Future success for independent agents depends in part on them continuing to fight for their share of the private-passenger auto-insurance market, and to do so, they cannot continue to cede domination of the Internet and mobile communication to direct writers, a new report says.

The Independent Insurance Agents & Brokers of America (IIABA) released its “2013 Market Share Study,” which analyzes 2011 year-end industry market-share and company-expense data from A.M. Best. While IIABA reports mostly good news for the industry and independent agents — property and casualty premiums grew in 2011 across all lines, with national and regional independent-agency carriers seeing 3.1 percent and 4.8 percent premium growth respectively — the association highlights continued challenges for independent agents in the personal-auto space.

In 2011, IIABA says, direct writers' market share in personal auto crossed the 17 percent mark. “One in every six dollars in personal-auto premiums generated was through the direct-response channel in 2011,” IIABA says.

The year before, in 2010, IIABA notes, “The success of direct advertising, combined with the ease of online purchasing, helped direct-response firms grow premiums in 2010 by $2.0 billion.”

By comparison,the association continues, regional independent-agency carriers increased premiums by $500 million while national independent-agency carriers saw premiums decrease.

“To continue thriving into the future,the independent-agency channel must continue to battle for its share of privatepassenger auto,” IIABA declares.

To do so, independent agency must embrace and leverage technology to chip away at direct writers' advantages on the Internet and through mobile devices.

“Just because the technology challenges are slightly easier in their singlecarrier ecosystems, there is no reason why direct-response channels should dominate usage of the Internet and mobile communication,” says IIABA's report. “Independent agents and carriers can and should work to take full advantage of online technologies, both in acquiring new customers and providing service.”

Independent agents and carriers, IIABA says, should see these technologies as beneficial to their business, rather than as obstacles to establishing relationships with clients. “Rather than replace the agent's relationship with the client,these technologies can become an effective customer connection tool that creates an opportunity for agents to develop relationships with new customers,” IIABA says.

For example, IIABA notes that customers seeking auto-insurance quotes online will also need other types of coverages — homeowners, umbrella, at-home business, watercraft. Agents can also gain commercial-lines business in this manner if the customer owns her or his own business or influences business-policy decisions.

“Statistically, it is likely that many customers who shop for auto online are open to establishing a relationship with someone who can act as a trusted advisor to help them understand risk and protection in today's economy,” contends IIABA. “The challenge then becomes one of on-boarding and postenrollment communication
and outreach in order to have the opportunity for important needsassessment
conversations.”

But agents can do more within personal auto than just use it as a springboard to gain additional business. IIABA notes the stress that can come from the process of filing an auto claim, and adds that personal agents can provide excellent service both before and during the event.

“Enduring personal relationships are something that the direct-response writers cannot copy,” IIABA says.

Some highlights from IIABA's report:

Independent agencies still control a majority of the entire P&C market, writing 57 percent of all premiums, including a third of all personal premiums.

Independent agencies still dominate commercial-insurance sales, which resurged in 2011, growing $11 billion or 5 percent more than 2010. Independent-agency company premiums grew by 9.9 percent in commercial lines from 2010 to 2011 (3.8 percent for national-agency carriers and 6.1 percent for regional-agency carriers). Captive-agent companies grew premiums by 4.1 percent in that time while direct writers increased premiums by 4.4 percent.

Independent agents outperformed captive-agency carriers in personal lines, with premiums growing by 3.1 percent from 2010 to 2011 (3.2 percent for regional-agency carriers, -0.1 percent for national-agency carriers). Captive carriers grew premiums by 1.2 percent during that time while direct writers grew premiums by 7.6 percent. IIABA says independent-agent growth in personal lines was largely due to performance in homeowners.

For private-passenger auto, regional-agency carriers saw premiums grow by 1.2 percent from 2010 to 2011. Premiums for national-agency carriers shrunk by 2.7 percent. Captive carriers' premiums grew by 0.3 percent while direct writers' premiums increased by 7.5 percent.

Special Reports /

To Fight in Personal Auto, Agents Must Take Control of Internet, Mobile Communication

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