Differentiate with digital

Loyal Agents Have Big Impact On Insurance Carrier Business

Ellen Carney
Principal Analyst
February 9, 2016

Understanding agent attitudes toward their insurance carrier partners is crucial in earning independent agent loyalty—and driving sales.  Why?  Because despite predictions that direct-to-consumer insurance sales would doom the insurance agent, nearly 20 years after the advent of online insurance selling, millions of consumers and small businesses continue to rely on their local insurance agencies. Consider that when it comes to their agents, US consumers:

  • Buy from.  Even after all that money direct insurers spend on TV ads, consumers are still buying from insurance agencies. In a survey of 10,000 online Americans, we found that 84% of home insurance buyers stated that they bought from an agent; 82% did the same for their car insurance, while 57% of life insurance buyers said that they did.
  • Trust in.  When we asked in the same survey about attitudes toward financial services providers, more than 70% of life insurance buyers and about two-thirds of non-life insurance buyers we surveyed agreed with the statement “I completely trust my agent”.  And that trust runs deep for some customers, especially for 25-34 year olds we surveyed.
  • Stick with.   And after buying from an agent, consumers tend to stick with their them We asked US online adults how long they had been buying certain coverage from their agents. The average relationships with their auto, home, and life agencies were 12.9, 12.5, and 16.3 years Consumer steadfastness with an agent is often longer than that loyalty to a spouse:  the average American marriage that ends in divorce lasts eight years.  And no surprise, the tenure with direct insurers is much shorter than that with agent-centric insurers.   

Loyal Agents Really Do Drive More Business For Carriers

Given the value of the agent to consumers, and as a consequence to carriers, we wondered about the factors that drive agency and agent loyalty.  Obviously, creating loyal agents is one thing, but is there a business impact beyond just mere devotion? To understand the role that loyalty plays in driving agency, and ultimately carrier, revenues, we asked 302 independent agency owners, business and technology executives, and agents how much they agreed with a number of statements about the carriers that comprised the highest and lowest percentage of their agency’s revenue.

Agency Loyalty?  It's Earned, Not Bought

Where did agency compensation land on the list?  It was #6 out of 16 factors we asked about.  Three factors move the revenue needle most:  putting relationships ahead of short-term gain; being easy to do business with; and being advocates first for the policyholder.  What was most striking was just how big the perceptions gaps were between the carriers representing the most substantial part of the agency’s book versus those representing the smallest portion of that book of business. 

Want to know more about the degree that these factors play on carrier—and agent—revenues?  Check out our new report, “Loyal Insurance Agents Drive Sales” to see what hits and what misses when it comes to fostering agent loyalty.    

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