Independent insurance agents: Thriving in difficult times

Many respondents reported having a good year despite more widespread difficulties. For instance, nearly 67% of agents' businesses grew in 2022, with 25.7% reporting growth of more than 10%. About seven out of 10 respondents said their earnings also grew over the last year.

But there was no denying the impact of a tough economic climate on agents and their clients. More than one in three survey respondents said their clients have decreased coverage to save money. Conversely, around 25% of respondents explained that their clients have increased insurance coverage to match the market in terms of replacement rates and costs. Such circumstances can be dicey to navigate, which is likely why respondents reported that "avoiding burnout," "finding competent, valued associates," and hardening insurance markets are issues that plague their businesses.

How are agents overcoming these circumstances?

Cross-selling is key, according to survey respondents. More than half of them reported an increased focus on this area. Agent also are leaning on the most tried-and-true of sales tactics: Building strong relationships, furthering exemplary service, and providing subject-matter expertise are all essential strategies for independent agents. One respondent said that the best way to counter the current financial climate is to be "empathetic with clients due to large premium increases." Another said that the agency has "concentrated heavily on client retention." And a third reported "increased efforts to maintain the current book by seeing ways to trim insurance costs for consumers."

Survey responses to questions about business and brand differentiation underscore the competitive advantage that agents and brokers have compared to direct-to-consumer insurance sales platforms. It follows that the majority of insurance agents are "only slightly concerned" or "not at all concerned" about competition from direct and online markets. More than 57% of agents reported such confidence this year as opposed to just under 40% in 2022.

What would be most helpful to agents and brokers in 2023 as they continue to navigate multiple challenges? They would like their insurance-carrier partners to support more marketing and training. More than 66% of survey respondents said that marketing support is among the most important tool they glean from insurers, and more than half of survey respondents said carrier training is key to success.

Other areas addressed in the survey include hiring challenges and difficulties with clients who don't fully understand their exposures to secure sufficient coverage.

Your insurance business

Over the last 12 months, there was an increase in agency production and gross income, continuing a trend noted in the 2022 Independent Insurance Agent Survey. For 2023, the largest increase occurred in agencies experiencing a greater than 10% increase over 2022 in both production and gross income. However, agents also lament that clients don't fully understand their insurance coverage nor are many of them sufficiently shielded from major risks. As in previous years, we noted the continuation of a near-even split between the percentages of personal and commercial lines insurance written by agencies. However, we found that this year, there was a slight increase in personal lines and a slight decrease in commercial lines. It may be too soon to determine if this is a trend or an anomaly.

Insurance agencies continue to struggle to find and retain great people. Compensation is a big reason why, with 38.5% of survey respondents reporting that this is the biggest challenge when it comes to fostering long-term employees. More than half of agents describe their ability to attract the next generation to their agencies as somewhat or very difficult. And 50% say that attracting and retaining talent is the number one challenge their agencies are currently facing. Networking is by far the biggest focus for boosting recruiting efforts — 58.8% of agents say they're networking. A much smaller number — 27.7% are offering internships. Only 17% attend career fairs.

Part of the issue in attracting the next generation could be flexibility. Overall 33% of agencies offer remote work, 40% say they offer it for some staff, and 27% provide opportunities for remote work for all staff. Diversity, equity and inclusion issues also play a part in the health of today's agencies. While 31% of agencies say that having a diverse workforce is critical to the health of their businesses, another 49% of agents say it is moderately important. Just over 20% say DEI is not very important to agency operations.

Ted Besesparis (tbesesparis@pianational.org) is senior vice president of communications for the National Association of Professional Insurance Agents. Executive Editor Elana Ashanti Jefferson (ejefferson@alm.com) manages NU Property & Casualty magazine.

See also: Insurance agents still challenged by carrier system integration (Part Two)