Rusbuldt on McKinsey 5: Where Will Agents Really Be in 5 to 10 Years?

November 1, 2013 by

Bob Rusbuldt, president and CEO of the Independent Insurance Agents and Brokers of America – the Big “I”- takes issue with a McKinsey report that claims local independent agents will soon be extinct. In this fifth and final installment from an interview with Andy Simpson, Rusbuldt puts aside the criticism of the report to discuss McKinsey’s worthwhile recommendations for agencies and to offer his own view of what the future holds.

We’ve beat up on McKinsey’s report enough. Are there any recommendations or points of the study you think are worth agents paying attention to?

Rusbuldt: Absolutely. McKinsey actually should be commended for some good recommendations, things that we have been advising our members to do as well. McKinsey has some very good advice and counsel for independent agents. Develop a value proposition that is compelling for both carriers and consumers. Define and reach target markets, rather than just being a generalist. Increase your digital presence. Be more flexible in how you communicate with your clients and your carriers. Develop new ways to get in front of your audience. Deliver more tailored and deeper expertise, such as bundle insurance packages for personal lines and industry-tailored advice for small commercial risks.

Use technology to be positioned to do more with less. Increase scale, whether through organic growth, mergers, banding together, outsourcing certain functions, and so on and so forth. Andy, those are all excellent, good, solid recommendations. Independent agents, in many instances, are doing these or are in the process of doing them.

McKinsey is right on a lot of their recommendations. It’s just that their conclusions are, in some instances, wrong on the independent agency system.

A lot of agents are doing some of these things. But do you think agencies need to do more? Put another way, are there areas where agents need to step up their game so they do not fulfill McKinsey’s forecast?

Rusbuldt: There’s no doubt about it. We’ve been preaching. We have something called the Agents Council for Technology, becoming more efficient in workflows in agencies, making more compelling cases to markets, communicating in the digital age in marketing. Those are all things that agencies are in the process of doing, but much work needs to be done in areas of efficiency, marketing, technology. Many independent agencies, they’re small businesses. There just are not enough hours in the day. Technology can make a huge difference in a small business, huge. You can do more with less. We have to make sure that workflows are as efficient as possible. That’s workflows not just internally in an independent agency, but between a carrier and an independent agency. Things like real-time, paperless policies, and all of these technological initiatives that are underway are important for independent agents, for carriers, and consumers.

We know where McKinsey thinks local agents are going to be in 5 or 10 years. Where do YOU think the independent agency force will be in 5 or 10 years? Will it be different from today, in any way?

Rusbuldt: Independent agencies are going to be vibrant. I think, 5 or 10 years from now, that we’re going to be the predominant distribution force, as we are today — and when I say that, not just in one certain line of business, but in all lines. Technology is going to help the independent-agency system, not hurt it. The initiatives that are underway are going to position us for a future. I think the future is bright, and the reason it’s bright is because these are small business owners. They’re entrepreneurs

Independent is what they are, and they are proudly independent, and when you have your name on that agency, you’re going to make sure that it works. These people are totally committed to their customers, their clients, their communities. I think that you’re going to see a great future, 5 or 10 years from now, for independent agents.

I am not as bullish on the future of captive and exclusive agents. Eventually, we’re going to come down to two channels of distribution, and it’s going to be independent agents and direct.

Do you think McKinsey might be a little surprised in 5 or 10 years to see that there are more agencies than they thought there would be and that the majority of them are independent agents.

Rusbuldt: You could look at it one way, Andy. If their recommendations are all adopted by independent agencies, then their actual prediction is wrong, right? They’re saying that if they do this, this is what they need to do to survive and thrive. Well, I say they are going to do what McKinsey says they need to do. I think their ultimate conclusions are wrong.

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