Page 22 - The UnCaptive Agent

While this flow of agents to the independent agency
channel, enabled by a change in carrier appointment
attitudes and the rise of Market Access Providers was
taking place, the mergers and acquisition activity in
the independent agency system increased significantly
following the 2008 economic downturn. Fueled by
low-interest rates, and a roaring stock market, traditional
acquirers (national insurance agency brokers) joined
by private equity groups, and medium to large-sized
privately held agencies seeking to remain competitive
have driven agency values and acquisition numbers to
historically high levels. As many of the producers and
agency owners of acquired agencies have made the
transition to larger, more bureaucratic organizations,
they have found that they preferred their former careers
inside smaller organizations. This has led to another
group of new agency startup owners.
Finally, as Chris Burand, insurance industry con-
sultant, has pointed out in an article in The Insurance
Journal, there has arisen a trend of agency employees
seeking to start their own businesses rather than wait
patiently for the opportunity to buy the business they
work for—an opportunity that may never come.
All of this has led, over the past decade, to an
unprecedented level of entrepreneurial activity in the
independent insurance agency channel. And while these
new business creators are often talented insurance sales-
people, their previous career experience has often lacked
operating a business.
Successful independent insurance agencies are com-
plex businesses. They must market and sell products
to be sure. But they must also be effective field under-
writers, careful selectors of products, and sophisticated
managers of money and cash flow to thrive. Increasingly,
they must also be knowledgeable and sophisticated