At $350B of premium, independent insurance agents shouldn't be underserved customers - but they are
Updated: Oct 27
Two decades of armchair thought leaders predicting the end of the independent agent are flat out wrong. Independent agents sell $350B of Property and Casualty insurance in the U.S. every year - agents control nearly half of P&C industry premium and have maintained market share. This is despite the hype (and occasional overhype) of the mostly direct to consumer insurtech pundits.
Agencies do, however, stand on a precipice. Many agencies are third, fourth, even fifth generation family businesses. And their clients are similarly third, fourth, and fifth generation clients. What happens when these long intergenerational relationships collide with an emerging modern lifestyle that puts way less emphasis on the Property side of P&C? Agency perpetuation, long based on an intergenerational handshake at the purchase of a first car, needs to change.
Customers in their 20s and 30s live different lives than their parents did
Purchasing a car after graduation used to be a rite of passage for young adults. And that let independent agents write the first insurance policy for the children of their long-standing clients.
But young adults are delaying or deciding not to buy cars and homes as lifestyles change. When they do buy that car or condo 5-8 years later, the agent has to compete with Progressive and GEICO, each of which spent more than $1B on advertising last year. And if Lemonade manages to climb their way up to condo and homeowners policies, agents will need to chase expensive relationships that would have cost nothing but good counsel and a handshake a decade ago.
This leaves agencies with a choice – adapt, or enjoy their swan song. There’s a break developing between agencies who will continue to do business exclusively the old way – word of mouth, a few postcards - and those who are embracing a combination of traditional insurance marketing and innovative newer ways to reach younger customers – social media, blogs and podcasts, etc. Many of these agencies are also investing in all kinds of automation to make their staff more productive and reduce low value manual work so the focus can be on the customer.
Insurance product changes have been left out of the digital evolution
Are insurance carriers providing the products these agents need? Online portals and help centers are great, as is social media marketing support. But what products can the agent offer (to the parent and adult child) that cover the real risks of living an asset-lite lifestyle? Non-owned auto, renters, and a little lightweight professional liability, maybe a disability policy?
How much work do carriers require today to sell this bundle?
Far too much.
Surround is the solution. We’re building packages of coverages that match younger consumers’ lives. Designed to help agents protect them from harm, their parents from worry, and your agency from perpetuation issues.
Surround Insurance gives independent agents the digital tools and innovative new products they need to stay competitive in a changing world. We’re an MGA building insurance starter packs that fill the insurance gap for consumers between college graduation and a major asset purchase like a car or home.