Related Items
  FREE Insurancenetworking.com Site Registration!
Sign up today and access the leading source of Insurance I.T. information on the Web.

Your FREE site registration entitles you to

FREE Insurance Networking eNewsletters

Search more than 7 years worth of archived data

White Papers and Industry Research that provide valuable insights on a variety of technologies and implementation issues

Access our Web Seminar series

   

Agent Attrition & Its Consequences

Daniel Joelson November 2006

Fed up with the life of an insurance agent, many aging baby boomers are retiring or choosing something spicier for their lives. Some principals are seizing the opportunity to sell their agencies to banks or another entities. While they may make big dollars or find cool waves, sticky problems remain in their wake. Too often, principals are struggling to attract new agents they can groom to take over the helm. At the same time, many of the country's brightest young business minds are looking askance at the prospect of being insurance agents; they've been spooked into thinking such positions will ultimately be filled by non-humans.

The outlook seems so bleak that agents might someday vanish, and will it be technology that metes out the coup de grace? Or do most agents actually view technology as their savior?

DINOSAURS TO BE?

"The independent agent is going the way of the independent drugstore and the independent hardware store," says Chris Melton, sales director of ProfitStars Insurance Agency Solutions Group, a unit of the Monett, Mo.-based Jack Henry & Associates Inc. This is partly due to the repeal in 1999 of the Glass-Steagall Act that opened the floodgates for banks to enter the insurance field. "The ability to hire and grow organically young new agents is brutal-the attrition rate is usually more than 80% within the first three years of hiring them," explains Melton.

The specter of technology's effect on insurance agents has certainly led some into the banking and brokerage industries. "We have gone through a period of a couple of decades in which we have been telling young people coming into the insurance business that the agency plant is not the place to be-that agents are going to be disintermediated in the future, that it is going to be self service and that the Internet is going to take over," says Bill Hartnett, general manager and industry director of the U.S. insurance solutions group at Redmond, Wash.-based Microsoft Corp. "If you are a bright young person, that doesn't sound like a very interesting career if you are going to wind up losing it in 10 or 20 years, right?"

For youths, the attitude of many carriers with captive agents is that the agency plant is "a necessary evil," and they fail to aggressively develop the agency force to become top executives or a key asset to the organization. Their attitude: "How do we get more direct channels; how do we put more stuff on the Internet so we are not so reliant on agents?" says Hartnett.

Agent ranks are thinning and will only continue to decrease, predict many. "There will be a head count reduction in the number of local agents, and when I say that you have to look at both the number of captive agents, as well as independent agents," says Dave Roush, CEO of Insurance.com, a Solon, Ohio-based independent insurance agency.

TECHNOLOGY: THE GRIM REAPER?

Insurers are embracing customer self-service options, particularly the Internet and call center channels. One firm embodying this growth is Insurance.com, which operates via both media. The company has built a network that operates directly with major carriers, interfacing real-time with their systems to provide comparative quotes to customers.

For more information on related topics, visit the following channels:


Agent Network

Customer Service

Distribution

Enterprise Technologies

Insurance Network

Outsourcing

Vendor Spotlights