Conning: The Independent Agency Model Still Works

Although direct-channel growth in personal auto has come at the expense of the independent-agency channel, 12 of 18 personal-lines insurers that have outperformed their peers in both growth and profitability over the past decade use the independent-agency distribution channel either in whole or in part, according to a recent Conning report.

“The flexibility of the independent-agency channel is well suited to the rapid growth of these companies,” Conning says in its report, “Growth and Profit Leaders in Personal Lines Insurance.”

The Conning report contradicts a study by McKinsey and Co., which argued that the value provided by independent agents is diminishing. Leading PIA agents strongly disputed the McKinsey study (“A Flawed Premise Wrapped in a Faulty Analysis”) in a series of press statements and an article in the National Underwriter.

Conning notes that the most common channel for companies in its “growth and profit leader group” was the independent-agency channel, adding that the channel allows small- and mid-sized insurers “to accommodate growth without requiring the large fixed-cost base of a direct-response organization.”

Most Personal Lines Growth Leaders Use Independent Channel (PC360 12/4/13)