Are Independent Agencies Still Making Money?

[mr_furly]

I have yet to take the P&C exam (I plan to in the next week or so).

But I was talking to someone that said nowadays most Indies are just getting by, and that most owners are looking to get out of the biz.

He was basically trying to tell me that the only people that buy from Indies are uninsurables.

Is this true?

I realize there is a shift happening with the internet...but is it really that dire out there?

 

[bdub713]

lol all lies brother don't let mediocre people talk you out of a future.

 

[todd02]

Not yet. Give it about 10-15 years and the Agency model will get hit hard.

 

[insurance1822]

If you know anybody looking to get out please let me know. It's a terrible business to be in & u should stay away.

 

[myfakename]

Not yet. Give it about 10-15 years and the Agency model will get hit hard.

Why do you believe that?

 

[WillC]

The standalone independent faces trends that are similar to those experienced in many industries--some of which seem almost impossible to imagine--such as family physician practices. It's clear that P&C is relatively insulated because of the high component of person-to-person analysis and customized solutions. But there are no positive trends, and increasing carrier demands will continue. I'd guess 10-15 years until major trouble is optimistic. The solution, per a thread I was part of earlier this week, is some variation of aggregating wherein the independent remains a locally focused, locally owned business, but with competitive carrier clout and related access to markets and favorable terms.

An early play-out of this scenario was the Independent Grocers Association, in reaction to the regional and national chains. In most fields the crisis was upon the standalone independent before they could react "from strength." Not the case with solid insurance agencies.

 

[LLATDE]

You mean the indys or the captives (or both) will get hard? If so - why?

 

[WillC]

In a hyper-competitive industry, all players must strive for maximum efficiency to survive (and thrive). This means that all players will strive to focus on "major accounts," vs. spend resources on smaller opportunities. It's happening today, clearly, as carriers' minimums increase and appointments are pulled or made more difficult. These trends are in place and will continue, as there is no countervailing force to reverse them. In fact, most trends are putting more pressure on profits -- the disrupters, the dot-com commodity players, etc. The good news is that insurance is much more stable than, say, the rapid-fire collapse of independent video stores (competition) then the whole industry (technology). So there is time to make plans and there are ways to prosper.

 

[todd02]

The industry is about to consolidate because of technology. Commissions are being cutt by 30-50% already. Technology can track the competitiveness between insurance carriers by each prospect. Meaning carriers will not be allowed to make dramatic rate swings or they stand to lose market share quickly. Putting more pressure on underwriting. Underwriting is changing as well where insurance companies will use machine learning to finally learn who a "profitable" customer is. Lot of crazy stuff about to happen in 2-3 years. I'm at the forefront of this. Have a meeting Jan 5th that I'm pumped about.

 

[KenP]

Personal lines may have their struggles. Especially when it comes to labor cost efficiency and dealing with higher maintenance accounts like monoline auto business.

But I don't see commercial going anywhere, and that's where the big premiums are anyway