Editor’s note: Matt Masiello is executive vice president and COO of SIAA 

On my way to address a room full of independent agents earlier this year, I heard the news that Wal-Mart would begin selling auto insurance. The timing seemed appropriate. Auto, long the flagship product of many agencies, is becoming commoditized and that means big changes for independent agencies.

That fact was a highlight of the 2013 McKinsey report, Agents of the Future, which examined how consumers are using the Web to purchase coverage and interact directly with carriers.

The future for independent agents, however, is not dire. If they adapt, they still have a critical role in the property and casualty distribution system. Here are five ways agencies can build a bright future.

1. Take a holistic view of accounts. Now that auto has been commoditized, there is little differentiation in the market. In fact, agencies have lost seven percentage points of market share since 2003, according to the McKinsey report. Consumers today will purchase auto coverage wherever is most convenient, whether that is the Web, their agent or large retailers like Wal-Mart.

As the travel industry illustrates, a new approach is needed. Consumers no longer visit travel agencies simply to book a flight, but they do use travel agents to organize large trips and cruises. And that’s an opportunity for travel agents to book their flights and make another sale.

Similarly, insurance agencies must look holistically at customer needs and become customer-centric businesses. Auto may no longer be the product that leads consumers to their doors. Instead, that will be products like homeowners, RV, boat or a Business Owner Policy (BOP). Once you have secured a loyal customer, you can then cross-sell auto as part of a comprehensive insurance package that meets the insured’s individual needs.

2. Develop options for individual life and medical products. The Affordable Care Act and group medical plans continue to challenge the average consumer, which means they need a place to turn–like their trusted insurance agent—for advice.

However, local property-casualty agencies do not often have the expertise or financial might to perform well in the life or individual medical insurance spaces. Agencies can gain the necessary scale by contracting with third-party service providers. This affords you the opportunity to cross-sell and, more importantly, create more value for your customers while keeping competitors outside looking in.   

3. Become a resource for other small businesses. Commercial lines, especially small businesses, are under-utilized lines at many independent agencies, but they can become a lucrative book of business. Local businesses want to work with other local businesses. This provides an opportunity to sell a BOP and other coverage to customers who already trust you for their personal lines. On the flip side, when you write a commercial account for a new customer, the owner and their employees become potential personal lines customers.

The challenge for many agencies is finding markets for their commercial accounts. That should be the first step so you don’t end up soliciting or trying to write policies for which you do not have a market. I liken this to a store that advertises men’s clothing but actually sells sporting goods. Yes, the store can get men’s clothes after a customer requests them, but it would be far more efficient to promote and sell what you have in stock. 

4. Make the most of agency management systems and mobile tech. Agency management systems (AMS) have been helping agencies achieve greater efficiency by centralizing information, automating routine tasks and making it easier to cross sell. But you can also use your AMS and other technology solutions to support marketing and manage relationships with customers and prospects—particularly through mobile and social media.

It’s important to communicate with customers and prospects in the way they prefer. More and more consumers prefer to be contacted via text message, but very few agents have yet taken advantage of this. Plus, consumers use their phones to browse the web and shop. If your agency’s website is not mobile optimized and/or if you do not have a mobile app, you may be missing out on leads and service opportunities to increase customer touches and efficiencies.      

5. Cultivate a business development culture. Traditionally, insurance agents have taken orders. That is, a customer realizes an insurance need, brings it to an agent and the agent places the business. The relationship with customers is reactive, not proactive.

For agents to succeed in the changing market, a different approach is needed. As carriers court their attention, customers are beginning to identify with carrier brands more strongly than with their local agents. In response, agencies need to adopt a business development mentFality.

From this perspective, customer service goes beyond following up on a new policy. Agents need to stay in touch with customers, anticipating needs and offering as much product as possible to protect their assets and income.

As Mark Twain might put it, reports of the agency’s death are greatly exaggerated. Independent agencies will continue to be valued as trusted advisors and intermediaries for insurers and insureds, but they will have to adopt a new holistic focus, broaden their product lines, keep up with technology and develop a culture of business development.