Do We Need Local Insurance Agents?

Many knowledgeable people have predicted the demise of the local insurance agent in America. There are several reasons for these predictions such as advancements in online technology, the generic nature of auto and home insurance for most families, and the massive advertising budgets of the direct online insurance providers. Some have even said that the insurance companies use of risk based pricing has increased efficiency and reduced innovation and now all insurance companies simply look alike.

Some major insurance companies with an agent distribution system have even gone further by taking the customer service burden off their agents through centralized 800 number call centers. The idea being that the agents will be more efficient with their time and use it wisely to increase sales. The thought is that customer service should be handled at the company level in order to deliver a consistent and risk free message to the customer.

Can this possibly be true? Are we destined to have our auto policy with a direct writer one day? Will life insurance sales be just a term policy purchased through the internet?
Will the local insurance agent become an advisor for commercial insurance or specialty products only? In simple terms, will insurance agents become extinct like a dinosaur?

The answer is…….Maybe. Let’s take a look at an industry in transition.

The direct writers (those that sell direct to the customer through an 800 number or online) market share has doubled in the last decade and they now control 27% of the total auto insurance market. The growth of the direct writers has slowed down a bit recently primarily due to the agency companies increasing their advertising budgets and, in some cases, buying or creating their own direct insurance outlet (like Allstate purchasing Esurance or Farmers purchasing 21st Century).

GEICO spends a mere 6% of their gross written premium on advertising. But that 6% represents over $800 million in advertising each year! Agency companies typically pay around 10% of their auto premium in commission to their agents. The prevailing thought is that these local insurance agents already know their customer and they certainly want to grow their business so it is natural and proper to pay them a commission for their services.

Insurance agents have increased competition. They have always had competition and many agents have prospered in that environment. What is different today versus 10 years ago?

The difference is the service that agents provide their customers. Ask any agent to identify what separates them from other agents or the direct writers and they will respond with “I provide great customer service.” Many cannot even identify what customer service really is.

Let’s take a look at how agency customer service has changed and how agents are at risk if they do not change the way they do business.

First of all, almost all agents have delegated the relationship with their customer to staff. This is not necessarily wrong because few agents have the time to answer the phone and take care of customers. Many agents have embraced newsletters or email to connect with their customers and help them stay informed. Few agents have developed any kind of ongoing policy review system with their customers. Those that do have a policy review system use it primarily to sell something else and therefore get push back from the customer. Almost every agent I know does not want to get involved in handling claims. They would much rather direct the customer to an 800 number claims service. Still more agents have taken the “let a sleeping dog lie” approach and decided it is not a good idea to make contact with a customer because it only opens up an uncomfortable discussion.

Many agents build their business on purchased leads from vendors, contacts with auto sales people and a few friends and family. In addition, many agents are never taught how to build a successful business as they are pushed to perform.

If we recognize that there will always be competition in our industry and we know that the cost of our products are going to vary, sometimes dramatically, and we accept the fact that a satisfied customer is my responsibility what can we do to improve service to our customers and why is that critical to our success?

Every agency owner needs a customer service plan. A plan that openly discusses how the agency engages with the customer. A good plan answer questions on how the phone will be answered. A plan addresses the responsibility of the agency owner and each staff person responsibilities. A good agency plan encourages customers to use reputable and selected vendors when they have a loss without directing them to an 800 number. It is important to remember that ALL insurance companies are the same until you have a loss.

Ask yourself this question: “How do I wow my customers and make it extremely difficult for them to leave?”

If you can find ways to engage with customers and make them forget the price differences your future is guaranteed. If you do not, you will find that your days are certainly numbered.

“For convenient online insurance training, visit”For convenient online insurance training, visit

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AARP Now Offers Auto Through Independent Agencies

AARP discounted auto insurance is now being allowed through select independent insurance agencies. The auto insurance provider for AARP provider has been The Hartford Financial Services for a number of years but in the past has only been offered online, via telephone or through the mail.

Independent insurance agencies are clamoring to become a represented agency for this product due to the low rates offered and access to thousands of retired persons.

For more information contact

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Update to Website!

ITA launched a new look to it’s website today with an easier to read and navigate home page as well as new state pages.
We’ve added new FAQ’s as well as the licensing and continuing education requirements in every state.
ITA is an online education provider with a national presence and offers insurance and securities license training, insurance continuing education, as well as aptitude testing, career counseling, and placement assistance.

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Commission Income or Fees or both?

Many Producers are complaining that they are seeing downward pressure on commissions paid by the insurance companies.  This is particularly true in health insurance because of mandated administrative fees (15% or 20% of total premium) as established by the Affordable Care Act.

So what is a Producer supposed to do in order to make some money in this business?  We recommend that you add a Brokers License (a Consultant license in states where  brokers are not recognized) to your existing insurance license.  This license will allow you to add an agency fee on top of the premium you charge your customer.

Be sure and check with your state insurance department for specific regulations regarding Brokers and Consultants.  You will also want to check your insurance company appointment agreement to see if they allow fee based service charges above commissions.

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Veterans Coming Home

This month more than 40,000 veterans will be spending the holidays at home. We, at ITA, want to thank them for their service to America and wish all of them a wonderful and happy holiday season. In January, many of our veterans will hit the streets looking for a new career. Do not forget to check out a career in insurance.

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Pass The Insurance Exam

Hi Doug!

What a GREAT app!!! I’ll definitely pass it on to those I know in the industry!

Thanks for getting the word out!


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Pass The Insurance Exam

Hi Doug, this sounds like a fabulous program. I have my insurance license, and I went through Pathfinders for training–it was a little pricey. I forwarded your information to our Agency Development Consultant that works with our new agent interns during the licensing phase. This program may be one State Farm would like to share with our interns.

Denise Dowell
Agency Field Recruiter
State Farm
765-464-7152 (office)

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Flash Cards; A new study review tool now available!

Flash Cards; A new study and review tool for those preparing to take the insurance license exam is now available on our website or as a mobile app on the Android Market.
Over 300 terms and concepts are in each of the Life and Health and Property and Casualty editions which includes audio. Purchase on the web at or search on Android Market for “Pass the Insurance Exam”.

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Now’s the time to consider an insurance career!

Now’s the time to consider an insurance career!

Whether you choose to sell life insurance and financial services products such as mutual funds, health and disability income insurance, or become multi-lines licensed in property and casualty selling auto, home, and commercial insurance, many career opportunities await your consideration. ITA can also help you meet company recruiters.


Unlimited earning potential!

In addition to unlimited income opportunity, insurance careers offer freedom and independence in your own business. You’ll be your own “boss” and set your schedule yourself instead of punching a time clock.


Building your clientele!

As an insurance sales producer you’ll meet with clients, analyze their needs, make recommendations, complete the applications and submit to the company,

deliver the policies, obtain referrals, and service your clients by conducting annual reviews to meeting their changing needs.


What it takes to be successful!

Most successful insurance producers tend to be self- motivated, set high goals, know people in their community, have “people skills” that allow working with many types of clients, are computer-savvy and professional.


Steps to getting licensed!

Most states require completion of pre-license training, 20 hours of study in each line of insurance you’ll be licensed in before you can sit for the state examination.

Go to  and click on your state to learn more about pre-license training.


Find out if an insurance career is right for you!

Changing careers is a big step. Take a career aptitude profile and learn if you have what it takes. Click on the following link for a $10 discount;

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ITA partners with SIRCON

ITA partners with SIRCON to bring you Sircon ProducerEdge!

With this tool you can load all active insurance licenses, renew and apply for licenses in all states, and track and manage CE requirements all in one place. Click on the Sircon ProducerEdge button on our home page to get started. It’s Free!

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