Thriving in an Age of M&A

Last year, the insurance industry experienced a record number of agency mergers and acquisitions. According to OPTIS Partners’ 2019 Year-end Merger & Acquisition Update, there were 649 deals across the U.S. and Canada, exceeding the 643 deals reported in 2018.

Despite the COVID-19 pandemic and ensuing economic effects, the marketplace has shown no signs of slowing down. In fact, OPTIS Partners' M&A database reveals that the deal count from January to September 2020 was only 7% lower than what was reported in the same timeframe for 2019.

Even amid such high rates of consolidation, independent agencies can continue to thrive. Here are best practices that can help agencies succeed.

Going from generalists to specialists

The percentage of agency revenue that comes from specialized market or product knowledge is on the rise. As Reagan Consulting’s Best Practices Study reveals, on average, over a third (36%) of agency revenue was related to specialization in 2019.  

The insurance industry is moving toward specialization for good reason: If an agency becomes known for excelling in a particular area, they’re more likely to attract and secure that kind of business. For example, if an agency becomes known for its deep understanding of the life sciences industry, it will have a better chance of attracting life sciences clients.

Notably, as business continues to be conducted remotely on an unprecedented scale, agents have the opportunity to pursue specialty business outside of their typical geographic markets. For example, west coast agents who’d like to work with more wood products clients are no longer limited to the Pacific region. Now that virtual networking and meetings have become commonplace, they can more easily connect with prospects in other parts of the country.

When determining which areas of specialization make the most sense for their agencies, independent agents should examine where they have opportunities to grow their books of business. Are there markets where they’d like to strengthen their presence? Are there new areas where they’d like to win clients? Are there knowledge bases that are untapped?

Once agents have determined where they’d like to specialize, they should seek resources to help achieve their goals. Some carriers, for instance, offer educational webinars that can help agents and brokers hone their expertise on different subjects, from products to emerging risks in various industries. By taking advantage of these kinds of programs, agents and brokers have the opportunity not only to expand into new markets, but also to bring additional value to existing client relationships.  

Promoting business health

According to Reagan Consulting’s Producer Recruiting & Development Study, an estimated 55–60% of agencies aren’t hiring enough producers to ensure their continued growth. In order to attract and retain needed new talent, agents must be able to devote time to recruiting and mentorship.  

However, time is often in short supply as agents work tirelessly to balance developing emerging talent, pursuing new business leads and advising clients. To make sure they’re able to make the most of their workday, agents should consider investing in tools that can help them become even more efficient.

For example, some carriers offer digital platforms that help minimize the amount of administrative work agents need to do. By making it easier to access client accounts, receive alerts about action items, save frequently used applications and more, these digital tools can help agents and brokers save valuable time they can dedicate elsewhere.

In addition to platforms that can help reduce their administrative burden, agents should research tools that can help them collaborate seamlessly in a remote work environment. Some collaboration-focused tools come in free or low-cost versions and can help agents work on shared files and connect with one another all from the same application.  

Remember: you’re not alone  

It’s important for agents to remember that, even in the independent model, they’re not alone.

Whatever 2021 may bring—whether it’s another surge in M&A activity or otherwise—carriers will be here to help agents flourish, be it through educational webinars, digital tools or sharing insights and best practices.

Josh Gibbons is Vice President and Branch Manager of Chubb’s Oregon branch office.

The opinions and positions expressed are the authors’ own and not those of Chubb. The information and/ or data provided herein is for informational purposes only and is not a substitute for professional advice. Insurance coverage is subject to the language of the policies as issued.