The Power of Agent-Carrier Partnerships

As the competition in our industry has intensified in recent years, winning independent agents have recognized that it is more important than ever to effectively align their agencies with carriers that can meet their growing needs.

Today, independent agents continue to control the overall p-c market and the very best independent agents are poised to improve their positions even further. In fact, these winning independent agents are growing at rates double and triple industry averages thanks to their clear focus on developing defensible partnerships that enable them to fully capitalize on the inherent value that they deliver to their customers.

Independent agencies have withstood tremendous challenges in recent years, including market pressures and competition from captive agents and direct writers.

Ironically, in many respects, these challenges have been a good thing for independent agents, fostering discipline and stimulating innovation. In response to the heightened competition and market pressures, the independent agency channel has undergone significant consolidation, and agents are able to improve the efficiency and effectiveness of their businesses on every level and better leverage available technology. As a result, independent agents today control 80% of the commercial lines market and nearly 40% of the personal lines market. The commanding stake they hold in the market is a clear indication of the confidence consumers and business owners have in them as insurance advisors.

While the perception of some is that the direct channel is winning, the reality is that during the past five years, the independent agency channel has won share back, particularly in market segments where value-added services are appreciated. Although some consumers will continue to purchase policies on the Internet or from a direct writer, the average consumer has two autos, a home and umbrella policy— and he wants the security of knowing that he is receiving the valuable, third-party advice needed to safeguard his family and, in the case of commercial clients, his business.

Winning agents know how to deliver value, how to round-out accounts and how to retain accounts. So, while direct writers and captives gained market share during the ’80s and ’90s, the market dynamic is much different today.

While the independent agency channel as a whole has gained ground during the past five years, the very best independent agents are truly winning because they understand the importance of mutually beneficial agency-company partnerships and are leveraging partnerships with the best companies to achieve above-average growth.

The best independent agents recognize that they benefit by forming true partnerships with committed companies that can deliver outstanding products, underwriting and service. And, the best companies recognize that they benefit by partnering with agents who are strategic-minded, growth-oriented and truly willing to participate in aggressive joint business planning.

Working together, the best companies and the best agencies are accomplishing great things. And, by staying focused, executing on their promises and continuing to invest—in each other and themselves—they have even more growth potential.

True agent and company partners participate in a thoughtful, collaborative, strategic planning process. They don’t just set sales targets. They invest the time to get to know each other, to understand each other’s appetites and goals, align the agent partners’ needs with the company’s capabilities and to develop a business plan that will enable them to achieve their respective objectives.

Faced with a softer market, many carriers are scaling back. But, we believe agents will see agency-driven carriers continuing to invest, delivering a total-value proposition to set their partners up for future success. The best companies know a total value proposition is not just about a relationship and it’s not about one product or one capability. It’s about tying everything together in a way that helps agents grow their businesses.

With that in mind, the best companies will continue to invest in a full range of product solutions that will help agents write total accounts in personal lines and to meet all of an agency’s commercial lines needs, improving their economics through increased premiums and retention.

In addition, these companies will focus time and money to create outstanding service models in technology and claims, ensuring that they are adding value in an efficient and effective manner. At the same time, they won’t let technology replace experienced and responsive field teams, maintaining strong presence in local markets so that they best understand the regional needs of their agent partners and their customers.

The p-c insurance business has faced tremendous challenges and profound changes in recent years. Undoubtedly, the pace of change and the competitive pressures that exist today will continue for the foreseeable future, resulting in even more change. While some companies and agents look ahead with trepidation, the best companies and the best agents do so with great confidence, knowing that through effective partnership, combined with outstanding products and service, they can and will control their own destinies.

Marita Zuraitis is president of The Hanover Insurance Group’s Property-Casualty Companies.