Metamorphosis
The independent agency business is going through a metamorphosis. The slow but steady caterpillar that served the public so well for so many years has become wrapped up in a cocoon of change and now must break out into an agile and quick flying modern day butterfly if it intends to survive. There are many forces at work creating this change.
An aging baby boomer population being replaced by millennials that see the world differently both as workers and as consumers. Agency ownership, employee turnover, changing buying habits and new competition are all greatly affected by changing demographics.
Technology, once lauded as the end of paperwork, now has opened a Pandora’s box of change for independent agents. Consumers have access to significant amounts of information. Business is transacted at lightning speed and whenever the client wants it. Insurance protection has become a commodity purchase for many without regard for professional advice related to coverage needs and differences. Artificial intelligence, data analytics and sophisticated algorithms have replaced professional agents, underwriters and actuaries.
Agency revenue is not keeping up with the ever increasing costs of running an agency. Shrinking profit margins force out smaller agencies who are gobbled up by the survivors hungry for increasing volume and the economies of scale. Agencies are forced to merge or acquire, creating the significant premium growth necessary just to retain current commission levels. Some mega-agencies are growing fast enough to create volumes with carriers that allow them to negotiate increased commissions.
Two major cost areas for agencies today are technology and employees. These two areas impact each other and create a seesaw effect.
New and constantly evolving and improving technology replaces manual work previously handled by employees. That reduces overall costs and frees up remaining staff to help retain existing clients and grow the agency. Because of the speed at which automation is changing and the cost associated with purchasing and implementing new hardware and software, many agencies have to weigh the cost of change against the potential of increased revenue.
On the other hand, the cost to acquire, train and retain quality staff is significant. Identifying good hires, giving them the best training in the most cost effective manner and then keeping them happy and highly functional is not easy. Agencies need the support of HR professionals that can help them through this process.
There is one other area impacting agents and that is the ever changing world we live in. Insurance is designed to protect the public against the risks they face operating in the world we live in. Self-driving vehicles, drones, cyber theft, terrorism, the internet of things, the sharing economy and the ever increasing involvement of technology and the internet in everyday life has created a whole new area of risk. That risk requires a solution for protecting the public, which in many cases is handled by insurance. It’s incumbent on independent agents to understand the issues and to know where and how they can find the protection their clients will need.
If any of this makes sense to you. If you are experiencing these same issues in your agency. If you stay awake at night worrying about these issues and how you can overcome them. Then you need to join me on October 14th, 2016 at the Sheraton Hotel Times Square for NYiDAY. A taste of what you could learn more about: Solutions for Emerging Exposures; Maximizing Your Agency Management System Investment; Agency Acquisition & Perpetuation; Hiring & Retaining Employees; Shock & Awe: What Does Your Customer Experience? This isn’t a sales pitch to come to an event, it’s a good answer to problems you either have now or will encounter soon. NYiDAY.com will help get you in the door.
These are new and unusual times. But there are solutions. There is a way to enjoy this business and make money doing it, all while offering the, needed more now than ever, safety net.
