It's hard to ignore the talk around the commoditization and disintermediation of personal lines insurance and its implication of the slow but inevitable demise of the personal lines agent. Consumers' expectations are pushing insurers to provide on-demand, online and mobile underwriting platforms and service solutions. The growth in the direct channel has been phenomenal and will likely continue. Comparative raters, increasing advertising budgets and sophisticated technology has made buying and selling on price rather than value a major focus in recent years, especially in auto.

This evolution is definitely putting pressure on many personal lines-focused agents. Research supports this and we can probably all recognize some facet of this through our own insurance buying experience.

However, I think we have lost sight of the fact that there is still a lot of value in the agency channel—both independents and captives–and many companies are positioning themselves to capitalize on this, even as they continue to recognize the impact of technology and changing consumer expectations.

I concede that the agent's role today will likely not look the same as it will tomorrow. Many agents and agent associations are actively engaged in adjusting to these evolving trends. Project CAP, an initiative launched by the Big I and several carriers, reports meaningful progress with its portal that allows insurance shoppers to compare quotes from multiple independent carriers and connect with local independent agents who can best serve them.

Many captive insurers are engaged in a variety of sales and systems integration initiatives between their exclusive agents and other sales channels. And agents that sell personal lines are likely also selling commercial and specialty lines, and may feel inclined to adjust their mix of business to meet changing demand and target customers.

So while tomorrow's agent will have to adjust, I believe that there is a future for agents selling personal lines—contrary to what's implied in much of the talk around the industry. Companies investing in “omni-channel” capabilities are not necessarily negating access to agents in the buying process.

Over the past several weeks, a few “big brand” public insurance companies have stressed their commitment to the independent personal lines agency channel and highlighted the value they bring to their target customer segment. These carriers are focused on the “higher lifetime value” customer who tends to be a multi-product (auto, home, umbrella, etc) preferred risk, who offers appealing profit characteristics, improved retention and has a large presence in the agency channel.

For example, Progressive—a company many automatically connect with the direct market—has one of the largest independent agency personal lines book of businesses in the market. Progressive has publicly stated that it wants to grow market share in the preferred and bundled market and sees large opportunity to do so through its independent agency force. Again, management is not ignoring the direct channel for this target market, but has acknowledged that this segment of the population has a huge presence in the independent and exclusive agency channel, which cannot be ignored.

Travelers, another major personal lines independent agency writer, recently held an investor presentation reinforcing its commitment to the channel as it seeks to maintain and grow its large preferred account customer base. Like Progressive, although they are investing in direct capabilities and want to ensure that their prospective and current customers are catered to however they choose to transact or desire to be serviced, management reiterated the importance of agents to their long-term strategy. Travelers also recently made a large investment in Project CAP to further support the cause of independent agents.

Last but not least, The Hanover spent a good deal of time highlighting its strong partnership with its agency force as well as the enormous opportunity it perceives within the independent agency channel to grow its personal lines account-based customer base. The Hanover designed its comprehensive product with the independent agent in mind, targeting those individuals who wantvalue and quality rather than the lowest price. This is a highly desirable customer segment which Hanover believes will provide a longer term return than the price-sensitive monoline customer. Even within the comparative rater environment, Hanover is seeing strong current and potential gains in selling its packaged offering through advisors.

While these are high-profile companies, they're not a “select few”; many others are aggressively targeting the preferred, bundled consumer and continue to see value in transacting with agents.

The future is not necessarily all or nothing—where in one possible world we have online, digital and dis-intermediated solutions selling on price, and the other with agents as a trusted advisor selling on value. The personal lines insurance customer is too complex and diverse with varying degrees of perceived value by agents and insurers.

I sometimes feel we do not appreciate the significance of personal lines agents, specifically with respect to highly desirable segments (e.g. preferred, account and/or high net-worth risks). The present and future is multi-faceted—and believe it or not, as the data demonstrates, there are still many who like the idea of a trusted advisor even as they become more mobile, digital, self-servicing and demanding.

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For Independent Agents, The Future Isn&rsquo;t &ldquo;All or Nothing&rdquo;

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