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The Aging Agent Conundrum

January 31, 2018 1:22 PM | Vaughn Lawrence (Administrator)

By Chuck Gomez, Novarica

I thought I would channel my inner Millennial this past weekend and replace my broker-sold homeowners insurance (underwritten by a reputable regional carrier) by purchasing a chatbot-sold policy online, but the price wasn’t right—at least not for this Gen Xer. However, this experience got me thinking about recent conversations that I have had with executives from P/C carriers coast to coast and their real concerns about their aging agency force. Studies show that the average age of an insurance agent is 59.5; this presents some interesting challenges to insurance carriers.

For one, strong succession plans at appointed agencies are emerging as critical business continuity strategies for carriers. Some are seeing that key agencies led by older agents don’t have adequate succession plans in place, which creates major risks to the agent’s current book of business with that carrier. This concern is more relevant to carriers working with independent agencies than captive agencies. Captives generally create succession plans, incorporate training programs, and, when timely, convert books of business from one retiring agency to another with minimal impact to policyholders.

So, what are the options? Carriers can establish direct connections with policyholders through a digital strategy where the carrier provides direct value to their insureds in innovative ways. Insurance touches the very core of humans in every way, through the cars we drive, the homes we live in, and the jobs we have. How can insurance companies positively lay their footprint with policyholders in the core areas of their daily life? One innovative example can be found at Liberty Mutual. Homeowners are provided with a Nest Learning Thermostat, installed at no cost. These smart thermostats can be controlled by a smartphone app and can automatically adjust based on recent usage. How efficient!

Another concern is how incentivized are increasingly influential Millennial buyers to purchase their insurance through the brick-and-mortar distribution channel, face to face with a Baby Boomer agent? Are technology-driven companies like Sure, Lemonade, and Metromile more appealing to Millennials? Maybe—insurance carriers may need to act creatively and consider the market dynamics and the evolving economics behind Millennial buyers. CUNA Mutual Group has come up with an interesting proposition for renters by partnering with SafetyNet, an InsurTech based in Madison, WI. Its renters policy provides a landlord with 1-3 months of rent in case of renters’ job loss due to layoff, illness, or injury. This proposition directly considers the current economic conditions Millennials face while establishing a direct relationship with this group early in their careers. Smart!

Finally, agencies owned or led by these “aging agents,” who may not be motivated to invest in technologies that increase efficiency or attract younger buyers, will risk losing a significant portion of a carrier’s book of business. The only options for these agencies may be getting purchased by larger agencies—as is commonly done due to inability or reluctance to invest in technology—or by the insurance carriers themselves. The carriers can then disperse their book (plus potential new customers) to stable agencies that are loyal to the carrier, as is commonly done in the general agency business. With either option, the buyer needs to ensure their E&O policy is reviewed appropriately to avoid any gaps in coverage for prior acts. Insurance brings peace of mind!

While carriers need to find strategies to address risks where there is a significant book of business held by aging agents, they also need to be innovative and identify new value when selling insurance to the growing number of Millennial buyers. Without this innovation, carriers will never appeal to Generation Z.

This article was featured in the PAMIC Pulse

Chuck GomezChuck Gomez is a Vice President of Research and Consulting at Novarica with over 25 years of insurance technology experience in senior roles at insurers, reinsurers, brokers, consulting firms, and software companies. His expertise spans strategic planning, transformational program management, technology assessment, cloud strategy, legacy migration, set-up of de novo operations, and other areas. Prior to joining Novarica, he held senior technology leadership roles at Guy Carpenter, Integro Insurance Brokers, and Arch Insurance Group. His other experience includes roles at AIG, Liberty Mutual, Ernst & Young, and AgencyPort/Sword Intech. Chuck holds a BS in Industrial Engineering & Operations Research from the University of California at Berkeley. He can be reached directly at

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