Agencies band together to clear path through industry disruption

Agencies band together to clear path through industry disruption

Agencies band together to clear path through industry disruption

As the insurance industry evolves, the safety in numbers hypothesis is becoming ever more relevant. According to Marshberry, 85% of all independent agencies in the US will be part of a network or aggregator group within the next five years.

Why are agencies banding together? Because networks leverage strong relationships between agents and carriers to drive business and yield positive results across the board. They provide market access, a support network, and education around new business, technology, legislation and best practices. Aggregator groups enable independent agencies to pool together their intellectual assets and successfully compete with industry disruptors.

Agency Network Exchange (ANE) is a network of more than 50 independent agents in New Jersey and Pennsylvania. In the past five years, ANE has written more than $100 million in new business to carriers, and chief executive John Tiene says there are more exciting things to come.

“There’s a significant shift going on in the independent agent distribution channel, which is fueling a number of interesting things,” Tiene said. “On the one hand, you’ve got the very large brokerage operations, like the Gallaghers of the world, continually trying to expand and buying up specialty shops to boost growth. On the other hand, you have huge consolidation fueled by equity dollars coming in and buying up insurance agencies to build these monolithic equity houses.

“In the middle, you’ve got [networks] like ANE dealing with agencies who want to remain independent, and want to continue to move forward, grow and perpetuate, whether with family or existing management groups. That’s what has fueled our rapid growth in the past few years.”

Every independent agency has its own unique characteristics and set of goals – attributes carriers and vendors have sometimes overlooked or ignored in the past. Network clusters allow agencies to keep their individual identity but also tap into the critical infrastructure, wider expertise and market access of a larger non-threatening trade body.

Being part of a larger organization also helps agency owners gain more confidence in their businesses, according to Tiene. With more business opportunities and revenue coming in, they can pump money back into their agencies and start to address pain points in the independent agency distribution channel by updating their operating models and investing in technology.

“A big part of what we do [at ANE] revolves around demystifying the changes in the insurance industry for the agency owner,” Tiene told Insurance Business. “Right now, we’re building processes and support structures to educate our agencies as technology advances. We’re developing guide paths and road maps, so they can see what they need to accomplish in order to be proficient and effective. It’s about cutting through the noise and helping them understand what’s important today.

“We also spend a lot of time with insurance carriers in order to understand what they’re doing and what investments they’re making. We’re starting to see a shift in investment dollars away from the area of making the sale to the processes that go into the sale. We have to understand where the carriers are at, so we can help our agents align with the carriers and work with them more efficiently.”

Successful agency networks like ANE have started to catch the attention of insurance carriers because of the general consistency and reliability of the aggregator models. Tiene pointed out, dealing with five or six hundred agents individually is a lot less predictable than transacting business through a well-structured network.

 

Related stories:
Insurance Network Alliance targets pain points in agency/carrier relations
ANE conference motivates and inspires independent agents