Although the pandemic may have presented an opportunity for independent insurance agents to better serve customers, a new report from J.D. Power found that agents are “facing headwinds” due to complications related to the global outbreak and increasing competition.
J.D. Power’s latest study, the “2020 US Independent Agent Performance and Satisfaction Study,” is the analytics and intelligence company’s third in its annual series. Developed together with the Independent Insurance Agents & Brokers of America (IIABA), the study evaluates the evolving role of independent agents in P&C insurance distribution, general business outlook, management strategy, and overall satisfaction with personal lines and commercial lines insurers in the US.
Key findings of the study include:
- Effects of pandemic put spotlight on independent agent challenges: 36% of agents say they were unaware of their carriers’ efforts during the pandemic. Agents have also fallen short in leveraging their strategic advantage during the pandemic; only 42% of independent agent customers say they were contacted to help manage their policy costs during the crisis, compared to 52% of direct customers who say the same.
- Progressive wields influence on independent agent growth: Although independent agents write 58% of all P&C policies, their market share is falling – particularly in personal lines auto, where they write just 31% of all policies. Progressive’s agency channel notably accounts for 52% of all personal lines’ growth among independent agents.
- Digital support could improve agent satisfaction: Digital channels are independent agents’ preferred means of communication with insurers, J.D. Power found, with email and online dashboards the most preferred communication methods. Specific digital tools that drive agent satisfaction focus on sales and product training and identification of cross-sell opportunities. However, the study found that these digital offerings are only used by fewer than 60% of agents.
- “Help me help you”: Satisfaction among independent agents is higher among carriers with diversified product offerings (i.e. enabling agents to offer flexible design and onboarding, enabling them to offer product bundling), the study revealed. About 43% indicate receiving this level of support from insurers.
- Cost efficiency not linked to agent satisfaction: J.D. Power found that the notion that simply paying agents a higher commission translates to higher agent satisfaction and improved business outcomes is not true. The study noted that many of the top-performing agent-based insurers have been able to maintain expense discipline while also delivering on agent expectations.
- Independent agents focused on alignment with carriers: Overall satisfaction of independent agents with carriers that demonstrate better market alignment (by offering adequate support for targeted industries) is 126 points higher (on a 1,000-point scale) than with those carriers that do not provide adequate support.
- Traditional agents face competition from virtual agents: 81% of consumers say they would be open to working with virtual insurance agents to perform core insurance activities – a trend J.D. Power suggests that traditional agency distribution is increasingly threatened by.
The study also ranked the carriers with the highest overall satisfaction score among independent insurance agents. Auto-Owners Insurance came out on top with an overall satisfaction score of 816, followed by Safeco with 761, and Chubb with 755.
“The effects of COVID-19 have highlighted the importance of personalized insurance as consumers seek help navigating their way through this period,” said J.D. Power head of property & casualty insurance intelligence Tom Super. “Ironically, in many instances it was direct-based carriers, which have made a concerted effort in recent years to emulate the high-touch and high-quality agent experience, that were able to step up and deliver during this crisis.”
Super added that the independent insurance agent channel should be using this moment as a learning experience, and redouble their efforts toward improved alignment, execution, and efficiency.