A Vote of Confidence for the Independent Agency Distribution System

The independent model provides more choices for clients and a more flexible and profitable career path for agents.

Did you hear? Insurance giant and Fortune 100 company Nationwide announced this week that they are moving to an independent agency model from their long-time exclusive agent distribution model. This is a major vote of confidence for the independent agency system. The big guys are acknowledging what we’ve known for years, a system which invests in the independent agency distribution system is smarter. Exclusive agents have only one product to sell, and to sustain their form of distribution is very costly for their carriers.

“Nationwide is committed to offering members a distribution point that works best for them, while providing long-term growth opportunities for our agents,” Mark Berven, president and chief operating officer of Nationwide Property & Casualty, said in a press release announcing the change.

It’s a message SIAA has been sharing for years. The independent model provides more choices for clients and a more flexible and profitable career path for agents. It’s a win for insureds and insurance carriers ¬– and with the strength of a trusted alliance behind them, a strong win for agents.

The independent agents now own the lion share of the U.S. market, according to a 2018 study by J.D. Power and the Independent Insurance Agents & Brokers of America. Independent agents write 35 percent of personal lines property and casualty premiums and 83 percent of commercial policy premiums. On average, independent agents have relationships with eight different carriers for personal lines and 11 for commercial lines, according to the survey.

Nationwide’s move presents considerable opportunity for independent agents. Clients will see the advantages to more product offerings, understand why the industry is moving away from the captive agent structure, and entrust the independent agent with their business. In the meantime, former exclusive agents have new opportunities to build their own businesses. They’ll see benefits to joining the right alliance that provides all of the tools to be independent including company access, high commissions, strong incentive programs, extensive training, marketing tools, professional field staff, branding and strength in numbers. Other carriers will see this movement and follow in Nationwide’s footsteps, converting more exclusive agents to the independent agent model.

SIAA is proud of helping the independent agent grow and become stronger. In 23 years we have helped create over 4,158 new independent agencies and have signed over 6,723 agents within our alliance. Ours is a proven distribution system that is attractive to carriers – a cost-friendly successful independent distribution model driven by well-informed agents armed with the resources they need to provide superior service to their clients.

No matter how many ways exclusive agents can distribute their products, it comes down to the breadth of products/companies they offer and personal, local advice and direction a client can’t get from a 1-800 number, or on an exclusive agent’s website. Independent agents can offer more – quotes from multiple carriers on multiple product options, and local service as a valuable member of their community – all while diversifying their revenue sources and building their book of business.

Nationwide is now “on ‘our’ side” because they’ve learned that the independent insurance agency model works. Who will be next?