Given today’s business environment, is it possible for independent agents to truly be “independent?”
When we talk about an independent agent, we simply think of a producer who has access to many different carriers. That agent is not limited to the product of one company and can provide his or her customers with a variety of markets to find coverages that best suit their needs and budgets.
Yet is it possible to provide customers with the best fit; that is, the product 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.
3. Inferior management skills and structure.
Testing technology
Technology makes insurance industry businesses faster and more efficient. Policies can be bound in minutes, not days. Multiple quotes can be offered instantly. Standard office technology, such as a rater and agency 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 technology. One such drawback is the free flow of data between agencies and companies. Due to privacy regulations, insurance companies cannot take leads and quote them directly. Instead, 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 companies do not divulge a customer’s name, they do obtain enough data to let carriers know about the person who resides in 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 from third-party administrators. Also ask whether their affiliates or parent companies do. Follow the data trail to see where it goes. That will tell agencies how many entities have access to their client data.