Where do I see the independent agency system going in the shortterm, as well as five years from now? What is the one major pieceof advice I would give independent agencies that might help themprosper? Those were the questions posed to me and 19 other “Movers& Shakers” by George Nordhaus, the founder and chairman ofInsurance Marketing & Management Services, and a long-timeopinion leader himself in the agent community.

A series of 10-minute webinars featuring all top-20 “Movers &Shakers” will be presented over the course of this month. (Go tothe IMMS site by clicking here.) Alist of the Top-20 people interviewed is included at the end ofthis posting.

My webinar runs on Dec. 17, but I'll give you the inside dopehere and now.

When asked to list where I see independent agencies heading inthe short-term, I predicted the following:

–The best agencies will continue to mature into true riskmanagers for their clients.

–To compete, agents will need to avoid commoditizing theirproducts and services by competing on price alone, and become moreof a consultant and service team quarterback.

–Agents will do business with fewer and fewer carriers asdemands for volume targets keep rising. More will merge with orsell to competitors, or join networks or clusters to aggregatebuying power.

–More agents will do business on a fee basis, rather thanstraight commission, especially as the demand for loss control andother non-insurance services rise.

–More agencies will outsource non-core functions to focus theirinternal resources on the critical areas of marketing, sales andservice coordination.

As for the long-term outlook, five years and beyond, not onlyfor agencies in particular, but for the industry in general, Ipredict that:

–A growing amount of business will continue to bleed into thealternative marketscaptives, risk retention groups, derivativeinstruments such as cat bonds and other alternative risk-transfermechanisms–never to return, no matter whether the commercialinsurance market is hard or soft.

–Agents who are not full-service risk managers for their clientswill disappear. More middle-market clients are demanding not justpolicy peddlers and price shoppers for insurance, but loss controland safety services as well as alternative risk-transfer andself-insurance options.

–The distinction between property-casualty and employee benefitproducers will be erased, with the most successful independent p-cagencies going big-time into benefits. This will not only helpproducers retain accounts and attract prospects, but will allowagencies to provide an invaluable service to commercial clientsmanyof which see benefits, especially health insurance, as theirbiggest pain point, especially in a soft commercial market.

–The insurance industry will become increasingly high-tech, withthose lagging when it comes to electronic data interchange doomedto extinction. Paper-based transactions and multiple data entry aretoo costly to survive, taking those who cling to traditionaltransaction methods with them.

–Globalization will continue to accelerate, with artificialbarriers broken down in terms of regulationespecially in the U.S.,where doing business is still far too costly to many foreigncarriers, without any appreciable benefit for the domesticmarket.

As for the ONE major piece of advice I would give independentagencies that might help them prosper in the future, long- orshort-term:

–Stop trying to attract new prospects or retain current clientsby only offering the best premium for a particular coverage. Thatsa losers game. Focus instead on the cost of risk, and put togethera team of service providers so valuable that for a buyer to move toanother agency just because they happen to come in with a quote afew points below yours on a particular coverage would be impossibleto imagine.

What do you folks think???

As for the other “Movers & Shakers” interviewed by IMMS(click here forthe site), the schedule is as follows, followed by a snippet oftheir outlook for the independent agency system. (I believe theinterviews will be available for the whole month after they firstrun, if not longer.)

Week of Dec. 3:

–Mike Manes (Square One Consulting), Consultant, author andspeaker:
Agents will need to provide resource management services and apositive delivery experience.

–Walt Gdowski, Publisher, Rough Notes:
Prepare for total account selling, 24/7 service, and the expansionof risk management.

–Mike Schroeder President, Roundstone (a captive managementservice):
Creative agents will thrive by providing total enterprise riskservices.

–Ken Crerar, President, Council of Insurance Agents andBrokers:
Brokers will consolidate, focusing on professionalism and providingvalue added.

–Alex Soto, Immediate Past President, IIABA:
Look for a continuing soft market and the growth of onlinedistribution.

Week of Dec. 10:

–Doug Robinson Chairman and CEO, Utica National:
Expect deteriorating earnings and a shakeout in distributionsystems.

–Robert Page President, National PIA:
Look for a stable and profitable industry, with a strong role forindependent agencies.

–Catherine Oak, Bill Schoeffler, Oak & Associates(consultant and author):
More agents will be providing niche marketing and value-addedservices.

–Steve Anderson, Editor, The Agency Automation Report, andagency automation consultant:
Technology will transform the way you do business.

–Sam Friedman, Editor-In-Chief, National Underwriter:
Look for the growth of enterprise risk management, alternativemarkets, fee-based compensation, and the continuing globalizationof markets.

Week of Dec. 17:

–Al Diamond, Agency Consulting Group (consultant andbenchmarking guru):
Be prepared for a technological explosion, revamped commissionstructure, and innovative products.

–Neal Montgomery, Director, Field Management, TheTravelers:
Be prepared for a sales culture that focuses on account roundingand retention.

–Dennis Garrett, EVP, Professional Independent Insurance Agentsof Illinois:
Expect massive demographic shifts, higher producer compensation,and consolidation of carriers.

–Greg Maciag, CEO, ACORD:
Enterprise standards and e-forms from ACORD will be baked intoagency workflows.

–Bobby Reagan, President, Reagan Consulting (Best Practicesguru):
Prepare for more specialization, consolidation, and a continuingwar for talent.

Week of Dec. 24:

–Jeff Yates, Executive Director, Agents Council forTechnology:
High-tech will drive high-touch, 24-7 sales and service, offeringagents unprecedented opportunities.

–Jack Fries, Fries & Fries (consultant, author andspeaker):
(Not taped yet, so key advice to be announced!)

–Cory Young, agency principal, Rhodes & Williams (CanadianGroup 500/IMMS Member):
Expect more competition from direct writers and a blurring oftraditional bricks-and-mortar brokerages.

–Chuck Brown, agency principal, Brown, Seligman & Thomas(Group 500/IMMS Member):
Look for a wider variety of distribution methods, and more nichemarkets.

–Bill Hold, President, The National Alliance (CIC, etc.):
(Not taped yet, key advice to be announced!)