As we have seen, despite growing interest in digital and otherdirect experiences available to the personal lines customer, manycustomers prefer to do business with an agent. Accentureresearch shows, in fact, that the independent agency channelremains the dominant distribution network forthe property and casualty business in the United States.

In part 1 of this series, we discussedsteps insurers can take to become a preferred carrier for alarger number of agencies. There is, however, another andequally important course of action for insurers. In theirrelationships with independent agents, carriers should work toestablish a high-performance agency network. By taking action tohelp their agents think and act strategically about people,processes and technology, carriers can promote their own growthwhile helping improve agency performance. 

Insurers should give attention to these four key areas to buildstrongn agency networks:

1. Optimize Compensation andPerformance Management. Compensation should reflect howeach agent does business with the insurers. Aone-size-fits-all approach will not provide the right incentivesnor encourage desired behaviors in all agencies. Carrierscan create a unique economic value proposition for each of thethree growth levers (acquisition, cross-sell and retention). Eachrequires different skills, market conditions, and investments. Forexample, acquisition, growth and retention analytics should be usedin tandem with deep agency and channel analytic insights to matchthe right products and services with the optimal agencyperformers.

Insurers also should consider commissionstructures that include performance-based thresholds. While legacycontracts make the carrier's compensation process more complex,employing a more nuanced approach to compensation and performancemanagement can create incentives that are more closely aligned withstrategic objectives.

2. Provide Data and AnalyticsCapabilities. Simple, relevant, personalized,data-backed recommendations delivered regularly to agencies throughmultiple channels (including mobile) can give agents thepredictive, actionable insight they need to better attract, serve,and retain customers. The level of insight provided can bemore in-depth or bundled for top producers (based on product,financial, and channel performance) and may include peercomparisons, risk-based pricing trends and early customer churnwarnings. Sales and operational analytics can helpagencies better understand the capacity and velocity of the salespipeline and can point to specific actions and resource commitmentsto correct any deficiencies. 

As small businesses, agencies generally lack the power to takeadvantage of big data. Carriers and select dataaggregators should bring analytics, insights and actionablecapabilities to agents. In return, agencies shouldconsider sharing their data and insights with carriers to create amore trusting, mutually beneficial environment.

3. Expand AgentSegmentation. Agency segmentation should move beyond abreakdown of such metrics as agent tenure, market share, number ofemployees, policies in force and profitability. "Soft" criteria foran agent segmentation analysis —for example, an agent's ability toadapt to change; degree of technology savvy; prior businessexperience; management style; and local marketcharacteristics—provide deeper insight into the agent populationand how best to create competitive advantage through the agentnetwork. When focusing on commercial lines, for example,identifying and targeting agents who have access to the small- andmid-sized commercial market can help carriers pursue the growthopportunity of this sector. 

Capturing this opportunity requires local knowledge of themarket (which agents provide) and industry expertise to buildcredibility with prospective customers. Understandingthese agents' carrier relationship preference—such as a nationalversus a local relationship—and how best to interact with them canprovide the insight required to take productive action.

4. Leverage Customer Segmentation. Foragents, better understanding the needs and preferences of theircustomers is a critical component to meeting and exceeding customerexpectations. Through more effective use of customer dataand related information, carriers can help improve the way agentsmanage and prepare for each valuable prospect or customerinteraction.  

Augmenting agents' local knowledge with a more detailedunderstanding of customers, obtained through advanced analytics,allows agents to provide more relevant, compelling anddifferentiated advice. Being able to adapt their marketinteractions, brand messages, and the customer experience tocredible insights into preferences, patterns, propensities andsocial network influence—gathered directly or in partnership withcarriers or their business partners—provides a much better way forindependent agents to differentiate themselves in themarketplace. 

Within the agency distribution category, the independent agencynetwork has consistently provided a strong consumer valueproposition, and recent surveys indicate the majority of consumerscontinue to value that traditional combination of advice, breadthof product offering, and carrier choice. Insurers can helpagencies—and help themselves—by providing agencies with addedcapabilities to sell and retain customers moreeffectively. Winning the hearts of independent agents canprovide significant returns for insurers willing to make thenecessary investments.