As personal lines become more commoditized, identifying new opportunities and rounding out accounts is critical for agency growth. The pace of change has been relentless and even innovative agencies are struggling to remain competitive. In the small independent agency sector, sales and customer relationship management (CRM) systems are quickly becoming one of the most essential technologies that directly impact the success of the business.
Related: 5 high-tech challenges (and solutions) for today's independent agents
|Independent market squeeze
In a commoditized market where consumers view all insurance products as the same, cost of coverage all too often becomes the determining factor in selecting an insurance carrier. The continued pressure of decreasing margins on personal lines is forcing carriers to re-examine commissions paid out to the independent agent. As a result of this domino effect, top-line margins for some independent agents — particularly those in personal lines — are getting squeezed.
Smaller agencies are perhaps most at risk, effectively stuck between a rock and a hard place. They have the least amount of leverage to negotiate terms with carriers, and they have the lowest level of capabilities and capital to invest in technological efficiencies that would lead to growth.
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