Much like the homes and vehicles it protects, the personal linesinsurance marketplace will continue to evolve — but even astechnological advances threaten to radically transform the industryover time, personal lines will continue to play a major role inP&C insurance and generate a large share of premiums, at leastfor the foreseeable future.

And yes, that future includes independent agents, who maintain astrong presence in the Personal Auto arena despite reports over theyears inaccurately predicting their demise.

Insurance Information Institute President Robert Hartwig notesthat Homeowners' and Personal Auto insurance account for almost 50%of all industry premiums today. Auto alone makes up 37% of thegrand total.

Personal Auto, he says, is a generally positive story forinsurers. It's competitive, he notes, but not destructive: Insurersare receiving positive rate changes, and that will likely continueas carriers report an increase in claims frequency due to more carson the road and lower fuel prices. The frequency increase, he adds,is manageable for insurers.

Related: P&C insurers hold their ground in customersatisfaction survey

Interestingly, the frequency increase does not appear to beuniversal, according to Tracy Dolin-Benguigui, director at Standard& Poor's. “If you listen to earnings calls, some companies arereporting an increase in frequency and others are not,” shesays.

Allstate Chairman and CEO Thomas Wilson is seeing the frequencyincrease, as well as severity per claim. In a Q3 earningsconference call, he noted the company has responded with acomprehensive program based on the business model and practicesthat have proven successful over the last 14 years. This involvesraising Auto rates, he says, and making underwriting standards morerestrictive, reducing the loss ratio for new business, but limitingpolicy growth.

Dolin-Benguigui says Auto physical damage severity is up due inpart to technological advances. Jim Fiske, senior vice president,Chubb Personal Insurance, explains those include crash-avoidancesystems, which are designed to reduce loss of life and damage. “Onthe other hand,” he notes, “if I get in a fender-bender with myBMW, a loss that might have been $2,500 10 years ago might be fiveto 10 times that amount today because of the sensors and technologyembedded in the car.”

Related: 10 factors affecting auto and P&Cinsurers

Where do agents stand?

For years, independent agents have read reports about thecommoditization of Auto insurance and the resulting decline in therole they play in that market — yet those agents remain players inPersonal Auto and companies still distribute through theindependent-agency channel.

In fact, Bill Wilson, director of the Virtual University of theIndependent Insurance Agents and Brokers of America (IIABA), saysagents he talks to point out that their best sources of businessare from customers who had coverage with a direct writer and becameunhappy with the service after a claim.

While there's so much talk about Auto insurance being acommodity, Wilson says that “most agents know there are differencesbetween policies.” He adds that some direct writers competing onprice have begun offering more restrictive coverage. “If youcompete on price, at some point you're operating about asefficiently as you can, and the only thing left to compete on priceis whether you pay claims or not,” he says. “So if you reducecoverage, you can reduce price and increase competitiveness.Agencies still largely represent companies with high-qualityforms.”

Related: Auto insurance pricing: It's time to adoptTravelocity, Zillow models

Madelyn Flannagan, vice president for Agent Development for theIIABA, says agents are seeing more opportunities in Personal Autoand have been jumping back in since 2013. That said, themarketplace has changed, agents have had to adapt, and insurersthemselves have even changed the way they do business. Somecompanies have abandoned an “either/or” choice when it comes todistribution and are using multiple channels.

It would appear, then, that companies are competing againsttheir own distribution force — and Flannagan says there has beensome angst among agents. Wilson adds that most multi-channelcompanies keep their operations separate and distinct.

Hartwig believes the future of Auto insurance is “channelfusion.” He explains, “I would expect in the future that mostinsurers will have the capability to communicate with consumers theway their customers want to communicate with them. Sometimes thatwill be online, sometimes that will be through an agent,” or evenboth — online through an agent's own portal.

“I should be clear,” he stresses, “agents do have an importantrole, particularly as people's insurance needs become more complexwith multiple vehicles, homes and other possessions that need to beinsured, including, perhaps, life insurance products and other suchthings that often require the input of an expert.”

Hartwig adds that agents need to be on the cutting edge oftechnology and marketing to connect with the next generation ofcustomers. Dolin-Benguigui says independent agents are usingcomparative rater tools to compete and sell on pricing, whileFlannagan says agents are more active on social media, connectingwith customers in ways that make them more readily available.

Related: 9 ways to unleash the power of social media ininsurance

“Our national board chairman has said agents used to make potsof coffee for customers who would come in every day. Now they godays without seeing customers in the office,” Wilson says. “Soagents are adapting and embracing how many people want to shop andlook for coverage.”

Homeowners snapshot

While there still have been no major catastrophic weather lossesin recent years — certainly none big enough to move the needle onpricing — the industry has had to contend with a number of smallerregional events. This year, Hartwig says, there have been about $11billion in insured cat losses through Q3, with yearly totalexpected to fall in the $13 billion to $14 billion range barring amajor event.

“Many people may have forgotten about it, but 2015 was aterrible year for winter storm losses, and that produced verysubstantial losses in states like Massachusetts and other parts ofNew England, and New York,” he says. Those winter storm losses willlikely be the most significant event of the year, although therehave also been wildfires in California and Texas and tornado lossesin parts of the country.

Dolin-Benguigui says Homeowners' insurers are taking on aprice-segmentation view, pushing for rate when needed and gettingsmarter about reinsurance buying. She says companies are generallywilling to absorb frequency risks while buying more protection forseverity risks.

Companies were able to get more significant increases inHomeowners in the heavy cat years of 2011 and 2012, says Hartwig,and while that's moderated since, they're still getting positiverate.

Fiske says this year's first quarter produced fairly severenon-cat weather-related losses. “So whether something gets declareda catastrophe by the industry or not, there are still frozen waterpipes and ice dams on roofs that need to be tended to,” hesays.

Related: 15 home insurance companies ranked from worst tobest by consumers

While much of the technology-transformation focus is on Autothese days, it is happening on the Homeowners' side as well. Smarthomes are coming, with technology developed by companies likeNest, and Hartwig says this could eventually lead to aflood of real-time data reported back to insurance companies thatwill change the way risks are underwritten. Insureds benefit fromconvenience, and could get discounts as this technology reduces thechances of suffering losses from fires or burglaries.

The technology can come with risks, however, particularly frompotential hacking. “Home-based telematics systems that areInternet-capable are also vulnerable to cyber criminals. There's noquestion about it, because everything is vulnerable,” Hartwignotes.

As it stands, the Personal Lines marketplace remains stable,competitive and growing. Hartwig notes there are net new exposuresto insure in both Auto and Homeowners and rate increases to be hadin both lines. Dolin-Benguigui says S&P is maintaining itsstable outlook.

Personal Lines-focused agents continue to play their part. “Westill have a lot of agencies that focus on Personal Lines,particularly in high-value areas,” adds Wilson. “I think they canstill make a living.”

Related: Why independent agents will alwaysmatter

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