Natural Selection or Apath?

There is an unhealthy trend occurring in our business caused by inaccurate perceptions and apathy on the part of some independent agents and brokers. They believe they can no longer success- fully write and retain personal auto insurance! Some have started to give up on personal insurance all together. They have conceded that market to the direct response carriers who use technology and low cost, commodity marketing.

I never thought I would see the day when so many independent agents and brokers have given up and resigned their agency to not being able to effectively grow organically in personal lines. When retired Progressive CEO Peter Lewis mentioned in an article that he predicted 45 years ago the end of the independent agent business, there was a huge uproar amongst agents and brokers. Now it looks like many have accepted what he said and are going to make him into some kind of prophet.

Darwin outlined natural selection in his Theory of Evolution. That meant certain members of a species will develop functional advantages that will allow them to rise to the top and the rest of the species would ultimately die out. Is that what’s happening in our industry? Are independent agents and broker destined to be replaced by direct response carriers in writing personal insurance?

I contend it’s not natural selection; agents and brokers have been out-marketed and many have conceded without a fight. I still believe that the best way to buy insurance is through a professional, well run, independent agency or brokerage. I also believe that it is possible to turn this market around and return market share back to independent agents and brokers. But that turnaround isn’t going to happen without commitment, change and hard work. The answers lie in technology, training, branding and consumer education. You have to use today’s technology to speed up your processes, make you more efficient and allow you more time to spend with clients and prospects. You need to become consumer centric, making your business conform to the needs and wants of today’s insurance consumer. Consumers are much better informed and also want to do business with an agency that understands and meets their needs.?Your best asset is the knowledge and expertise of your staff. Invest time and money in improving their skill level and it will pay off big. Provide your staff with important marketing and sales skills that allows them to better compete in the marketplace. Remember they are working with many consumers who have been trained to view insurance as a commodity to be purchased solely on price. Your staff has to be comfortable educating consumers on the fallacy of that approach and getting them to see the value of what you offer.

Who is an independent agent or broker and why should a consumer buy from you? You need to educate consumers on the benefit of doing business with an independent agent or broker and specifically with your agency. You already have a brand that is easily integrated with your agency brand. It highlights the benefits of having a professional who can review their coverage, make recommendations, place them with the best company for their needs at a competitive price and then be there to advocate when they have a claim.

That brand is Trusted Choice® and it is slowly gaining momentum. You can speed up that process by getting behind the brand and promoting it in everything you do. You may never have the marketing budget of the national direct response carriers but as a group you can get your message out. You and your staff are real people living in your community, raising families, employing people and supporting local charities and the community. The Gecko and Flo don’t live there. You don’t see them in the grocery store or around town. They are fictional characters meant to humanize doing business with a large corporation. Many millennials and young consumers don’t care for large corporations and prefer not to do business with them. Remind consumers to look beyond the marketing and the hype and make sure they are adequately protecting themselves and their families. A mistake might not just mean a financial loss — it could also mean painful and permanent long term injuries that go untreated.

Consumers need to be reminded that they are buying protection for themselves and their families and having the right protection at a competitive price is the ultimate goal, not the cheapest price for unknown protection with no assistance when a claim occurs. Matter of fact, when you have a claim with a direct response company there is no one to make sure you are properly covered and that you receive all the benefits that you are entitled to. If insurance wasn’t complicated and risky there wouldn’t be so many personal injury lawyers earning a good living filing lawsuit after lawsuit. Buying cheap coverage that ultimately doesn’t protect you properly can affect you for the rest of your life.

Many times when I write these columns I have this feeling that readers believe I am naïve or don’t understand what it is really like to compete in today’s marketplace. That couldn’t be further from the truth. I realize that what I write are just words in an electronic document, however I truly believe what I say. I realize that to make these things happen will take dedication and hard work but the alternative is to give up and lose what you have worked so hard to build. Maybe you’re nearing retirement and you just want to ride out these last few years. Doing that could cause you to erode a significant amount of your agency’s value and make you less attractive to a buyer.

I would assume you became an independent agent or broker because you wanted a business that would help protect people and let you earn a good living. You chose the independent path because you wanted to make your own decisions and do what is best for you and your clients. You weren’t afraid of hard work and enjoyed the financial rewards that came from it.

The world is changing and you need to change with it. You are still the best way for consumers to protect themselves and their families and you believe that you need to do whatever it takes to get your message out. We all know that many consumers are being misled and are putting themselves at risk. If you care about your clients both current and future, your business, and your staff you will make the commitment to do what is necessary to move consumers back to understanding the benefit of buying protection from an independent agent or broker. I wish you luck in this important endeavor and I am always ready to discuss and offer assistance with anything related to the ideas outlined in this article.