How independent agents can stand out as competition grows
A digital presence is the first impression customers have to an agent’s brand as well as the route clients and prospects prefer to connect.
Two years ago, Nationwide, which is one of the largest carriers in the U.S., released its captive agents, making them all independent agents (IAs).
This action was completed in 2020. While Nationwide was one of the first major carriers to make this move, we know now with almost certainty they won’t be the last.
We expect to see more carriers take the same route as Nationwide. This will make the market more competitive — especially the personal lines segment. I believe independent agents will start to see their personal lines market share increase over the next few years.
Will we ever see the day where personal lines market share rivals that of the more lucrative commercial lines segments? Industry analysis indicates 84.5% of all commercial line premiums are written by the independent-agent channel.
Perhaps not, but the independent-agent channel will start trending in that direction. Here’s why…
The IA model is good for carriers and agents.
Nationwide made this change to reduce costs. Not all of their captive agents loved the idea or the process. But now, almost two years in, very few agents are upset about their newfound independence; most of them are excited.
That said, the realization of opportunity can sometimes be clouded by significant challenges. Consider the comments Nationwide’s President of P&C Sales & Distribution Amy Shore made in a recent interview: “The two biggest challenges we hear from agents is how hard it is to grow organically and how hard it is to attract and retain talent.”
Shore added that Nationwide hopes that by allowing their agents to be independent, the carrier will have more ways to diversify its revenue streams, participate in acquisitions and attract new talent.
Nationwide reported having 2,000 captive agents before the shift. The carrier says that 99% of the formerly captive agents continue to sell its products as independents, which Nationwide takes as an endorsement of the new IA model. And here’s additional evidence that this experiment is paying off: Previously captive agents at Nationwide report that once released, they increased new written premiums by over 35%.
In the new IA model, agents are now charged with several new responsibilities such as technology adoption, digital presence, customer communication and carrier relationships — just to name a few. However, this gives them the flexibility to operate their business as they see fit, leveraging the technology, human resources and carriers that will best help them grow their agency. And on the carrier side, the shift gives Nationwide along with its current and future clients access to policy types, coverages and premiums that it did not previously have.
For example, if an agent sets up shop in a community that is prone to fire and Nationwide doesn’t offer policies in that area because of the increased risk, that agent can now work with another carrier and still serve that customer. In the captive agent scenario, the agent would just have to pass and watch that business go to a competitor.
Why stand out as an independent agent?
Let’s assume this trend of captive agents being released into the world of independence becomes the norm. In such a world, there are three main reasons these agents and agencies should strive to stand out in a crowd.
First, if they want to grow, they must stand out! Why? This situation will create a more competitive independent pool, and consumer expectations are at an all-time high. Most prospects choose an independent agent because of their expertise and relationship. These are the things at which independent agents excel.
Second, if an agent hopes to sell their agency for top dollar, that business needs to distinguish itself. Agencies that have proper business plans, technology and marketing plans in place sell for more than agencies that lack these elements.
Finally, they need to stand out if they want to leave a legacy for their family. The reality is that many independent agencies are family legacies and many will continue to be. But if they want their family legacy to be there in five, ten or even 15 years down the road, they need to take action to ensure their agency stands out, is growing, and has the right tools in place.
Don’t let digital drag you down
Newly minted independent agents should also be keenly aware of how they position themselves. A digital presence is going to be the first impression customers have to an agent’s brand as well as the route that clients and prospects use to find and connect with an agency. A polished and professional-looking online presence is essential for building clientele. But fortunately, many independent agents need not start from scratch. This is where technology can really make their lives easier.
There are marketing solutions available that take care of many of the things that Nationwide used to cover for agents such as automated messaging, which allows an agent to extend that expertise and relationship at scale.
Please remember that at every opportunity, independent insurance agents should share their expertise and build relationships, as those are the reasons people will choose them.
Agents should take advantage of these perks to establish themselves in the marketplace. For example, many carriers and networks offer marketing and advertising co-op funds that IAs can leverage. To use these funds, IAs must follow brand compliance guidelines. The payoff is a much easier prospect of creating local, polished ad campaigns that can grow a targeted clientele. Nationwide and other carriers often will negotiate discounts with technology vendors on behalf of IA agencies looking to boost their digital architecture
Now that Nationwide has proven the benefits of the IA model, the industry is likely to continue the trend. The value to the carriers comes from the reduction in operational costs and for agents, it represents new opportunities and flexibility — but only if independent agents take advantage of all the digital tools available to them. Leveraging technology to provide service for customers and active communication could be the difference between an agent’s success or stagnation.
Joel Zwicker is the “insurance evangelist” at Agency Revolution and formerly an agent at one of Canada’s largest independent insurance agencies. He now works to provide independent insurance agents with the best marketing tools for their unique needs. Contact him at info@agencyrevolution.com.
These opinions are the author’s own.
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