We've written quite a bit over the past year about direct writers and how insurers are not necessarily looking to get rid of the middle man in the insurance deal, but are seeking alternate ways to deliver products and communicate with their customers, the policyholders that purchase their products.

While much of this discussion has centered on personal lines products, Deloitte got some people thinking differently when they issued a report that discussed what the consultant believes will one day become a trend in the insurance industry—direct writers for small commercial lines products.

Such talk often brings out the doomsayers that have been predicting the demise of independent agencies for years, but that is really far from reality. There is no doubt that agencies face challenges to their very existence, but no matter how much some consumers think they know it all, one simple insurance mistake can be costly for consumers in the long run.

In short, people need independent agents to help them understand that what may seem obvious is not always that way.

I recently asked some research groups if they had any numbers on what insurance carriers might be spending this year on agency technology and the distribution of their policies.

Deb Smallwood, founder of Strategy Meets Action, reports that ease-of-business technology investments remain a high priority for carriers and that insurers expect to spend 10 percent of their IT budget on distribution this year. She adds that nearly 40 percent of insurers expect that number to increase in 2014.

Novarica's managing director, Matt Josefowicz, explains that his company doesn't have specific numbers for distribution expenses, but he agreed with Smallwood's estimate that it could reach as high as 10 percent of IT spending.

Mike Fitzgerald, a senior analyst for Celent, pointed to the number of software deals involving distribution technology as an excellent sign that spending on connectivity with agencies is on the rise. Celent reports that distribution ranks behind core processing and infrastructure spending, but over 20 percent of software deals in each quarter of 2012 involved distribution.

These aren't definitive numbers by any means, but they are indicators that agency technology remains a vital part of an insurer's plan to attract and retain business and that should be comforting to agencies—at least for a while. For more on this, check out our Special Report on carrier/agency connectivity.

Special Reports /

Agency Channel Still Commands a Healthy Chunk of Insurance IT Spending

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