Independent agents confront the market’s challenges

Independent agencies are learning to adapt to competition from direct writers


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The insurance-buying public has changed, just like all retail consumers in the digital age. A new simplified scenario for retail consumers looks like this:

Step 1: Research on the Internet

Step 2: Choose one or two online firms to explore

Step 3: Price the products

Step 4A: Purchase online

Step 4B: Go to the retail outlet and purchase

The satisfaction quotient hasn’t changed, however. A consumer wants a quality product, expedited service and complete product satisfaction regardless of how or where the final product is purchased.

The scenario for the insurance-buying consumer is identical, according to the latest research by A.M. Best, which reports that 75 percent of consumers looking to purchase homeowner insurance, car insurance, at-home business policies, watercraft and umbrella policies start their research online.

At this point, Step 4B becomes more pronounced, since property and casualty insurance purchases are made through an independent agent 56 percent of the time. Broken down further, independent agents sell 33 percent of personal lines insurance, and 37 percent of commercial lines insurance in New Hampshire.

Direct writers like Geico, State Farm and Progressive, as well as “Internet sales-only insurance companies” account for the rest of the sales. As the percentages show, these carriers continue to have a substantial portion of the market.

New Hampshire has a very competitive insurance market, with well over 200 insurance carriers selling personal lines and over 400 in the commercial lines business.

Although competitive in many areas, the independent agent distribution channel faces many obstacles to stay competitive. Direct writers have resources completely out of reach for small independent agents – multibillion-dollar advertising campaigns, an Internet presence that tops the list of every search engine, and a branding presence second to none. Need we say duck, gecko or Flo?

Trusted Choice is the nationwide brand for independent agents -- all New Hampshire independent agencies that are members of the New Hampshire Association of Insurance Agents are Trusted Choice agents. All told, New Hampshire has over 200 Trusted Choice agencies and approximately 3,000 Trusted Choice agents marketing insurance products from over 200 property and casualty carriers. (You can find a directory of all agents at trustedchoice.com.)

No other independent insurance agent firms may use the trademark. The national brand is coupled with a pledge of professional performance, national advertising assistance from insurance carriers that use the agent distribution system and annual branding and advertising campaigns run under the umbrella of the Independent Insurance Agents and Brokers of America.

Add to that the Consumer-Agent Portal, a new national strategy designed to increase market share by promoting the independent agent distribution channel’s value by helping carriers and agents leverage digital marketing -- and help the consumer find the right agency for them when buying insurance products. Available in the fall, the CAP will allow a consumer to locate an independent agent nationwide, read a profile of the agency, receive comparative ratings, download a mobile app and deal personally with an agency and agent of their choice.

The New Hampshire independent Trusted Choice agent is a true small businessperson with an average size agency of seven or fewer employees. They’re your neighbors, working in every community, visible on every main street, utilizing the latest technology and branding with 22,000 other agencies nationwide to embrace changing consumer purchasing patterns.

Bob Nash is president of the New Hampshire Association of Insurance Agents.


 

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