Best's Review


At Large
Empowering Agents

Data shows partnering with agents enables success.
  • Bill Pieroni
  • April 2020
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Our industry is focused on risk, yet averse to taking it. We like to quantify it, price it, transfer it, and manage it—anything but undertake it ourselves. This perspective creates a context where accumulated legacy is both our greatest strength and greatest weakness. The most significant risk for insurers in the 2020s will be that of falling behind just gradually enough that they can ignore it until it's too late. Failing to thoughtfully leverage the lessons of centuries of industry experience, while also adjusting to the new realities of a rapidly changing market, is a pitfall that insurers must avoid.

Role of the Agent

Discussions of strategy and tactics in insurance are often dominated by the concept of data and analytics—and rightfully so. However, most do not realize that, while leveraging data and analytics may be the basis of many cutting-edge technologies and techniques, it also has been the underpinning of the insurance industry from its earliest days.

An agent meeting with a client—whether in the year 1720, 1920 or 2020—is performing analytics and business intelligence. They are intuitively evaluating the risk and lifetime value that client represents, while simultaneously assessing their needs and how they want to be treated.

Agents truly excel at the moment of truth—when the customer files a claim, has a billing inquiry, or is wavering on renewal. One pervasive risk in our industry is a lack of understanding by some carriers of the critical role that agents play in value creation for both policyholders and shareholders alike. How do we continue to support and enable them to perform in that moment of truth?

Quantitative Results

Is there quantitative evidence to support the value provided by agents? Emphatically, yes. ACORD has studied the characteristics of insurers worldwide over the past decades, and their correlation to financial performance. A common thread running through many of the results was the success enjoyed by organizations that leverage the expertise of agents. For example, our data shows the agent channel positvely impacts total shareholder return.

Multiple studies have shown that carriers relying primarily on agents were more likely to achieve “intelligent growth”—that is, to outperform their peers worldwide in both value creation and growth of market share. Among U.S. property and casualty insurers, agency writers were also more likely to achieve “sustainable value creation”—profitability in both underwriting and investment activities.

Tellingly, in workers' compensation and other commercial lines, agent commission was the only category of expenses where these winning carriers actually overspent the average. By leveraging the expertise of agents to forge relationships and manage clients, they were able to demonstrate lower total underwriting and loss expenses than direct writers.

Enabling Success

Clearly, there is no substitute for the high-skill/high-will agent. However, insurers cannot take this for granted. They must invest in giving agents the capabilities and support needed to succeed.

Carriers should help agents fulfill their value proposition through an optimized operating model. They must give agents tools to optimize cost, while enabling them to assume a more consultative, problem-solving role for insureds. Finally, they must ensure they have an infrastructure to fully support the role of the agent as a customer advocate.

Accelerating change presents strategic and tactical uncertainty in our industry. Are you partnering with your agents to mitigate the risk? Insurers that provide their agent partners with the right capabilities will succeed. The data shows it.

Best’s Review contributor Bill Pieroni is the president and CEO of ACORD. He can be reached at

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