Statements from MarketScout CEO Richard Kerr on the comparative advantages of small and large independent agencies drew comment from both insurance agents and business owners this week.
Kerr, who is of the opinion that small agency producers are able to spend more time with business owners, says the “extra expense” of working with a small agency is often worth it.
“It’s no secret smaller agencies generally produce more profitable business,” Kerr said. “That’s one of the reasons there are so many buyers of small agencies. The big aggregators wisely use the acquired profitable premium base to their benefit.
“Smart buyers are carefully examining a seller’s loss ratio. Some will even adjust the purchase valuation based upon the seller’s loss ratio with their top insurers.”
Agents weren’t willing to concede that larger agencies are able to offer better prices, however. Reader James Ostrove noted:
We are a small agency in Ct. and I have no problem competing on price, I have plenty of direct carriers for personal auto and home , for commercial lines there are a multitude of cluster groups that we can access.
Jim added that “big houses…taking lower commissions” is “news to me,” and speculates they may be “making up for it with broker fees.”
Dan is just happy as a clam writing smaller business. He wrote:
We are small by most measures, just under 10M. There is nothing we like to see more than one of the "big" houses on an account 50k and under. Why??? They stamp a renewal letter on those and just ship them out the door. Very efficiently I might add. That's bread and butter to us and no one is more all over it than us little guys.
Small business owners were divided, however. Reader David noted:
As an owner/operator of a new small business I don't have the option at this time to pay "a little more". I am happy with the care I am getting from a specialist in my area and the extra perks I am receiving from the larger firm. It's important to look at and hear from both sides.
A big thanks to all our readers who commented this week!
