Fewer Property and Casualty Agents on the Horizon?

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Fewer Property and Casualty Agents on the Horizon?

The property and casualty industry will see a change in the distribution channel, namely fewer agents, says an insurance advisor for EY.  During a recent Insurance Journal “On Point” podcast with Peter van Aartriik, an insurance industry marketing and communications specialty company, EY’s Ed Makowski noted that those agents that remain will be larger and more tech-savvy.

“The agent is still very valuable today, and I think there’s always going to be a role in this industry for the captive agent, however, I think that the agency business and the agents themselves [will] continue to consolidate,” he said.

Chess Board. Less agents more competition

Makowski points to the need for cost reduction, which will compel more agencies to exit the business.  He related a statistic noting that in 2018 alone there were some 600 acquisitions among agents and brokers. “So, they’re consolidating, they’re becoming fewer and fewer. I think that we’re seeing certain agents are becoming super agents, they’re investing in their businesses, they’re automating, they’re finding ways to innovate and capture more market share,” he said.

Technology Changes and The Millennial Factor

Makowski said that in addition to cost considerations, other forces are driving this transition. “There’s the millennial factor. There’s a huge portfolio of independent agents that just don’t have a successor. … You also have the dynamic of, ‘Boy, it’s just hard to make a buck, it’s hard. I don’t have the same business and the same flow that I used to have where everybody would just drive up to the agent or call the agent and then that’s how you would get your policy.’”

Millennials and Technology Changes

Another factor involves the evolution of customers going through different channels, using websites, online marketplaces, digital, mobile, etc.  “Larger agencies, super agencies and big brokers have a greater ability to spend on digital channels and technology improvements,” he said. So, “the biggest agencies in the world, the biggest global brokers, the names, they continue to consolidate, and they continue to acquire and they’re growing through acquisitions of other agencies.”

Photo courtesy of Insurance Journal.