delivery mechanism — viewed as having broader reach with a lower cost of distribution.

(Photo: Shutterstock)

The dawn of digital insurance distribution – competitive threat or massive opportunity?

All of the new distribution models mentioned above (Overstock, Google, IKEA, Walmart), are using some form of digital product distribution to reach their target audience – many who are now agents' clients.

The mega company, Metropolitan, historically had four distribution channels: direct, career agents, independent agents, and group sales. They now have added online sales beginning with auto through Google Compare.

More surprising is Mercury Insurance taking part in Google Compare's initiative. Mercury Insurance has had an industry reputation as one of the staunchest backers of independent agents. In today's world supporting only agents is perceived by some as too limiting, so the multi-channel distribution models are gaining ground.

Also challenging agents for business are websites like PolicyGenius. Sites like this cause the old guard like me to cringe. Obviously, some insurance is better than no insurance, but the simplistic approach to the sale of renters insurance on PolicyGenius will no doubt give a false sense of security to many while leaving huge coverage gaps. It's highly probable this site will sell a great deal of insurance. In fairness, their site is no more overly simplified than GEICO's online auto site.

It seems clear in the face of these competitive threats that the independent agent can't continue to market as they have in the past without losing market share.