Confidence in agency growth is on the uptick, according to a recent study from Aite Group and Vertafore entitled “How Independent P&C Insurance Agencies Are Thriving in Today’s Competitive Marketplace.” New data shows that 94 percent of agencies of all sizes anticipate moderate to aggressive growth over the next three to five years.
Aite Group surveyed 194 US-based independent P&C insurance agencies between August and September 2014. Its research revealed a widening confidence gap between large and small agencies, with 70 percent of large agencies “optimistic” about future growth compared with just 25 percent of small ones.
“The difference between the large agencies and the small agencies is, the larger agencies are less resource-constrained and more diverse regarding the types of business they write,” explains Aite Group’s Todd Eyler, who authored the report.
Forty-four percent of all agencies have diversified into new lines of business to deliver value and support growth. Larger agencies possess the sophistication and technological access that allows them to expand into new and non-traditional types of business such as homeowners insurance, cyber liability, identity theft protection, and worksite insurance.
Complex lines of business, such as homeowner's and commercial insurance, are ideal for facilitating growth because policyholders prefer to have a human being to intermediate the transaction, says Eyler. Fifty-eight percent of all agencies saw an increase in homeowner's insurance sales over the past two years. Cyber liability is also expanding, with half of large agencies reporting sales increases in the same timeframe.
Following on the trend of agents adopting new technology, research indicates that new tech is leading to positive results for fast-growing agencies. Respondents claimed better customer service (50 percent) and improved cross selling (49 percent) were key drivers of growth. Almost half (47 percent) have adopted advanced self-service capabilities such as mobile, chat, and video conferencing.
“Growth is really coming from a high level of customer service,” Eyler says. “Interactive types of content make it easier for [agents] to engage more effectively with prospects or with customers.”
Social media are also facilitating rapid agency growth. “We found that the fastest-growing agencies are more likely to use social media that requires them to be more interactive,” says Bruce Winterburn, VP of industry relations at Vertafore. Twitter and blogs, for example, were more popular than LinkedIn, he says.
In an effort to boost their marketing strategies, 63 percent of large agencies have partnered with insurers to leverage their marketing management tools. Fifty-six percent have entered carrier partnerships to access predictive analytics capabilities and create more targeted prospect lists. Such agreements typically benefit both parties; insurers can market new products in a more personal manner, and agencies can boost customer engagement with new technologies.
Looking toward the future, Eyler predicts further integration of technology and marketing between agencies and carriers in order to boost the effectiveness of both.
Kelly Sheridan is the Staff Editor at Dark Reading, where she focuses on cybersecurity news and analysis. She is a business technology journalist who previously reported for InformationWeek, where she covered Microsoft, and Insurance & Technology, where she covered financial ... View Full Bio