Given today’s business environment, is it possible for independent agents to truly be “independent?”
When we talk ab
out an independent agent, we simply think of a producer who has access to many different c
arriers. That agent is
provide his or her customers with a variety of markets to find cove
rages that best suit their needs and budgets.
Yet is it possible to provide customers with the best fit; that is, the pr
oduct or products that provide the coverages they need at the price they want?
More likely than not, market changes and advancements in technology have limited what it means to be independent.
There are three specific factors that affect agents’ ability to remain truly independent:
1. Dependence on technology.
2. Large carriers are answerable to stockholders.
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3. Inferior management skills and structure.
Testing technology
Technology makes insurance industry businesses faster and more effi
cient. Policies can be bound in minutes, not days. Multiple quotes can be offered instantly. Standard office technology, suc
h as a rater and agenc
y management systems, are essential for any successful agency, and technology has proven to be the great equalizer.
However, there are hidden disadvantages to the dependency on t
echnology. One such drawback is the free flow of data between agencies and companies. Due to privacy regulation
s, insurance companies cannot take leads and quote them directly. In
stead, they use third-party administrators to verify motor vehicle records or loss histories.
Those companies then sell allegedly “clean” or “scrubbed” data back to insurers. While third-party companie
s do not divulge a customer’s name, they do obtain enough data to let carriers know about the person who resides i
n east Los Angeles who drives a blue Ford Bronco. Such a profile can only fit a few customers.
Agents should ask their carriers whether they buy consumer data fro
m third-party administrators. Also ask whether their affiliates or pare
nt companies do. Follow the data trail to see where it goes. That wil
l tell agencies how many entities have access to their client data.