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VIEWPOINT I trends
lndependent Davids Take On, Triumph
BY JOHN TlMM
he last decade has brought radical change to the insurance industry. Customers can
now buy their insurance policies from a wide variety of sources including independent
agents, brokers and exclusive agents, direct from insurance companies; or from businesses like banks and marketingcompanies. Just as tmel agents saw their ranks decimated as the popularity of online travel providers as wll as airlines and hotels selling direct to
consumers grew, some analysts have predicted a rapidly declining role for independent in
surance agents and brokers in today's highly competitive marketplace.
T
r
nies greet people. Ijrpically, astomem and pospects interact with
their inswance agent via telephone. Because thee is no eye con
~orobservationofbodyla~,thetoneandqua~~ofvoice
are important. It takes only a few semnck to form an i m m i o n
either positive or negahhre. Smart
teach theif emplayees
thatmood,attihrde,#Id~le\Eel~criticaltoestablishi~the
ri@t relationship m r the phone.
While the typical independent insurance
is staffed with a
competent team of arstomer serviw persomel peffedy capable of
fielding most queshions, many people still want to talk dimtly to
their awn Bgent when they need him or her. Therefwe, successful in
dependent agents and brokers answer their awn calls whenever
possible and maintain individualiaedcontactwith customers on a
w l a r basis notjust when an emerkency arises.
The complexity of insurance products r n a k it d i i t for many
astomers to make dedsii. Ahn@ some consumers focus
only on saving money, others understand that inswance has value
whenpgetthemostfory~lrmonqr.Therefore,sucoessfuli~
pendent insurance apXs and b m h s are most sucoessful when
they provide informationthat allows customers to wisely choosethe
best insurance products for their needs.
Consumers live in an em when ewythii moves at l i i n g
speed, and they expect their insurence agents to respond accordin4
hsuranceagerdesastheroleofbechnolcgybecanes~h, ly. Online insurance companies offer 24hour customer service,
~ n t . A s o l d e r ~ n c e ~ f a c e ~ m a r y s e l l t h e i rwhich
a s can be diffiart for the independent agency to d u p l i i .
t o m e r a c u n m t s t o a ~ ~ r a t h e r t h m s p e n d t i n e a n d Nonetheless, in the face of stiff competition, it manants the effort
m m e y o n t h e ~ n e e d e d t o ~ l h e i r c n r m c o m p a n i e s . Wle2Qhanstaffsenke1equiresacertainarountoffladbiliiitS
Fir~re,rnanyindependent~bhsoldor
wwthddn&Inny~tgencyweded@abanaoncall"agentanas
sig)mentthatismtatedHReldyamorgwrskliipaducers.The
merged becausethe Oregon market, as in ather states, has seen
an increase in 'regional agsncy" development Hlhere a multioffice
onoall~isavaiWatalltimesdthedayorni$rtviaapal4w. He
independent insurance aesncy seeks glowth thmgh the acquisition orshefMgestogetbacktotheastomer~q,inthesame
of established local agendes. While this trend has reduced the
manner thatan oncall doaor ple@s to return a
dl.
mrall number of independent insurance agencies, the sunrivws am
When it comes to competition, Ishare the sentiment of ancient
usually efficient operatws embracingthe wry best in technology
Greek philosopher Heradis who wrote that "th only amstant is
and customer service.
change." While independent insurance Bgencies cannot predict who
During my tenure with IIABO, I'vefound that most successful inde their competitors will be,they can ensure their continued success
pendent insurance aendes have embraced new tmhmbgy while
withafowsonwtstandinga&omerservice.(r
understandingthat real gmwth comes only thmugh ouMmdi@as
tomer service. This means Wily personalimed aumion and ~espon
sive, proactive communications.
Stellar wstomer service, for axample,be@nswith the w y compa
Fortunately, as the m r of an independent insuance
and state director of the Independent&en& & Bmkem of Omgcm. I
find solace in the words of Mark Twain: "lhe reports of my death
are--."
In its most recent market share
the IndependentInsuance
Agents&BmkersofAmericafoundthattheaveralldirectwritten
propertycasualtyinsurance market gmw $20.6 billion in 2004.During that time period, the independent insurance
system
amassed a nearly $12 billion increase in production -for
almost 60 percent of the national increase.
In Oregon, there are two associations serving independent
agents. The Independent&en& & Mefs of
which goes
by the acronym IIABO, has appro-ximately275 member
The ProfessionalInsurance&en& of Oregon/ldaho has a similar
number of agency members in Otegon. Counting 'wa@n
cies that beloly!to both assodations, the total number of indepen
dent insurance
inthe state is about 450.
Jim P e m , former dMsion reddent vice president of Safeco and
now the executive director ofthe llAB4 believes that 450 Meper+
dent insurance agencies in Omgcm is InPely half the number of agen
cies that existed in 1996. But heti also quick to point out that the
d u d o n does not mean independent
are m i n g .
Rbther,,Plenrccasgrs,c#nsdiiis~amoghdependent
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w,
m,
m.
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February 2007 1 COMMEN