This is the third year that Vertafore & Hanover Research have published this study
In its third annual study evaluating the current state of independent insurance agents, Hanover Research found that nearly half of its agency respondents, or about 49%, are “very optimistic” about the future success of his or her agency. Even more encouraging, the survey found that almost 85% of respondents are planning for either “moderate to aggressive growth over the next three to five years.
“The study, entitled “How Independent P&C Insurance Agencies Thrive in 2016’s Competitive Marketplace”, is now in its third year and is sponsored by the insurance technology company Vertafore. The actual online survey is conducted by Hanover Research and seeks to measures both the current sentiment of agencies as well as their plans for investment in growth planning. In particular, the survey asks agency principals a series of questions about their company’s “…growth experience over the past few years as well as their current and planned business models, products, technologies, and marketing capabilities.”
Surprisingly, the study found InsurTech startups to be a threat to their agencies. According to the 2015 study, more than half of the agents surveyed (54%) felt moderately to seriously threatened by InsurTech newcomers. In 2016, however, 76% of agencies viewed these start-ups as a small threat or no threat at all. This finding is even more surprising given the fact that the study says VC funding more than tripled to $2.6 billion in 2015.
If agents continue mixing technology tools with their customer-first mindset, the future of the independent channel is bright – Bruce Winterburn, VP of industry relations at Vertafore
“Independent agents are acutely aware of the disruption facing the industry and their businesses, but they’re not letting it impact their spirits,” said Bruce Winterburn, VP of industry relations at Vertafore. “By doubling down on technology that bolsters customer relationships and continuing to integrate mobile technology into the whole of the business, the research shows the investment in paying off. Growth is in fact happening and at an accelerated pace. If agents continue mixing technology tools with their customer-first mindset, the future of the independent channel is bright.”
Key findings of this year’s survey
The following are some of the key findings of this year’s survey:
- Overall, “seven in ten” agencies are optimistic about their future success with a majority dedicating themselves towards more growth over the next three to five years.
- Over two-thirds (70%) of agencies stated that they are either “optimistic or somewhat optimistic about their future success, with 46% stating they are “very optimistic.”
- In 2016, optimism largely mirrors agency size, with larger agencies versus smaller agencies feeling “very optimistic” about the future of their agency. Approximately 85% of larger agencies are optimistic about future success, while 95% of more medium-sized agencies
- While personal lines has seen a higher revenue increase in 2016 than commercial lines, those numbers are still lower than in 2015.
- The biggest driver of an agency’s growth in personal lines during 2016 has been linked to the improvement in customer retention. Effective cross-selling to existing customers and better service to existing customers also rounded out the top three reasons in response to the question “What has driven your agency’s growth in personal lines over the past 24 months.”
- Surprisingly, the three least effective drivers of growth include More use of electronic/digital tools for leads; an acquisition of another agency or agencies; and partnerships with other agencies.
- As for technology, the survey found agencies more apt to grow their technology budgets in the coming year. An impressive 63% said they were expecting to increase their technology budgets over the course of the next year.
- Investments in mobile technology along with implementation of new systems were two of the highest priority items for agencies technology-wise.
How to obtain a copy of the complete report
Those agents interested in reading the complete report, “How Independent P&C Insurance Agencies Thrive in 2016’s Competitive Marketplace” can download it for free on the Vertafore website.