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

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