Opinions on the Future of Independent Insurance Agencies

[Nautilus5711]

Hello, I'm looking to get into the insurance industry as an Independent Agent. I'm young-ish (in my 30s) and I want to consider the long term prospects of being an agent and if this career is going to viability for the next few decades or how it might change.

I'm in a very advantageous position to get into the industry as I have contacts to get me appointments (or access to), office space, and a lot of training without much cost to me. But I'm very concerned about companies circumventing the agent model and going to direct to the client (like Geico). Why do they need to pay agents hundreds of thousands of dollars in commissions when they can just sell direct? We also live in an increasingly digitized "do it yourself" world where people are often savvy enough to make educated decisions about what they need in terms of coverage.

I've even seen ads for THREE by Berkshire Hathaway recently and it appears they are trying to do to commercial lines what GEICO did to auto policies. This should be an alarm for the independent agent.

What do you think is the future for independent insurance agents? Will they still be around 10 or 20 years from now? Will companies want to dump the IA model and go direct to the consumer in order to compete with companies like GEICO? How is this industry going to change and what can I (or we) do to insure (pardon the pun) our businesses will be viable and healthy in the next few decades?

 

[Life Hawk]

I believe as long as this is a People to People product, there will always be a place for the independent agent as long as there is profit in it or the company and the agent.

 

[marindependent]

We also live in an increasingly digitized "do it yourself" world where people are often savvy enough to make educated decisions about what they need in terms of coverage.

Frankly this so called "do it yourself" model is my number one lead generator. I cannot tell you how many times wealthy people have said to me "I don't understand any of this - How do people do this?"

Geico and the self service model 'may be' effective at lowering prices but maybe ineffective at providing needed coverages. I have a load of these digital insurers that have not discovered that they do indeed need agents.

Best of Luck

 

[Markthebroker]

There are certain situations and people that are perfectly happy buying a complex product that can protect their finances and future from a cartoon character on tv or commercials with people getting pies thrown in their face.

There are many people, generally higher net worth and with more complex scenarios that need/want a consultant. Figure out who those people are, focus on them, and you'll have a bright future.

 

[somarco]

if this career is going to viability for the next few decades or how it might change.

It will be viable.

It will change.

The question is, how flexible are you and can you roll with the punches?

 

[Allen Trent]

The independent & captive agents I know that are great at what they do have little to no competition & are growing at unbelievable rates. These are students of the business that employ great service & marketing staff members,the agency is active in the community & they get massive referrals. After 20 years of non stop advertising by direct carriers like Geico, progressive, e-surance,etc & still we see 8 of top 10 carriers are the big captives & independent carriers.

It isn't easy to run an multi line insurance operation, so many do it poorly meaning the elite ones have no competition in reality

 

[Markthebroker]

The independent & captive agents I know that are great at what they do have little to no competition & are growing at unbelievable rates. These are students of the business that employ great service & marketing staff members,the agency is active in the community & they get massive referrals. After 20 years of non stop advertising by direct carriers like Geico, progressive, e-surance,etc & still we see 8 of top 10 carriers are the big captives & independent carriers.

It isn't easy to run an multi line insurance operation, so many do it poorly meaning the elite ones have no competition in reality

Allen makes a good point. I specialize in commercial p&c, and do nothing else, and as a result have become very good at it. Finding business is literally the last thing I am worried about, and competition doesn't even show up on my radar. At this point, my phone just rings from word of mouth and from my existing network.

Getting to this point, though, took a lot of work.

 

[Real_AMG]

Agents and Brokers will be around, albeit in a different capacity and likely with different branding than we have right now. There are advisors for all types of things that could be completely automated. Technically, anybody could go and learn about the law online instead of paying for legal advice, or learn accounting online instead of paying for a CPA’s advice. They still go to an advisor because with something so complicated and ever changing, it makes sense to get help. To this day, worthless “financial advisors” manage to scam people into paying 1-2 percent a year for a underperforming mutual fund. We tend to forget what it feels like to not know something important. The feeling of fear associated with that, coupled with the distrust of the institution that actually sells the product, is the reason why people come to agents and brokers.

Will the buying habits of gen z be different when they start aging into Medicare? Probably. But most of this forum will be dead by then.

 

[Yagents]

This debate has been discussed every year for decades, the sky has not fallen, nor will it ever fall.

More complex, the larger need for agents advice.

No commissions, then charge a fee, unless you don't feel you provide value.

Government and legislative changes are a constant and creates job security.

I haven't spent a dime in marketing in a decade, vs billions by the big boys, and my phone won't stop ringing with referrals.

Technology helped me double my business, and go completely online with a new pair of pajamas each month. Leverage it, its not the enemy

 

[Allen Trent]

The main issue direct carriers face is that they haven't found a way to be cheaper than the captives & independent carriers.the direct spend as much or more on TV & other marketing & technology than the commission costs to the agent. So, if an agent or agency is good, why not have one for the same cost for the advice & as an advocate when needed & more importantly a business that is local, pays local taxes & employs members of the community. that story should be part of the agency non-stop branding messaging.