How Carriers Are Pivoting for 2025

Shane and Tonya discuss how carriers are pivoting for growth in 2025 amid shifting market pressures. From the disruptive Geico Effect to renewed focus on auto lines, they explore what these changes mean for independent agents. 

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Transcript

Announcer: [00:00:00] This is IA Forward, your playbook for success as an independent insurance agent. Here to help you knock it out of the ballpark are your hosts, Shane Tatum and Tonya Lied.  

Tonya: Welcome to IA Forward. It's December. It's Christmas. It's planning for 2025. Lots of meetings and discussions with carrier reps.  

Shane: Lots of discussions with carrier reps and lots of planning and. 

Just ideas and it's a little bit exhausting I have to say but for me, thank goodness that I have people that are also involved in that planning. So I just get to talk. It's good to be Shane today.  

Tonya: It's good to be Shane every day. Tell me some good news for 2025. What are you hearing from our reps?  

Shane: It's a mixture. 

And the mixture is based on naturally what you would think it would be based on, which is how are the carriers doing the respective carriers that these reps are working for? How has 2024 [00:01:00] been, how do they feel about 2025? Bye. What are the trends? There is this just mixture of, I've talked about it recently. 

Some that tried the shrink to profitability versus others that have grown through profitability. There's just this mixture of tone, optimism versus pessimism. When you get to the summary of it, overall positive trending, optimistic trending, but there is a little bit of, we're not sure yet.  

Tonya: Are you running for office? 

Because that was the most political answer you've ever given me for a question.  

Shane: I kiss babies, I shake hands, and I'm announcing my, my run for governor in 2026.  

Tonya: You've heard it here first. And if you believe that, then I have some oceanfront property out in Arizona to sell you to. There is an anomaly this year that I want to know how it's affecting our industry and it's affecting those conversations. 

Let's talk [00:02:00] about the Geico effect.  

Shane: For those that have been living under a rot, Geico entered the independent agency channel earlier this year, maybe not in your state yet, but for Texas, that happened in September, and we knew this was happening, the rumor mill for years. I found out after the fact that they've actually been working on getting set up. 

For agency management system download and Ivan's set up for a couple of years. So there's some folks in the industry, obviously that were under NDA and couldn't say anything that this has been an ongoing thing for a couple of years. In hindsight, it was just rumor to us. July really started happening. We were fortunate enough to be one of the agency organizations that was able to represent GEICO. 

There's maybe some assumptions about the fact that they're huge ad spenders every year regardless of where you fall. Are they going to be? Truly investing in the independent agency channel. Is this a Diversion of [00:03:00] disruption to the independent agency channel. Is this sort of the trojan horse type of play? 

wherever you fall because i've heard all of those things like They're actually doing this to disrupt the channel more than they're doing this to get into the channel I've actually heard that conspiracy. I I don't really know. All I know is that Like anything else, I would expect a major player, a Buffett owned company, a Berkshire Hathaway owned company. 

You just see the fact that they are going to do it well when they do it. We've seen this change a little bit across other carriers and that competitive nature, which as a free market capitalist, the answer to most everything's when it comes to the economy is competition and good. Competition in a free market, the market decides. 

And so we are seeing some of the Geico effect in terms of we need to grow again. Even some of those that were maybe in that shrink to [00:04:00] profitability camp are now talking about 2025 becoming a growth year again, this is all personal lines. I'm talking from a personalized perspective. So, it's just something to pay attention to at this point. 

Tonya: It sounds like it's way beyond something to pay attention to if our other major carriers are focused on that.  

Shane: Focus is a strong word. They are extremely aware, okay? They're definitely aware, especially on the auto side. That's where things are interesting. We have so much pressure. on the property side of the marketplace because of cat losses, major storms, and just the entire developmental phase of the coastline, the population growth to a state like Texas where we have seen an influx of population. 

Other parts of the country have seen very similar things. Property has just been under pressure. Auto has become the darling. It's not necessarily been great because [00:05:00] of the reality of inflation and parts and claims cost. Obviously, we've struggled in profitability with auto as well, but auto is an area where we can predict better. 

It's just right now, it's hard to predict the weather. And it's hard to predict what's going on with development. And so rooftops and hail storms and wind damage and coastal exposures properties under so much pressure that everybody's shifted the dial to let's grow auto, and then around the same time, we got this perfect storm of this top three auto carrier. 

Entering an entirely new distribution channel. So disruption, absolutely.  

Tonya: This is such a shift of mindset from when I joined the industry seven years ago, when it was lead with home, do not lead with auto, whatever you do, because you can't build a full time client by leading with auto.  

Shane: Yeah. That's the thing that. 

I have honestly [00:06:00] scratched my head for a couple of months. What's the shift? What's the pivot? Is there a pivot? Is it stay the course? I've been a lead with home guy because with the exception of very densely populated cities within the country, New York City, there are few metropolitan areas around the country. 

Where if you led with property or home, you weren't necessarily guaranteed to get an auto with it. There's some people in certain parts of the country that don't own vehicles. They don't have to, they have public transit. They live and work within three blocks, whatever. In Texas, which is where we're based. 

The reality of it was if you led with home, we were guaranteed auto because everybody has a car in Texas. That is something that we were always able to depend on as independent agencies is lead with home because we're always going to be able to cross sell that auto if we lead with home, leads us to the full time client. 

That can still happen. You just have to get out [00:07:00] of that sort of mindset of my property and my auto carriers are always going to be the same carrier.  

Tonya: Which is where the internal thought of bundling has to get stretched a little bit. We still are encouraging you to bundle, it's just not necessarily going to be bundled with the same carrier. 

Shane: Yeah, that's right. And we have to be careful because If the carrier partner also writes home and auto together, you have some carriers like Geico, like Progressive, who are very heavy auto driven. And you've got this sort of thing going on where these major auto carriers, Progressive and Geico, are now in the independent agency channel. 

Whereas 10 years ago, Progressive really wasn't in the standard preferred auto arena. They entered that with the acquisition of Geico. Getting into the property side and now they're trying to find their way through this property exposure [00:08:00] issue, but they've always still continued to be very auto conscious, very auto driven. 

Geico's obviously very auto driven. And so then you have your major multi line carriers, your Safeco's, your Traveler's, your Hartford's of the world. In a lot of those cases, you can't allow your book of business in your partnerships to become unbalanced. And so that's where things start to get really difficult. 

We need some monoline home markets to help us with. The auto market side that's going to be model line in some cases, or in some cases where there is no capacity for property in some of these multi line companies, but there is capacity for auto growth in these multi line companies. It's just part of being a good partner as an independent agency owner, understanding the needs of your carrier partners and being there during those times where they're trying to get back to this sort of [00:09:00] profitability situation. 

Overall, we want to grow again, and several that were shrink to profitability are seeing that they need to grow. They are seeing that the good customers are running out the back door while they're trying to run off the bad customers. That it's just really difficult to shrink to profitability. And again, I've harped on this. 

I've harped on it on previous podcasts. This is a positive connotation of spilling the tea. That growth is a pivot. That interesting growth. Is a pivot from where we've been for two years. It's been premium growth, but policy enforced growth, not so much. So many agencies have struggled with keeping their, what would be called PIF count, their policy enforced count above positive, above not shrinking. 

And so that's been a, that's been a struggle. And even though their premium has been growing. Therefore, their revenue has been [00:10:00] growing for the most part. There has been this underlying negative trend of policy count shrink. It's been stressful. It's been extremely stressful because at the same time, the carriers need you to hang on to that business and are pushing agencies to hang on to that business because they need premium to earn. 

They, they really do. I understand they took a raid action. They need that premium. Um, To earn to get them back to profitability. And when they take rate action and they lose policies, now that premium's not earning, then you have losses that are still going on and you don't have that premium to earn to make up for those losses. 

Tonya: Y'all Shane is smiling so big because he's getting to insurance geek out. Probably if someone's listening to our podcast, they're insurance nerdy geek out kind of people.  

Shane: All four of them.  

Tonya: Our major players are seeing the GEICO effect. How is our [00:11:00] internal independent agency seeing the GEICO effect?  

Shane: Two different paths I'll take you down there. 

Not every carrier is grey in every geographic region. Okay, so let's just So our retail operation is in Texas forest country. It's like a 12 County marketplace, about 350, 000 people in population. Even though our main office is in a town of 2000 people, that Texas forest country is 350, 000. And. That's our macro economic area. 

We are rural by nature and the Geico effect is not super, super strong in that area. They're more Metro based, they're population centered. So what's going on in Houston and Dallas and Austin and San Antonio, a lot different than what's going on in deep East Texas. So from the retail standpoint, not that big of an effect. 

Now, In those population centers, huge effect.  

Tonya: Follow up question is, what are we seeing [00:12:00] from our partner aid?  

Shane: They're growing. They're growing quickly within the independent agency channel. Objectively, really trying to take a neutral seat here for a second. The timing is really good if you're on the GEICO side. 

If you're on the non Geico side, the timing is terrible because you're trying to get back to profitability, you're trying to manage cat exposure, you're trying to manage all kinds of different things, that inflationary cycle, and then boom, here comes this major player into your space. That's been our messaging to our customers. 

agents. We have carrier partners that have brought us to the dance, and we're going to dance with the ones that brought us. That's just who we are. We're going to do everything we can to be partners and to help them get back to a good place if they have struggled, and most have struggled over the last few years. 

And it's really been a Fight is the wrong word, but within the agencies themselves, just that friction [00:13:00] of doing what's best for their client, keeping the client, not losing a client, but also trying to do what's best around letting that premium earn when a carrier takes raid action. That is what really makes the independent agency system to me so great and so valuable is individual businesses just trying to find their way through this process and be a good partner with their carriers, but also be independent. 

An advocate and the best thing they can be for their clients. And what happens is you get people that are able to be disruptors and that's where the Geico effect is coming in. They can come in and just be a disruptor. If you're starting a new agency right now. You can be a total disruptor. You've got no book to manage. 

You've got no retention issues. If you started your agency in the last year, which we have several [00:14:00] partners that have done that, you can be a disruptor. And they are, they're growing. They're doing really well. If you started your agency, Three to four plus years ago, and you're managing 2 million book right now, then you're fighting, you're struggling through this process while trying to also grow. 

That is what we all feel and what we see, and that's the thing that we spend just about every day counseling our partners, sometimes hugging and counseling our carrier reps, doing what we need to do to be good partners on both sides. And. That's not political. That is business. Part of what we've been looking at and talking with our agents about and with our network is where does this thing look for you two years down the road, three years down the road? 

Because We need all the carrier partners that we have. We are not the hundreds of carrier partner market access program. We are [00:15:00] the smart, efficient portfolio manager of carrier partners. Profitability. Yes, we are growing and we have grown. Well, I made a post on LinkedIn the other day about. Starbucks shrinking their menu to grow. 

Raising canes is nearly an 8 billion valuation with a limited menu of chicken fingers and coleslaw and Texas toast, like simple wins. That's who we are. That's what we do. That's our philosophy and our approach. And 91% 

Of the top 25 percent of our agents, uh, 91 percent of their book of business is within 10 carriers, 10 markets. That includes specialty lines like RVs, boats. That's a low number, really? And truly, there are a few that would be a little higher. Even our [00:16:00] coastal partners, that number doesn't exceed 15. 

There's some efficiency going on that leads to incredible profitability for independent agencies versus our bottom quartile average about 30 plus carriers. within their book of business. Now, where is the profitability problem? That's the evidence that I always come back to. And that doesn't matter what part of the country state region we're talking about. 

We're just talking about what makes sense to profitability. How does an agency manage through this? And so. We need to take care of our carrier partners, and we need to obviously gain market share when we can. We're riding a lot of business with GEICO. We are hopefully being seen as a strong partner for them. 

But we're also trying to help those carriers that need us. To retain business. So premium can earn so that they can be where they want to be for this next growth cycle that I feel like we're all headed towards.  

Tonya: If we were [00:17:00] doing this podcast 10 or 12 years ago, would we be discussing the progressive effect in the same way? 

Shane: In some ways, because that's what happened. Maybe in their minds, they always saw themselves as. No different than maybe a Geico. A lot of independent agencies saw them as more non standard to my term preferred non standard. I know that sounds really weird that there are preferred non standard clients versus just pure non standard clients. 

That was progressive. My first half, maybe even the first 15 to 18 years of my career. That's what the progressive view was. Progressive made a pivot to get into standard and preferred. And when they did that, it was extremely disruptive to the old guard. And I don't mean that in a negative light, just the hundred plus year old. 

Major brands in the independent agency channel. It was disruptive new ceo And she has been a [00:18:00] phenomenal leader for them came out of the claims area And they fully committed to the independent agency channel the question at the time Was, are they really gonna stay? Is this gonna stick? Is this a fad? 

That's always a question when a carrier enters a channel. Is it a fad? Are they all in? Is this toe in the water? It's where we've been with Geico for several months at this point. Time will tell. Nobody knows. Nobody has crystal ball. It looks like they're committed to the channel, we'll see. Progressive has obviously been committed to the channel at this point, because they've really changed who they are in terms of independent agency brand. 

Tonya: How do you see our traditional carrier partners evolving because of the GEICO effect?  

Shane: I see them looking for ways to grow, even when maybe their profitability numbers aren't exactly the same. perfect yet. They're really moving off of trends. So it's maybe speeding them up. They could have [00:19:00] maybe sit back a little bit longer. 

This sort of new element of a major auto carrier entering the market. And again, just to remind everybody, we're talking personal lines today, but we've got this scenario where they're more interested in looking at trends. Now, What's really interesting, and I love this play, and I'll go ahead and give a shout out to this carrier specifically, Travelers. 

They are not watching their competition. Winners don't focus on others. Winners focus on winning. I use that term to describe what I feel has just been the case with travelers through the last few years. Slow and steady wins the race. Reliable, reliable. Staying open in the market when some others have closed, just being a steady as you go kind of partner. 

And that is something that a lot of independent agencies have taken note of. And that's the thing that's really difficult. When a carrier just leaves a market [00:20:00] or retracts dramatically from a market, it's very difficult to come back into that market. And I saw it 20 years ago up in the Midwest with a few national carriers. 

And they spent a decade trying to get back into some of those markets after they probably in hindsight had a little bit of a knee jerk reaction to pulling away from a marketplace. Remember we're business owners and a lot of independent agencies, long tail business, infinite game business. There's a lot of independent agencies that. 

In communities, many of the independent agencies across the country are multi generational. At this point, we remember Dion, Primetime, would say, we keep receipts. That happens at the carrier level. It happens at the agency level. That's why partnership and just being a good Business partner is so important to agents and to carriers. 

Carrier reps don't necessarily go and be something else. They generally end up at another carrier or they end up on the [00:21:00] agency side. And if agency owners sell and depending on their age and retirement, they generally end up on the carrier side. So this industry is pretty small, even though it's gigantic. 

It's the smallest gigantic industry that you can. Imagine, and that's something that every one of us can take away from the last couple of years as we think about these effects and new players entering the channel. We're not just throwing people to the curb and finding the new shiny carrier. That's a bad play. 

If you're on the agency side, the good play is, yes, becoming a good partner to new carriers, but also remaining a great partner to the ones that brought you to the dance.  

Tonya: One of the keys to being a good partner, especially this time of year, make time for your carrier reps and talk with them. Don't roll your eyes. 

Don't say you don't have time for this. Don't go in with a bad attitude because you think you don't have time for this. You [00:22:00] don't not have time to be developing those relationships right now.  

Shane: The agency network effect with the retail carriers for years, there was a lot. Some still do market themselves as no volume commitment. 

All these things that negatively affected the importance of agent carrier relations from the agent side. I get access to that carrier through such and such organization. We are very transparent within our agency network and Our carrier reps and our members know each other, they get to know each other, they work together, they see each other at our annual agent conference, they have lunch together, they have coffee together, they build relationships, and we are very encouraging in that sense, we want the territory managers, the sales executives, the field managers, whatever the term is within various carriers, we want To build relationships with our partner agents. 

We think it's important. There's a lot of [00:23:00] organizations out there. There's a lot of agents that work with those organizations. Who's dismissed the carrier. I'm protected under this big umbrella. That's a bad strategy. You need to build relationships. Because this is a relationship business. And as a business owner. 

A distributor, a sales organization, and as a manufacturer, carriers develop the product, produce the product, we distribute it. There is an inherent relationship to this, and to dismiss, to no show, to think it's not important, to not develop those relationship is a bad strategy. Just like it's a bad strategy when a carrier Works with an agency network in a way that says you take care of your members. 

I'm just going to work with you. We've done that before because that was the carrier's choice, but that carrier always struggled to develop true partnership distribution. That's some of those things that's evolved within agency networks over the years. 20 years ago, that was the thing. As a carrier, I'm going to plug [00:24:00] into an agency network. 

And as an agent, I'm going to plug into an agency network and I'm not really going to know each other what's evolved over the last probably five to eight years is that strategy produces less results or weaker results than a fully engaged strategy as this Geico effect impacts our distribution channel. 

Keep that in mind because. We don't need to lose carrier partners. We're going to lose them through consolidation M and a activity. We lost state auto to the Liberty acquisition. Now it's folding into Liberty and Safeco. That was a carrier loss. Now love that they were acquired by a major top partner for us, but at the same time, we lost a carrier. 

a carrier. We lost a competitor within the marketplace that keeps our distribution channel moving forward. And so the more that happens and then finding people, carriers to come in and replace that, that's why [00:25:00] my view is positive about the Geico effect. My view is, yeah, come on in, join the channel, join the  

Tonya: party. 

Looking ahead at 2025, We have this new major player within the channel who is being a disruptor, but we want to make sure it's not creating too much disruption within your business.  

Shane: If you're able to partner with a new carrier, whether it's GEICO as the new disruptor, or whether you're deciding to take on new carrier partners, be. 

Thoughtful about that. Don't just react. New carrier. Yes. Give me a contract. Don't just be the yes I'll take the contract and I'll leave you with a lesson learned today from the last couple of years because this cycle we're gonna Eventually, hopefully we're gonna get back into But guess what? At some point, depending on the life cycle of your agency, we're probably going to have another hard market down the road. 

So let's live, let's learn, and go from there, which is we need to [00:26:00] be careful about Being able to commit to our carrier partnerships and the lesson we've learned over the last couple of years, or several agents have learned, I saw it several years ago in a couple of other hard market cycles. We're very quick to take an appointment or take a contract and commit to it without thinking about what it does to our existing partnerships or our ability to actually commit to them and commit to those new carrier contracts. 

Tonya: Because we're thinking about our Yes,  

Shane: or we're thinking about I can grow my business because I'm going to get this new carrier and I'm going to be able to have better pricing or whatever. Honestly, most of the time we're thinking as salespeople, we're thinking as sell, sell more, grow, and we're not thinking about business ownership. 

To commit to that new carrier, can you afford to not disrupt your existing partnerships while you commit to that new carrier? Because if you can't, it's okay to pass. And come back to them whenever you actually can commit to them. Because the [00:27:00] worst thing you can do is say yes, and then fail. And then you're probably not getting that carrier back for a long cycle. 

That's the thing we're cautioning agents against. Don't just take the carrier because it's a new carrier. Take the carrier because you're committed to developing a partnership with them. That's the change. That this market cycle has created because carriers have been looking for agents that are not producing with them, that are not truly partnering with them. 

And so we have to learn from this process and get better.  

Tonya: I'm going to leave us today with this quote from Jack Nicholas, concentration is a fine antidote to anxiety.  

Shane: Attitude to choice. Make a great one.  

Announcer: Bye y'all. At the Integra Partner Network, we understand that carrier access is the key to your agency's success. 

That's why Integra offers direct access to top rated personal and commercial carriers, ensuring your agency thrives in today's challenging markets. And with our comprehensive resources, profit sharing, and bonus opportunities, technology, and [00:28:00] peer support, all while you retain a hundred percent of your book with no penalties to exit. 

Integra is ready to empower you. And your agency to find sustained growth, find your way to Integra. Visit integra of partner network.com today. That's integra partner network.com.