Insurer-Agency Relationships: Young Agents’ Perspectives

Novarica recently conducted a study of our 400 Under 40 Young Agent community, and my colleague Emerson Davis and I had the opportunity to speak with a number of these agents at a virtual roundtable discussion last week. We are grateful to Carlos Camacho, Josh Brown, Andrew McCarthy, Austin Bolt, Vaughn Costello, Jeremy Chase, Patience Noah, Brad Christian, Hayden Musgrove, Adam Hengst, and Ben Rathbun for lending their thoughts and insights as we discussed some of the findings of the report. Here are a few key insights that came out of our discussion:

Insurers have a narrow window of opportunity to build loyalty with young agents.

In reflecting on how many products they sell and how many carriers they work with, several agents noted that younger agents who are new to the business tend to work with many carriers and sell many different lines. Over time, however, they tend to consolidate with a core group of carriers and start to focus their efforts on specific kinds of risk. Insurers need to focus their marketing and outreach to younger agents so they can build loyalty early on and avoid being one of the carriers dropped from an agent’s overall book. Carriers should be thinking about overall agent lifetime value, rather than monthly or quarterly performance.

Insurers need to change consumer attitudes toward the insurance industry as a whole.

We talked quite a bit about recruiting talent into insurance agencies. The roundtable participants expressed concern that recruiting young talent was challenging, largely because of the perception of the insurance industry in the minds of American consumers. “No one grows up wanting to sell insurance,” and there is an “unspoken rule” that young people don’t belong in the industry, perhaps exacerbated by the pattern of underwriters or adjusters becoming sales agents later in their careers. Although some carriers have hefty advertising budgets, these ads do little, some agents thought, to change these perceptions. Insurers need to do a better job marketing the industry as a whole, not just their own brands.

Insurers may find themselves increasingly negotiating with larger networks instead of independent agents.

Independent agents are increasingly being recruited to join regional or national agency networks. For a modest monthly fee, these networks provide benefits to agents: They allow agents to receive referrals for specialized risks; they provide market intelligence and help in lead generation; networks might provide software access and may streamline the carrier licensing process. However, some agents lose their autonomy by joining networks and have little say about which carriers they sell or what kinds of technology they use. Insurers who are used to negotiating with independent agencies may find that the collective bargaining power of agency networks is a more challenging environment in which to negotiate commissions, market new products, and integrate with agency tech platforms.

Overall, this conversation with a group of dynamic, motivated, and smart agents underscored the need for carriers to have frequent and open dialogue with their agent distributors—not just agency principals or their top sellers, but those younger agents on whom carriers will increasingly depend. To learn more about how young agents prefer to interact with insurers, read Novarica’s recent report Young Agent Insights: Technology and Service Needs and Preferences.

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