Friction between independent insurance agents and their carrier partners fell sharply over the past year, but a new set of pressures around direct-to-consumer competition and rising digital expectations is reshaping the independent channel, according to new research from insurance marketplace First Connect.
The firm's 2026 State of the Industry Report, based on surveys of insurance agents and carriers across the US, found year-on-year declines across every major measure of agent-carrier friction. The proportion of agents citing coverage availability as a significant challenge dropped from 44% in 2025 to 35%. Those reporting appointment timing as a significant problem fell from 31% to 18%, a decline of 42%, while agents flagging quote speed as a significant challenge dropped from 22% to 11%.
The report attributed much of the improvement to a softening market, where carriers are writing more business and appointing more agents, alongside improvements in coverage technology and product access. It described the shift as a move from transactional friction toward operational partnership, though it notes that the proportion of agents reporting no challenges at all has barely moved. The worst friction is fading, the report concludes, but not all friction has gone.
While legacy friction points are receding, agents are contending with a sharply different competitive environment. The single biggest factor agents said is reshaping their channel is direct-to-consumer competition, cited by 43% of respondents, up from 37% in 2025. The proportion citing rising customer expectations for digital experiences as the dominant market force rose 50% year on year, from 9% to 14%.
Carriers reported the same picture. Some 30% name digital experience expectations as the strongest pressure on their market. Self-serve quoting, automated data prefill, same-day issuance and policy customization have moved from competitive advantages to baseline customer expectations. Some 77% of agents said client expectations for quote and binding speed have risen, and 71% said the same for policy customization.
The report noted that the industry is fragmenting in real time, with independent agents, captive agents, digital aggregators, embedded partners and direct-to-consumer channels each holding share. AI is broadening the coverage available to direct customers beyond the simplest lines, which the report says is adding to agents' concerns about maintaining market position.
In its first year asking agents directly about artificial intelligence, the report found a measured reception. Just 53% of agents are optimistic about AI's impact, and only 35% are currently using it in day-to-day operations. No single task category cleared 17% when agents were asked what work they would willingly hand to AI, with collecting basic customer information, scheduling appointments and checking payment status cited most frequently.
The report framed this caution as rational rather than resistant. AI tools still produce confident but incorrect outputs often enough that deploying them in customer-facing roles carries real risk, and agents evaluating the technology application by application are behaving as the industry should want professionals in a high-stakes field to behave. The report identified closing the gap between AI ambition and actual deployment as among the most important tasks for the industry over the next 12 months.
The carrier section of the report surfaced a significant blind spot on data and market intelligence. While two-thirds of carriers rate their market understanding as very good or excellent, three-quarters do not use a third-party market intelligence provider. Nearly two-fifths do not regularly use quoting tools to gather data and insights, and 22% rate their visibility into the agents selling their products as poor or very poor.
The report argued that commission data, on which many carriers rely heavily, tells them what was placed but not what should have been placed, what was lost to friction, or where an agent's effective book is shifting. The full picture of agent behavior across the ecosystem, including which carriers an agent quotes first, where they are moving volume, and what they are writing outside any single carrier's product, is only visible from a marketplace position, the report contended.
The report also concluded that the carriers growing most consistently are those that respond fastest to agent signals rather than those with the largest appetites or most aggressive pricing, and that agents who build tight, well-matched carrier sets will outgrow those chasing breadth at the expense of fit.
Aviad Pinkovezky, CEO of First Connect, said: "If 2025 was the year the industry asked 'what if,' 2026 should be the year it answers 'here's how.' That answer will not come from vendors making promises. It will come from agents and carriers who have already done the work and are willing to show their results."
