Future success for independent agents depends in part on themcontinuing to fight for their share of the private-passengerauto-insurance market, and to do so, they cannot continue to cededomination of the Internet and mobile communication to directwriters, a new report says.

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

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

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

By comparison,the association continues, regionalindependent-agency carriers increased premiums by $500 millionwhile national independent-agency carriers saw premiumsdecrease.

“To continue thriving into the future,the independent-agencychannel must continue to battle for its share of privatepassengerauto,” IIABA declares.

To do so, independent agency must embrace and leveragetechnology to chip away at direct writers' advantages on theInternet and through mobile devices.

“Just because the technology challenges are slightly easier intheir singlecarrier ecosystems, there is no reason whydirect-response channels should dominate usage of the Internet andmobile communication,” says IIABA's report. “Independent agents andcarriers can and should work to take full advantage of onlinetechnologies, both in acquiring new customers and providingservice.”

Independent agents and carriers, IIABA says, should see thesetechnologies as beneficial to their business, rather than asobstacles to establishing relationships with clients. “Rather thanreplace the agent's relationship with the client,these technologiescan become an effective customer connection tool that creates anopportunity for agents to develop relationships with newcustomers,” IIABA says.

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

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

But agents can do more within personal auto than just use it asa springboard to gain additional business. IIABA notes the stressthat can come from the process of filing an auto claim, and addsthat personal agents can provide excellent service both before andduring the event.

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

Some highlights from IIABA's report:

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

Independent agencies still dominate commercial-insurance sales,which resurged in 2011, growing $11 billion or 5 percent more than2010. Independent-agency company premiums grew by 9.9 percent incommercial lines from 2010 to 2011 (3.8 percent for national-agencycarriers and 6.1 percent for regional-agency carriers).Captive-agent companies grew premiums by 4.1 percent in that timewhile direct writers increased premiums by 4.4 percent.

Independent agents outperformed captive-agency carriers inpersonal lines, with premiums growing by 3.1 percent from 2010 to2011 (3.2 percent for regional-agency carriers, -0.1 percent fornational-agency carriers). Captive carriers grew premiums by 1.2percent during that time while direct writers grew premiums by 7.6percent. IIABA says independent-agent growth in personal lines waslargely due to performance in homeowners.

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