A Robust Economy Is Good for Insurance Agents and Brokers According to Reagan Consulting’s Q4 2017 Organic Growth & Profitability Survey, insurance brokers experienced a 4.5% increase in organic growth for all of 2017, compared to 4.2% during 2016. Brokers’ performance increased significantly during Q1 2018, with those participating in Reagan Consulting’s survey reporting a 5.6% increase in organic growth, which was 44% better than Q1 2017 and 24% better than Q4 2017. Despite the generally good performance at many agencies and brokers, the property/casualty (P/C) insurance industry’s total 2017 profit of $36.1 billion was 15.8% less than 2016, primarily because of a significant increase in catastrophic claims.

All Lines in the Black The Reagan Consulting Q4 2017 survey also revealed all three primary insurance product lines had positive organic growth, with commercial lines, +4.1%; personal lines, +3.0%; and group benefits, +5.2%. For Q1 2018, Regan Consulting reported personal lines increased 3.9%, which was the largest in the survey’s history, while group benefits had the largest increase, or 7.3%, which was 40% more than Q4 2017. According to the quarterly MarketScout pricing survey, the average commercial auto rate increased the most during Q1 2018, or +5%, while commercial and personal lines increased 2% and 3%, the same as during Q4 2017.

The Smallest Agencies Gain with Industry Growth According to Reagan Consulting’s 2017 Best Practices Study, the smallest agencies, or those with annual revenues of less than $1.25 million, generated an average of $821,000 during 2016 (the latest data available). This smallest category of agencies experienced a 4.4% increase in organic growth of their total commissions and fees, with 93.2% of commissions and fees generated from renewal business. The smallest agencies had an average of 8.21 employees, who generated an average revenue of $118,214. Most of these agencies were located in Southeast states, or 43.3%; Midwest, 30.0%; Northeast, 20.0%; and the Southwest and West, 3.0% each.

The Independent Agent’s Perspective According to the 2017 Independent Survey from the National Association of Professional Insurance Agents (PIA), 91.3% of those responding to the survey were retail operations. Commercial lines for small businesses accounted for premium volume at 58.6% of these agencies, while more than 50% of agencies derived 40% of premium volume from protection/indemnity (P/L) lines. The confusion and volatility of the health insurance market resulted in 68.1% of the agencies answering the survey saying they lost more than 10% in earnings during the past three years, primarily because of needing to offer more service.

Customers Generally Satisfied with Insurance Although the J.D. Power 2018 US Property Claims Satisfaction Study found customers who had filed property insurance claims were more satisfied than ever, those in regions with natural catastrophes, such as Texas and Florida, were less satisfied. Just 14% of survey respondents said their claim took more time than they preferred, but those who had to wait the most time for a settlement rated their experience at 8.45 on a 10-point scale, which was greater than the industry average. Many insurance companies rely on independent appraisers to serve consumers in a hurricane or other natural catastrophe’s aftermath. Consumers were satisfied with their work, but are dissatisfied with how well insurance companies utilize these appraisers.

Headwinds and Healthy Trends Independent agents as well as most insurance brokers continue to lose auto insurance business as the insurance companies market directly to consumers. Plus, auto claims are increasing because of the many high-tech features being added to light vehicles. RVs are a vehicular insurance niche that is an opportunity for agents, as the industry continues to ship record numbers of vehicles. Agents must also realize more families with young children are buying RVs, thus changing the customer demographics. Agents and the retail insurance industry in general have another opportunity in the smart-home market. The use of smart devices for home security is likely to reduce consumers’ losses and claims and possibly improve customer retention.

Advertising Strategies New startups, including retail and service businesses, are an opportunity for local independent agents and could be costly effective reached at entrepreneurial “fairs” or similar events. Independent agents may find it beneficial to learn more about the RV market and possibly partner with a local dealer to host a seminar onsite for first-time buyers and/or provide a brief guide that dealers can distribute during the sales process. To appeal to a larger segment of consumers and local, small businesses, independent agents should develop a diversity of coverages and services, including a service center just for these types of clients, with which other independent agents have had success.

New Media Strategies According to industry experts, independents and small, local agencies must introduce tech solutions to make it easier to serve local consumers, including small businesses, so they can access policies, certificates of insurance and other documents on their smartphones. Testimonial videos are always strong content for use on an agent’s Website or as uploads to social media pages. Every time a customer makes a claim, ask him or her to record a short video about the ease of the process and the service he or she received. Independent insurance agents often sponsor youth and/or adult sports teams and/or leagues. Instead of just buying their uniforms, create a page on your Website where they can upload announcements, team standings, etc., to attract potential new clients.