Although large firms are more confident than small ones, 94% of all agencies expect growth driven by more diversified policy lines and investments in technology, according to a new survey conducted by Vertafore and Aite Group.

More than a year after the now infamous McKinsey Report spelled out doom for the independent agent, the new survey, conducted among 194 U.S. p-c independent insurance agencies between August and September 2014, reveals an underlying optimism in the system driven by creative strategies and innovative business practices.

“Everywhere you turn, there’s someone talking about the demise of the independent agent channel and how they’re in the same boat as all the other small-town businesses,” says Bruce Winterburn, vice president of industry relations at Vertafore. “But what we read in the McKinsey Report doesn’t reflect what we’ve been seeing with our customer base. We were seeing these giant pockets of not just success, but uber-success.”

The survey reports that 50% of fast-growing agencies are finding new ways to stay relevant as the insurance industry continues to evolve, including:

Pursuing strategic partnerships. Nearly two-thirds (63%) of large agencies have partnered with insurance companies to access their full range of marketing management tools, while 56% have partnered to leverage predictive analytics capabilities and build more targeted prospect lists.

The strategy is a win-win—enabling insurance companies to market new, value-added products in a more localized and personal manner while agencies increase efficiency and engagement with their customer base.

Diversifying their product offerings. According to the survey, 44% of all agencies have diversified into new coverage and product types including homeowners insurance, in which 58% of agencies experienced sales growth over the last 24 months; and cyber liability insurance, in which 50% of large agencies experienced growth.

While some of the homeowners growth can be attributed to the recovery of the housing market, Winterburn says there’s more to it when it comes to doing business with an independent agent. “For the vast majority of people in America, the home is their No. 1 investment—it’s their financial security,” he says. “You’re less likely to trust that to some computer’s program that you don’t really understand. If I have the one thing in my life that represents the vast majority of my personal wealth, I’m more likely to want to talk to somebody I trust before I make some of those financial decisions.”

The same goes for cyber liability. “Those small and mid-size agencies are the ones touching those small and mid-size businesses, and the need is definitely there,” Winterburn explains. “The biggest thing that’s changed is just the overall awareness of the risk and the possibility of being able to insure against that risk. I don’t think you’ll find anyone in business today that doesn’t know there’s possibility in a cyber liability policy.”

Giving customers what they want. Agencies of all sizes cited better customer service (50%), improved cross selling (49%) and advanced customer self-service capabilities on their websites including chat, video conferencing and mobile (47%) as important drivers of growth in personal lines business.

When it comes to technology solutions like simpler dashboards, data analytics, consumer front-end support, SEO and comparative rating, “the onus is on us vendors to support those independent agents,” Winterburn says. “Then all of a sudden the agility you have being a smaller, more nimble agent, whether it’s specialization or just being able to make decisions and move quicker, starts to return some of the advantage downstream.”

“How Independent P&C Insurance Agencies Are Thriving in Today’s Competitive Marketplace,” which Aite conducted independently with no influence from Vertafore, reveals a widening confidence gap within the system, with 70% of large firms “very optimistic” about future growth compared to only 25% of small agencies. But Winterburn says that has more to do with available financial and human resources than it does with agency size—and that smaller agencies are already figuring out ways to work smarter, not harder.

“It just so happens the larger agencies are more likely to be able to have or muster the resources to leverage what’s available in this modern economy we’re in, whether that’s through the sophistication of analyzing data enough to better leverage cross-sell opportunities or it’s leveraging social to reach the modern buyer and then of course those specialty lines of business they can focus on to grow their business,” Winterburn says.

Jacquelyn Connelly is IA senior editor.