National UnderwriterProperty & CasualtyEditor-in-Chief Shawn Moynihan conducted an interview with PatriciaA. Borowski, senior vice president of the National Association ofProfessional Insurance Agents (PIA), for our 2016 Market Guide feature story “The P&C Industry in 2016: Where Do We Go fromHere?”

Here, we present that interview in its entirety. Borowski sharesher thoughts on — among other topics — the biggest challenges foragents as we enter 2016, how agents can better coordinate withcarrier systems, and why the supposed demise of the independent hasbeen greatly exaggerated.

Every year, some consultant or analyst predicts thedemise of the independent agent. What do you sayto that?

True, but this time around, we’re also seeing research speakingto the need for keeping well-qualified professional insuranceagents in the mix. In part, when you ask consumers, “Would yourather work with the carrier directly yourself, or wouldyou rather work with your local independent insurance agency thatthen works with the carriers?” Still, today, for personal orcommercial lines, across all demographic groups, 80-90% say,“AGENT.” The PIA Partnership, our national agency-company council,came out this year with the results of its project, “Small Business Insurance & the Internet — The Voice ofthe Commercial Lines Customer.”

In nationwide surveys and focus groups, we found thatsmall-business owners strongly prefer independent insurance agentsas they make choices in today’s online world. This was both anaffirmation and a wake-up call for agents. We found that commerciallines customers want digitally engaged local agents as experts, whoare backed by the efficiency of the Internet.

What that means is they want the insurance agency to use all oftoday’s methods of communication — Web, Twitter and Facebook, aswell as e-mail, text message, phone, mail, in-person appointments,all need to be available to the customer. Will they use all ofthem? No, but they will decide how they want tocommunicate. They want choices. I have been in this business longerthan I care to remember, and one thing has been remarkablyconsistent: Every decade or so, there is a new crop of consultantswho proclaim the impending death of the independent agentdistribution system — but it never happens.

These consultants try to convince firms that people don’t wanttheir agents, or that they would be happy to buy online, or that abank teller can sell and service insurance. None of that is evertrue. Consistently, over the decades, insurance customers say theywant to do business with their Main Street insurance agents.Perceptions to the contrary are being invented by our competitors.They issue so-called “studies,” the results of which they thenpromote. Their surrounding marketing conveys an impression ofobjectivity, impartiality and academic inquiry whose sole purposeis to determine the truth. However, as in politics, the method andpurpose are to the contrary. A closer look shows such “studies” tobe opinion pieces designed to appeal to and reflect attitudes ofthe consultant’s desired target audience. One recent reportproclaimed, “The End of an Era for the Local Insurance Agent.” Butupon further examination, this “study” contained no research assuch; it was a “meta-study,” or in other words, a collection of theopinions of others. This same “study” also noted that currentdirect writers are adding neighborhood agency operations to theirmarketing approach.

So the question that carriers using the independent agencysystem need to ask is: “If the insurance agency system is dying,then why are my competitors trying to develop their ownneighborhood agency systems, through which they intend to bringmulti-carrier offerings?”

How do you see the P&C agent’s role evolving asdistribution changes to more of a digital experience for theconsumer?

What consultants get wrong is thinking that a customer’spositive response to using more technology means that they wantedto “do it themselves.” This is not so. Sure, when you only have anold car that you need only liability on and you don’t have manypossessions in the one-bedroom apartment that you share with afriend to afford the rent, then you want to do the “online/godirect thing,” because the direct online route makes things verysimple for you, with their pre-selected choices. And that works,because from an insurance perspective, things are pretty simple foryou. But, as you move through life and you acquire more — morepossessions, responsibility, and obligations — guess what? Thoseinsurance choices get a lot more complicated, and your own life’schallenges get in your way, as well.

This is the life cycle of almost all of us. This is why most ofus stop going direct online for insurance, and get ourselves anagent that we can trust and knows what they are talking about. I’vealso noticed a trend in surveys in recent years, in whichmillennials are more interested in face-to-face meetings than theprevious generation.

Since 1994, despite all reports to the contrary, the marketshare of the independent-agent system has been growing. IAoperations have expanded their class and line of insurance reachand mix, as compared to any decade before.

Related: 8 tech trends that will change how carriers dobusiness

In our view, and despite competitors that don’t want this to betrue, all indicators are that if PIA and all independentagencies stay abreast of things so that they can smartly guidetheir own decisions, the independent agency distribution system ispoised to take off like a rocket and soar, performing even betterthan it has over the last 20 years.

More tech-savvy staff members may be able to more quicklymaster new options available to agencies in upgraded systems.(Photo: Shutterstock)

What are some of the biggest challenges that independentagents face as we enter 2016, and how might they best confrontthose challenges?

There is no question that for the entire industry, the nextgeneration of technology purchases and adoption will be a hugechallenge for carriers and agencies. For many, this can mean theentire replacement of hardware, operating and application systemsfor core processing systems.

Key decisions to be faced are: Does our company make that scaleand scope of investment directly, and exclusively own and operateit? While agencies need to be aware of all the options, they mayhave to revisit the “systems integration” challenges of the past.Put simply, will what they buy be compatible with what all theircarriers choose to use? Carrier interface will determine howeverything works together — or not.

The technology uptick that is coming is not merely a one-timeupgrade or addition to your current systems. It re-invents. Onthe one hand, this can be viewed as an exceptional challenge foragencies, because certainly cost is a consideration. However,beyond that, we may find it liberating for agencies. Why? Thistime, agencies are already hiring younger staff for whom technology— especially open, social media frameworks — is second nature.Also, the balance of experience among staff is better than duringprevious major tech upgrades, so staff training this time aroundmay be more successful and quicker.

These more tech-savvy staff members may be able to more quicklymaster the vast new options available to agencies in these upgradedsystems. This could help agencies really break out into the newdynamic of agency operations in these open-social mediasystems.

The biggest challenge will be coordination with carrier systems.We will have to assist agencies in rationalizing the balancebetween our members’ technology decisions and those of theircarriers. I think ACORD and our other industry tech leaders willplay an even more important role in all this.

Agency owners, along with whatever staff they have in the pastassigned to “tech issues,” must reengage in understanding what isout there. Last, agencies should not wait until a carrieris banging on their door to advise of their major system change,telling agencies what they must do in the next three months torespond, or not be able to continue their partnership.

There is a belief that investments made in technology are meantto save money. Wrong! Rather, we need to appreciate that technologyinvestments mean agencies are better able to compete, making thembetter able to integrate and leverage technology to secure morebusiness. As a result, agency staff is once again able to handleeven more transactions per employee.

Related: Technology and insurance predictions for2016

It is a large engagement, but the end result, if it’s doneright, will allow PIA agencies to be even more successful goingforward.

Evolving technologies is one of the challenges thatinsurance agents continue to face. (Photo: Thinkstock)

What are some of the trends that changed the way agentsconducted business in 2015?

There are three trends that have come to the fore in the pastyear:

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   1. The changing nature of risk. Cyber is yourbest example, but also drones and the sharing economy aresignificant new trends that will increasingly impact how agents andcarriers do business. Agencies have had to understand the insurancesignificance of these changes, what they mean to them as agency andbusiness operations; what it could mean to all of their current& prospective customers; and then, how it impacts their variouscarriers’ offerings.
      
      Agencies must demand current and thorough continuing education onthese emerging issues – and also to have written, updatedinstructions from each of their carriers for each of the coveragescurrently offered, along with new ones to be offered. Specificallyto all of these, the agency needs to know what the carrier means tocover or not cover, and how this is done in the policies andendorsements that they offer whether revised forms or newpolicies.
      
      
   2. Currently developing technologies. “TheInternet of things” is a term that tries to catch tech lightning ina bottle. It refers in part to the growth in open systemcommunications. This new communications landscape includes, but isnot exclusive to, social media. What are these systems and thetechnology items being connected, and how do we use them? As weanswer this question, other major questions come up which must beanswered, including: how do we need to change our existing systemsto accommodate them? Policies and practices need to be in place toprovide safeguards that comply with the privacy, data and systemssecurity, and cyber liability obligations of the agency to itscustomers and carriers.
      
      
   3. Finding good talent for the increasing numberof open positions in agencies and the new positions that manyagencies are adding. Once hired, how do agencies develop a good,remixed balance among all the agency employees? How do we train anddevelop them? How do we keep them?

Agency principals must present their agency’s goals andobjectives going forward—and the opportunities the new hires have —in a way that is clear, understandable, interesting and inviting.All three of these trends have been building over time, but havebecome most apparent to agencies this year — and these arechallenges that will continue.

Related: Agenciesfocused on maintaining current business, surveyshows

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