Insurance Experts Optimistic On The Future Of The Independent Agent
The world of the insurance agent is certainly undergoing a lot of changes. Customers are turning to the Internet more for their first look at available policies, and they’re using comparison sites to see where they can get the best policy for the best price.
Amid these changes, a mid-2013 report from McKinsey & Company predicted a lot of doom-and-gloom for the role of the agent moving forward. However, two industry experts have taken issue with this assessment and have presented a preponderance of evidence to indicate otherwise.
In statements to the Insurance Journal website, Insurance Information Institute president Robert Hartwig and Dave Evans, senior vice president and executive director of the Independent Insurance Agents & Brokers of America Inc., indicated that the fears brought on by McKinsey are unfounded. They also highlighted a number of areas where activity for independent agents is sure to increase in the years ahead.
2013: The ‘Best Year’ Yet
While some have looked at the year with a “sky is falling” mentality, Hartwig turns to the actual facts and trends to paint a picture of why there is still a lot of opportunity for agents across the United States.
“As we approach the end of 2013 it’s a virtual certainty that 2013 will be the best year in terms of profits and performance for the property/casualty industry in the post-crisis era,” Hartwig said, adding that he expected “the economy will continue a very slow improvement” in to 2014, particularly when it comes to investments.
Further crushing the idea that there is some kind of Titanic afoot in the insurance industry (as it relates to agents), Evans pointed out that there was a 1,000 net gain in the number of agencies from 2010 to 2012, according to Big I’s Agency Universe study.
Still, There Are Challenges…
Hartwig acknowledged that the new insurance climate will have new sets of challenges, but said that he believes it is how independent agents respond to these challenges that will make the difference.
Of the key technologies that agents should be putting to use, Hartwig noted, “social media and digital marketing” would be essential to helping the indie “keep pace with big spending direct writers,” IJ reported.
“As with many industries, many of today’s customers prefer dealing with insurers though a multiplicity of channels,” Hartwig said. “In other words, they don’t mentally separate insurers, agents, claims, or methods of communication.”
“I think that while the industry has a tendency to sort of silo channels, the consumer continues to view the interaction with the company as one dimensional in terms of its relationships,” Hartwig said. “The consumer simply wants to be able to have access in a multiplicity of ways.”
Consumers also tend to look at insurance quote sites and other technology tools as starting points. The nuts and bolts of coverage is still an area where they prefer to have a trained expert guiding them through any possible gaps in coverage to the best plan possible.
Beyond property and casualty insurance, Evans shared some sectors of the insurance market with real growth potential for agents.
“One area is definitely cyberliablity,” he said. “We see cyberliabilty as an area that is definitely gaining ground.”
Cyberliability is geared toward the tech professional and protects against risks inherent with the use of technology. With computers being a regular tool of the trade these days — whether through desktop, laptop, tablet, or smartphone — it’s increasingly an area of protection that you don’t necessarily have to be in IT to enjoy.
A second area of possible interest to the independent agent: dram shop and tavern keeper liability insurance. Alcohol sales, even in environments where it is perfectly legal, can still pose many liabilities on the seller. Letting a patron have too many drinks and then stumbling out to his car; serving drinks too close to closing time; and simply not cutting someone off for being too inebriated, are all situations that can come back and bite a tavern owner, even if the sin of omission is pure oversight.
Specialty policies can provide the customer with significant protection and the peace of mind that comes with it.
Last but not least, Evans expects hydrofracking to be a vital area for independent agents — one they ignore at their own risk.
Hydrofracking is a method of hydraulic fracturing of rock by a pressurized liquid. Environmentalists have lashed out at the practice, while others believe it is a job creator and an efficient way of producing more energy resources.
Landowners have also seen it as an opportunity to grow income.
“If I’m a farmer and I’m allowing someone to do hydrofracking, or put up a windmill, that’s a commercial use of my property, that is usually excluded on a personal lines policy,” Evans told the IJ. “There’s a lot of consumers out there, someone comes up and makes an offer, and they may not be totally aware of the commercial exclusion.”
As people increase their use of technology for resource and convenience, there will always be individuals and organizations that choose to think the worst. It doesn’t matter what industry you’re talking about — the naysayers will nay. That’s because it takes a little work to learn a new way of doing things after you’ve used the old ways for so long. But innovators will always create new opportunities and find new ways of staying relevant. So the key is not to ask what will happen to the independent agent in the insurance world of tomorrow; but what will he make happen with the new opportunities and resources that are available.