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Leading carriers regularly revisit these six questions and perform at least bi-annual check-ins of field structure effectiveness in the spirit of continuous improvement. (Photo: madpixblue/Shutterstock)

Insurance carriers with captive agents have a long history of tweaking their field organizations and agency compensation plans to make the agent channel more effective and efficient. But the stakes have become higher, and the moves bolder in the last several years. Faced with stagnant agent counts, declining agent productivity, and elevated expense ratios relative to direct players, carriers are taking more sweeping action to ensure the continued viability of the agent channel. From Allstate and Farmers to numerous regional carriers, timid steps have given way to massive reorganizations and wholesale redesigns of compensation programs.

As we advise executives at national and regional carriers active in the agent channel, the most frequent question they pose to us is: “How do we know if it’s time to go big (or go home)?” Although good agents tend to welcome change that makes a carrier more competitive in the marketplace, others may resist it. For the insurance distribution executive, agency transformation is difficult, time-consuming, risky, and potentially controversial.

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