How insurance carriers and agencies can win together

Recent years have been especially challenging for insurance carriers. Inflation, economic pressures and natural disasters have contributed to rising insurance premiums, leading many customers to switch carriers or even forego coverage that could protect them in a moment of crisis.

As these trends continue, some carriers are considering a way to cut costs and take greater control over their customer relationships – bypassing brokers and independent agents and selling directly to prospective customers. While I can see the benefits of this approach for carriers, I'd like to suggest a different perspective. 

Based on my experience, carriers may miss significant opportunities if they remove agents from the insurance shopping process. In particular, they won't be able to take advantage of an insurtech agency specialty: the ability to process a high volume of underserved customers (individuals and small business owners) at scale. 

I believe carriers can increase their success by strengthening their partnerships with agencies while also focusing on great communications with their customers who are facing so many economic challenges.

Here are some recommendations for what carriers might want to focus on:

Leverage agents to decrease customer acquisition costs

Carriers are seeing a high cost associated with acquiring and retaining customers. 

Since independent agents can help customers make purchase decisions and drive demand to carriers, working with them can ultimately lower these costs. Agents equipped with the right technology can process a high volume of transactions at scale and efficiently match carriers with large numbers of customers with their preferred risks.. They can produce demand with minimal effort from carriers.

And investing in a great partnership will drive even stronger results. J.D Power found that agents who are more satisfied with their relationship with a carrier increase the amount of current and future business they produce. Carriers that commit to increasing agents' satisfaction can see a threefold increase in business generated for them. 

Enable seamless digital experiences for customers

Reducing the amount of steps a prospective customer has to take to purchase insurance keeps them in the sales funnel. Carriers win when customers can purchase insurance from them in multiple locations – and don't have to leave the environment where they learned about their products. 

For customers who prefer a 100% digital transaction, I'm also encouraged that an increasing number of carriers see the benefit of online binding and are partnering with agencies to make it happen. Although carriers have traditionally preferred customers to make final policy purchases directly with them, this is one more opportunity to honor a customer's preferred shopping style and connect them with a carrier's products.

Invest in AI and agency partnerships

Insurance leaders may win or lose based on how they invest in and utilize AI. A McKinsey study estimates $50 billion to $70 billion of insurance industry revenue will come from the impact of Gen AI productivity across business functions. More than half of 50 carriers surveyed believe Gen AI could lead to productivity gains of 10 to 20% and premium growth of 1.5 to 3.0%.

Carriers are already unleashing AI to accelerate risk assessment, underwriting, claims processing and many more time-consuming activities. But when it comes to agency partnerships, I believe they should focus on how AI can optimize rather than replace the benefits that independent agents provide. 

AI-powered tech integrations will equip agents to respond instantly to the most complex of market changes and emerging risks, delivering ideal customer matches to carriers and the most personalized solutions to customers. This is a great future we can build together. 

Improve customer communication

It's unlikely today's hard market will take a turn for the better in 2025, so both agencies and carriers will need to empathize with customers who are struggling with rising costs. Education is key, and carriers are in a good position to provide it because they set prices. 

J.D. Power found 49% of customers have actively looked for a new auto insurance policy in the past year. It's natural that people want better deals, but the overall health of our industry depends on making sure they understand the downside of buying cheap coverage that won't protect them if they have a surprise loss. 

As an industry, I believe we can do a much better job of communicating the value of having the right levels of coverage – and the threat to their savings and other valuable assets if they only focus on the short-term. 

J.D. Power reported that less than half of auto insurance customers receive a policy review from their carriers or agents, but those that do trust their carriers more and better understand their policies. 

Everyone in our industry cares about acquiring customers – and meeting their needs during challenging times through great experiences that keep them coming back. Now is the time for carriers and independent agencies to double down on investing in a winning partnership to reach underserved customers with outstanding insurance solutions.