The Independent Agent

Many Businessowners place insurance P & C using an independent agent. This is typically a good way to access a variety of options, since independent agents are not beholden to one insurance carrier. They can find the best combination of coverage, price, and insurance carrier to “fit” the risks associated with a business.

But a “peak under the hood” reveals that not all independent agents are the same. Far from it. To wit:

1. There are some 40,000 independent agents in the U.S.
   
   
2. The requirement to obtain an insurance license(Maryland):  pass a test usually requiring a 2-day course with some practice tests.  In Maryland, to obtain a license in cosmetology requires 1500 (188 eight-hour days). That’s not to disparage beauticians, but – wow.
   
   
3. Most of those 40,000 agencies are small – one or 2 people.  And many have access to few contracted insurance markets. Some have no markets, dealing solely in the non-standard (“excess and surplus”) lines market.
   
   
4. Insurance carriers will generate different quotes for different agents, even if on the same parameters. Why? Carriers underwrite agents. 
   They want: 
       •   Volume,
       •   Profitable accounts,
       •   Ease of doing business
   
   
5. Insurance carriers typically quote for one agent in any given year; it’s costly to quote an account. Many agents “block the market” by playing the game – knowing that sending an application to all their carriers precludes other agents form quoting. Hence, “marketing diligence” is sometimes hollow.
   
   
6. Not all agents have access to all carriers. Few do – it takes size, longevity, profitable business to  secure and maintain carrier contracts.
   
   
7. Many agencies are owned by other agencies – or Private Equity or Venture Capitalist firms, which love recurring income the average accounts stay “on the books” for 7 years. That in itself is not bad, but when, in a narrow margin industry, a significant portion of any profit goes to a “mother ship,” the cost cutting is borne by the client. Well-hidden at times, but inevitable – especially when one needs to ”use” their insurance program.
   
   
8. Some agencies invest in tools to help its customer reduce risk, and related cost, over time.  Most do not.

Ultimately, while independent agents offer flexibility and choice, it's essential for business owners to carefully evaluate their options. Choosing the right agent can make a significant difference in the coverage, cost, and overall management of Commercial P&C insurance. Stay tuned for more insights to help streamline your insurance experience and protect your business effectively.

To learn more about choosing an Independent Agent that’s right for you, reach out to an agent at Diversified for more information. DII is your partner in Navigating Commercial Property & Casualty Insurance. Our team of experts can work with you to the best partnership options for your companies interests and needs.

Please contact your DII representative for more information. #Independentagents  #InsuranceExperience #Businessowners #stayinformed