In nationwide surveys and focus groups, we found that small-business owners strongly prefer independent insurance agents as they make choices in today’s online world. This was both an affirmation and a wake-up call for agents. We found that commercial lines customers want digitally engaged local agents as experts, who are backed by the efficiency of the Internet.

What that means is they want the insurance agency to use all of today’s methods of communication — Web, Twitter and Facebook, as well as e-mail, text message, phone, mail, in-person appointments, all need to be available to the customer. Will they use all of them? No, but they will decide how they want to communicate. They want choices. I have been in this business longer than I care to remember, and one thing has been remarkably consistent: Every decade or so, there is a new crop of consultants who proclaim the impending death of the independent agent distribution system — but it never happens.

These consultants try to convince firms that people don’t want their agents, or that they would be happy to buy online, or that a bank teller can sell and service insurance. None of that is ever true. Consistently, over the decades, insurance customers say they want to do business with their Main Street insurance agents. Perceptions to the contrary are being invented by our competitors. They issue so-called “studies,” the results of which they then promote. Their surrounding marketing conveys an impression of objectivity, impartiality and academic inquiry whose sole purpose is to determine the truth. However, as in politics, the method and purpose are to the contrary. A closer look shows such “studies” to be opinion pieces designed to appeal to and reflect attitudes of the consultant’s desired target audience. One recent report proclaimed, “The End of an Era for the Local Insurance Agent.” But upon further examination, this “study” contained no research as such; it was a “meta-study,” or in other words, a collection of the opinions of others. This same “study” also noted that current direct writers are adding neighborhood agency operations to their marketing approach.

So the question that carriers using the independent agency system need to ask is: “If the insurance agency system is dying, then why are my competitors trying to develop their own neighborhood agency systems, through which they intend to bring multi-carrier offerings?”

How do you see the P&C agent’s role evolving as distribution changes to more of a digital experience for the consumer?

What consultants get wrong is thinking that a customer’s positive response to using more technology means that they wanted to “do it themselves.” This is not so. Sure, when you only have an old car that you need only liability on and you don’t have many possessions in the one-bedroom apartment that you share with a friend to afford the rent, then you want to do the “online/go direct thing,” because the direct online route makes things very simple for you, with their pre-selected choices. And that works, because from an insurance perspective, things are pretty simple for you. But, as you move through life and you acquire more — more possessions, responsibility, and obligations — guess what? Those insurance choices get a lot more complicated, and your own life’s challenges get in your way, as well.

This is the life cycle of almost all of us. This is why most of us stop going direct online for insurance, and get ourselves an agent that we can trust and knows what they are talking about. I’ve also noticed a trend in surveys in recent years, in which millennials are more interested in face-to-face meetings than the previous generation.

Since 1994, despite all reports to the contrary, the market share of the independent-agent system has been growing. IA operations have expanded their class and line of insurance reach and mix, as compared to any decade before.

Related: 8 tech trends that will change how carriers do business

In our view, and despite competitors that don’t want this to be true, all indicators are that if PIA and all independent agencies stay abreast of things so that they can smartly guide their own decisions, the independent agency distribution system is poised to take off like a rocket and soar, performing even better than it has over the last 20 years.

More tech-savvy staff members may be able to more quickly master new options available to agencies in upgraded systems. (Photo: Shutterstock)

What are some of the biggest challenges that independent agents face as we enter 2016, and how might they best confront those challenges?

There is no question that for the entire industry, the next generation of technology purchases and adoption will be a huge challenge for carriers and agencies. For many, this can mean the entire replacement of hardware, operating and application systems for core processing systems.

Key decisions to be faced are: Does our company make that scale and scope of investment directly, and exclusively own and operate it? While agencies need to be aware of all the options, they may have to revisit the “systems integration” challenges of the past. Put simply, will what they buy be compatible with what all their carriers choose to use? Carrier interface will determine how everything works together — or not.

The technology uptick that is coming is not merely a one-time upgrade or addition to your current systems. It re-invents. On the one hand, this can be viewed as an exceptional challenge for agencies, because certainly cost is a consideration. However, beyond that, we may find it liberating for agencies. Why? This time, agencies are already hiring younger staff for whom technology — especially open, social media frameworks — is second nature. Also, the balance of experience among staff is better than during previous major tech upgrades, so staff training this time around may be more successful and quicker.

These more tech-savvy staff members may be able to more quickly master the vast new options available to agencies in these upgraded systems. This could help agencies really break out into the new dynamic of agency operations in these open-social media systems.

The biggest challenge will be coordination with carrier systems. We will have to assist agencies in rationalizing the balance between our members’ technology decisions and those of their carriers. I think ACORD and our other industry tech leaders will play an even more important role in all this.

Agency owners, along with whatever staff they have in the past assigned to “tech issues,” must reengage in understanding what is out there. Last, agencies should not wait until a carrier is banging on their door to advise of their major system change, telling agencies what they must do in the next three months to respond, or not be able to continue their partnership.

There is a belief that investments made in technology are meant to save money. Wrong! Rather, we need to appreciate that technology investments mean agencies are better able to compete, making them better able to integrate and leverage technology to secure more business. As a result, agency staff is once again able to handle even more transactions per employee.

Related: Technology and insurance predictions for 2016

It is a large engagement, but the end result, if it’s done right, will allow PIA agencies to be even more successful going forward.

Evolving technologies is one of the challenges that insurance agents continue to face. (Photo: Thinkstock)

What are some of the trends that changed the way agents conducted business in 2015?

There are three trends that have come to the fore in the past year:

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   1. The changing nature of risk. Cyber is your best example, but also drones and the sharing economy are significant new trends that will increasingly impact how agents and carriers do business. Agencies have had to understand the insurance significance of these changes, what they mean to them as agency and business operations; what it could mean to all of their current & prospective customers; and then, how it impacts their various carriers’ offerings.
      
      Agencies must demand current and thorough continuing education on these emerging issues – and also to have written, updated instructions from each of their carriers for each of the coverages currently offered, along with new ones to be offered. Specifically to all of these, the agency needs to know what the carrier means to cover or not cover, and how this is done in the policies and endorsements that they offer whether revised forms or new policies.
      
      
   2. Currently developing technologies. “The Internet of things” is a term that tries to catch tech lightning in a bottle. It refers in part to the growth in open system communications. This new communications landscape includes, but is not exclusive to, social media. What are these systems and the technology items being connected, and how do we use them? As we answer this question, other major questions come up which must be answered, including: how do we need to change our existing systems to accommodate them? Policies and practices need to be in place to provide safeguards that comply with the privacy, data and systems security, and cyber liability obligations of the agency to its customers and carriers.
      
      
   3. Finding good talent for the increasing number of open positions in agencies and the new positions that many agencies are adding. Once hired, how do agencies develop a good, remixed balance among all the agency employees? How do we train and develop them? How do we keep them?

Agency principals must present their agency’s goals and objectives going forward—and the opportunities the new hires have — in a way that is clear, understandable, interesting and inviting. All three of these trends have been building over time, but have become most apparent to agencies this year — and these are challenges that will continue.

Related: Agencies focused on maintaining current business, survey shows

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