Many years ago, Mark Twain was famously quoted as saying, “The report of my death was an exaggeration.”  Lately, I’ve heard a form of this idea quite a bit in predictions of the death of the Independent Insurance Agency in the US. 

It’s no secret that Independent Agencies are getting purchased left and right with multiples that were unheard of just a few years back.  This fact, along with the advent of insurtech based on Artificial Intelligence, is leading many to conclude that the Independent Insurance Agency in the US is quickly becoming a thing of the past.  I’ve heard it said that to make people believe something, they need to hear it three times from different sources, and I’ve heard this idea far more than that, so it’s not surprising that many are starting to believe it. 

There’s only one problem with this idea: it’s not true. 

Certainly, if one is looking at the number of agency acquisitions, they could easily conclude that pretty soon they’ll all be bought up.  And if that were the case, we could map out “the end” by simply doing the math.  But a few minutes of online research shows exactly the opposite: there are more independent agencies in the US now than ever before.

So how can this be true?  If all the independent agencies are getting purchased, where are these new ones coming from? 

The answer is found inside the acquisition activity itself.  Turns out that every acquisition of an independent agency spawns a few more agencies, just like the mythical Hydra head in Greek mythology.  Every time Hercules cut off a head, two grew back.  And in this case, sometimes three or four. 

The reason for this is found inside the culture of an independent agency.  As it turns out, independent agents are, well, an independent lot, and they like it that way.  A large broker purchasing an independent agency changes the essential nature of that agency to such a degree that two or three producers generally say, “no way” and go out to start their own agency.  This can be seen in the number of net new independent agencies started since 2020.  Depending upon your source, conservative estimates put that number anywhere from 4000 to 10,000 new agencies.  That’s a lot of new agencies and demonstrates that the need is real.

But what about all that new insurtech and the needs of new generations of clients?  Surely, they just want a website, an app, and a policy, right? 

Well, yes and no.  I won’t deny that this is the stated desire of many of the younger generations, but what I will argue is that it doesn’t last.  Younger generations are used to “quick” and “easy” and don’t like to interact with others much.  This works for them because at their stage of life, they don’t have to.  They don’t have many assets, don’t have much risk (perceived, anyway), and therefore don’t feel the need for expert advice. 

But that only lasts for so long. Everything changes (in my experience, anyway) the moment those clients get something they don’t want to lose.  A house, a car, a family, a business.  All of these bring new risks and a need for advice on how to manage those risks, and neither AI nor direct online writers will give that.  Direct online writers specifically avoid doing so to avoid creating a “special relationship” or giving advice that could be incorrect. 

Do you want to save money?   No problem, pick your new limit.  But if it turns out you’re not covered, that’s on you.  Sorry.

AI has an even greater problem.  Agentic AI (think Hal 9000) could in theory make recommendations, quote, and bind a policy.  Except there’s a problem with that model.  AI can’t hold a license, nor can it be held liable.  This means that above a certain risk threshold where the chances of large losses increase, there is no legal framework for AI to replace a human in the process of quoting and writing coverage. 

A legal entity (human or corporate) will always carry the liability risk, which significantly limits the things AI can do autonomously.  It can help create efficiencies, but it can’t displace humans in the process.  This fact is being learned the hard way by the increasing number of suits brought against companies for their use of AI to give advice and take actions. 

So, what does that all mean for our poor beleaguered Independent Agent? 

Well, with apologies to Mark Twain, “the report of their death is greatly exaggerated.”  Turns out they’re doing just fine, thank you very much, and we here at Angela Adams Consulting are right there cheering them on and providing any help we can in making them grow. 

Disclosure: No AI was used in the writing of this article.