Mergers heating up in the Independent Agency World

Economics 101 teaches that when industries mature and the product becomes commoditized then the companies with the cash will buy up the market. I am seeing this with the independent insurance agencies in our region. Just a few years ago in Delaware we had over 60 or 70 insurance agencies. Today we have 45 or so. This trend is continuing throughout the country also. When I started in the business in the late 80's there were over 100,000 independent insurance agencies in the Nation. Now the estimates are about 25,000. This all has to do with an industry that has no place left to go with it's products for differentiation. With the advent of the internet, service demands, the only differentiating factor between agents, is falling because of online use. The agents National Associations are hoping that the complexities of insurance will keep the need for agents and bolster the industry. Though I agree that agents are needed for consumers and that insurance is a complex transaction, online programs and apps will simplify the process for consumers and reduce the agents over all need. This may take a decade but it is coming. Agents will have to be creative and adapt to new service needs for consumers. The insurance transaction may be focused arouund the information and programs of online buying, but risk is growing. Agents roles will be as risk managers more so than sellers of insurance. Risk management is where agents can shine in the eyes of consumers. The big question however is how will agents get paid. I talk about my views on this in a futre blog. Until next time know your risks and be careful out there. K

Popular posts from this blog

Delaware Legislature Preparing To Revisit Dram Shop Liability

Here we go again. Representative Peterson is preparing to introduce limited dram shop liability for consideration. The legislation caps the liability at $250,000 but, as is usually the case, this creates a starting point where limits are eventually increased once it's decided by the powers that be that the current limit is too low. This also puts restaurants, bars, etc, at an increased risk due to the vague wording of the legislation, specifically "reckless" sale of alcohol by the business. Also, you can be sure that if this legislation is passed, that rates will go up commensurately for not only Liquor Liability coverage, but if actual damages begin to be paid out under this law, that insurance rates on the whole will see an increase.
Read more

Get employees back to work quickly to keep work comp costs down

Image
In the past I have spoken to clients regarding a particular workers compensation claim affecting them and have asked if they have brought the employee back to work yet. Too many times the answer is no, they have nothing for that employee to do since said employee is not 100% and unable to perform their specific job prior to their workers compensation injury/claim. The problem with this is that too often employers miss the point that even though an employee can't perform in the position they were in prior to their injury, it behooves the employer to create some type of alternative task/job the employee can do until such time they are able to resume their normal duties. Bringing that employee back to work means that work comp benefits /payments in that particular claim are being curtailed, thereby saving the employer potentially more being paid out, while adding to their experience mod and driving their overall work comp expenses up.
Read more

Important to notify insurance company of potential liability claims

Image
When trying to manage their insurance policies, many business owners make the decision not to turn in potential claims and decide to take care of them on their own. By paying for small claims, such as property damage, etc, they strive to keep claim frequency down and in turn keep renewal premiums down. One area of insurance they should not try to manage though is potential liability situations/claims. Most policy conditions require prompt notification of any potential liability claims to the insurance company and if a claim isn't turned in promptly, the policy language does note that the company can deny a claim due to late notification. It's important to do this early on since information/memories are still fresh and it gives the insurance company time to completely investigate the potential claim. The potential for a liability claim is most likely the small business owner's greatest area of risk, whether they operate a restaurant, cleaning service or any other busi...
Read more