A Reason for Optimism

It’s not an easy time to be an independent agent.

Pessimism permeates our national economic psyche—and that’s particularly so in our industry. Unemployment is rising again to unacceptable levels. The soft market continues in the commercial lines property-casualty sector. Health agents and brokers are taking significant commission cuts as a result of President Barack Obama’s new health care law, the “Patient Protection and Affordable Care Act.” Some carriers are retrenching as a result of the horrific storms seen so far in 2011, putting pressure on agents to find new markets in certain areas of the country. Contingencies are down for a variety of reasons. Agency technology changes on a daily basis. And that is just the beginning of the list of challenges on our collective plate. The trends are troubling for our nation and industry.

Call me a crazy optimist, but I believe there are incredible opportunities for independent agents at this critical yet difficult time. Consumers have never needed a trusted advisor more than they do now to navigate the perils in our economy. But consumers need to know the difference between Trusted Choice® independent insurance agents and captive agents and direct writers. They need to know who offers choice, customization and advocacy. All Big “I” members will be Trusted Choice® agencies beginning on Sept. 1 if the agency signs the licensing agreement/Pledge of Performance. Trusted Choice® highlights for consumers the advantages of independent agencies vs. the competition. Trusted Choice® agencies are the only agencies with a written Pledge of Performance for consumers, and the agency locator has proven to help consumers find Trusted Choice® agencies.

But unifying under the Trusted Choice® brand is only step one, as the Big “I” is currently working on a new initiative called the Consumer Agent Portal (CAP). CAP will open a new and exciting door for independent agencies to conduct personal lines business on the electronic highway and do business the way a growing number of consumers prefer while maintaining the advantages of what independent agents offer. Surveys now show that nearly 75% of consumers shopping for auto insurance do research online first before buying their insurance. Independent agents have competed forever on Main Street in their communities, and now they will compete the same way online. We will be the only distribution force with both bricks and clicks, giving consumers the option of how to do business, but always offering choice, customization and advocacy. The Big “I” has been working on this initiative around the clock and more information is forthcoming in the next couple of months, with CAP education for agencies beginning this fall and the launch of the portal in the second quarter of 2012.

While the national economic trends are ominous, the trends in the independent agency system are a cause for optimism. The Big “I” Future One Agency Universe Study shows that de novo agencies are being created at an amazing clip. More than 4,000 new independent insurance agencies were formed between 2008 and 2010, during one of the worst economic climates in our country’s history. Many of these agencies were started by former captive agents who were drawn to the opportunities in the independent agency system. In addition, after decades of declining agency counts, the number of independent agencies has remained stable the past five years, demonstrating the strength of our system.

On the technology front, the Agents Council on Technology (ACT) continues to push technology improvements and industry adoption of Real Time. The number of independent agents using Real Time upload increased 16% from 2009 to 2011, according to a recent study by IVANS. In IVANS’ 2009 Insurance Agents, Carriers & Technology Survey, only 36% of agents reported using Real Time upload, but this number has increased to 52% of the agents surveyed in 2011. Usage of commercial lines download also saw an increase from 42% to 59%, and claims download is up to 30% from 18%.

On Capitol Hill, the Big “I” continues to work for reauthorization of the National Flood Insurance Program (NFIP), with positive reforms for consumers and agencies. Progress has been made. We continue to work to exempt agencies from the onerous Medical Loss Ratio (MLR) provision in the new health care law, and we now have 104 cosponsors on the bill. We also are continuing to advocate for agent nonresident licensing reform and many, many other issues.

So, while the press will concentrate on the bad news, there are emerging opportunities for independent agencies. Granted, we need a more robust economy where businesses are being started and growing, people are buying new homes and cars and we are producing new products and services again.

But until that growth happens, independent agencies can survive—and thrive. The opportunities will require more work, diligence, new ways of thinking and doing business and new education. What is your agency doing today to meet the challenge?

Bob Rusbuldt (bob.rusbuldt@iiaba.net) is Big “I” president & CEO.