PIA Pres. Says Independent Agents Benefit From Trust Factor

NU Online News Service, March 27, 3:29 p.m. EDT

Independent agents and brokers who have customer trust can flourish in the current insurance marketplace, a producer trade group president advised at a recent industry conference.

The comments were made by Kenneth Auerbach, president of the National Association of Professional Insurance Agents. Mr. Auerbach spoke at the American Insurance Marketing & Sales Society's annual conference in Nashville. AIMS reported his remarks.

Mr. Auerbach, a principal of E&K Agency in Eatontown, N.J., cited several factors working in favor of independent agents and brokers.

"It's a personal service business," he said. "Customers will increasingly demand more value, better choices and more personalized services. Business relationships are built on trust--in short, everything that differentiates us from our competitors.

"When trust is eroded, as it has recently, consumers gravitate to what they know--smaller, local, what they can see and touch," he added. "In today's environment, the value of personal relationships soars. Nobody fosters this better than independent agents and brokers."

Also, the "bigger is better" mentality is being re-evaluated by businesses, governments and individuals, he said. Because consumer interest is measured by what Mr. Auerbach called "the pointy tip of the spear--the one or two people customers deal with," size disparity is equalized. "You are the one the customer deals with, whether you're in a five-person agency or 1,000-person agency."

While the insurance business is "taking a hit in this financial environment, like all industries," he said independent agencies are largely holding their own. He added that they have a unique opportunity.

"There's a lot of displaced talent out there--talented and educated individuals who lost their jobs and who may migrate to insurance sales," he pointed out.

Noting insurance sales' relatively low barrier to entry, he added, "This can attract a great number of talented people--people with an entrepreneurial spirit who became disenchanted with their ability to explore and grow within larger firms."

While opportunities exist, so do hurdles. The largest external challenge that could affect the success of independent agents, he said, involves federal legislation.

"We always get frustrated when Washington does things slowly," said Mr. Auerbach, "but more frustrating and scary is when they do something quickly--like passing a stimulus package nobody has read or calling to revamp federal regulation for the entire financial industry without pausing to note the stability of the state-regulated insurance business.

"We need to leave here and remind our policymakers that it's the feds who failed in their oversight, not the states," he added. "It's very easy to get lost in the sauce."

Internally, independent agents and brokers need to position themselves for success, he said.

"They need to do things like trim expenses, maximize their use of technology, and make their marketing work amid the advertising clutter, particularly in personal lines," Mr. Auerbach said. "This is a difficult task for all independents. They have to distinguish themselves as the trusted go-to professionals, trusted to protect the lives and livelihoods of their clients."