Circa 2015, the InsurTech narrative was, “Independent agents and legacy carriers are largely irrelevant and resistant to change. They will be displaced because all the customer really wants is immediacy and access at their fingertips. We're here to disrupt."

As we head into 2025, the new InsurTech narrative is, “We know independent agents are here to stay—and we're here to help."

 No wonder independent agents have a decade of InsurTech-induced whiplash.

“If you rewound the clock, [the relationship] between InsurTech and independent agents was contentious," says Chris Cline, executive director of the Big “I" Agents Council for Technology (ACT). With billions of dollars of capital coming into the industry and tech startups touting the mantra that independent agents were going away, the future felt unsettled.

Throw in a global pandemic that exacerbated the need for interactions to be fully digitized and remote, and it could have meant the end of independent agents. But the opposite happened.

 “I think what's been fascinating is that in the last two market share cycles, the independent agency share of the market has gone up in both personal and commercial lines," Cline says. “It's counterintuitive to InsurTech's original messaging. And InsurTech, as an institution, has started to become more appreciative of the value of agents in the entire process and the value they bring to customers."

The relationship between InsurTech and independent agents “didn't start well," agrees Garrett Droege, senior vice president, director of innovation and digital risk practice leader at IMA Financial Group. However, InsurTechs and the venture capital companies backing them quickly realized the complexities of the insurance industry.

“There are 50 different regulatory bodies you have to work around, and the entire distribution ecosystem is very fragmented," Droege says. “It's not easy to displace. [InsurTechs] have pivoted to enabling and empowering independent agents because they recognized, in most cases, agents and brokers weren't going anywhere."

InsurTech Skepticism

InsurTechs are now attempting to solve meaningful problems for independent agents—but there are headwinds.

“There are a lot of agents looking toward retirement that don't want to learn new things, and the younger generation is trying to come into those roles and their minds are just exploding [with lack of technology]," says Mandy Reed, a former independent agent and CEO and founder of We Build Staxx, an InsurTech that provides automation services to independent agents.

Casey Nelson, director of consulting services at Catalyit, a consulting firm that recently partnered with the Big “I" to support independent insurance agents in selecting, implementing and optimizing the right technologies for their agencies, thinks there are camps: agents who are pushing themselves to try new things, and those disassociating themselves from InsurTech and sticking with what they've always done.

The state of InsurTech is overwhelming—but equally as exciting—because if there is a pain point that agents are committed to solving, a solution exists.

Ironically, however, agents who were willing to try version 1.0 of InsurTech solutions sometimes show the most resistance to the new wave of InsurTech, Nelson observes. “I hear and feel resistance from individuals on the agency side to adopt new InsurTech solutions because it failed in the past," he says. “They tried something, and the shiny object syndrome was in full effect—and then it flopped, for whatever reason."

From Droege's perspective, the majority of agents and brokers were starting to embrace the idea of InsurTech before trust started to backslide when InsurTechs didn't deliver on the promises they made to agents and brokers. “Suddenly you have 25 different tools in your workflow to renew a piece of business, and it's costing an obscene amount of money because every tool is a per-seat license," he says. “People started to question the ROI."

Today, agents are savvier and analyzing whether InsurTechs are really delivering value. And that makes agents a more difficult customer to sway. “I think it's gotten harder for InsurTechs to sell to agents and brokers than it was three to five years ago because we've all been burned at least a half dozen times or more by companies that we thought were going to change the world," Droege says. “And ultimately, those products ended up costing us clients, associates—or both."

Agents Move to Drive InsurTech Innovation

Pat Cline, managing director of 101 Weston Labs, wants to make sure the agency's technology adoption doesn't come at the cost of customers or employees. 101 Weston Labs is an accelerator for InsurTech startups focused on enhancing independent agencies and another partnership the Big “I" has formed.

101 Weston Lab's advisory council evaluates potential companies to determine if they are a fit from the agent perspective. “We know there are many types of independent agencies out there, so our panel looks at products not necessarily as something they would use themselves, but something that they think agents would be excited about in general," Pat Cline says. “They evaluate if the founders of these startups can speak their language and engage with agents."

Bradley Flowers, founder of Portal Insurance in Mobile, Alabama, is on the 101 Weston Labs advisory council and says he enjoys offering the agent's perspective on everything from product to messaging. “We listen to pitches, and we're just brutally honest with them about their direction," he says.

Agent input enables the startup to see the biggest possible market for its products. “And 'the biggest possible market' can be around the revenue model, the user interface or additional products and services," Pat Cline says.

Droege is on the board of BrokerTech Ventures, an accelerator owned by a group of broker partners focused on developing InsurTech solutions for the agent and broker space. He says that often companies come seeking input on products trying to solve a “problem" that's not really a problem.

“I tell them, 'You're a hammer looking for a nail, and I could have saved you a lot of pain, heartache and money because this thing is not going to sell,'" Droege says. “We help these companies refine their product and pricing model. So, when they're at the point when they need to scale and go to market, they have a product that is something agents and brokers actually want."

Flowers thinks the next wave of InsurTech are ones that are not just leaning on the guidance of agents, but ones founded by agents themselves. “Agents are building InsurTech solutions to solve problems in their own agencies, and then offering those solutions to other agencies," Flowers says. “To me, there's no cooler entrepreneurial story than someone who is working in an industry that sees a need and then takes their own dollars, sweat, blood and tears to build something to solve a problem."

Innovations on the Radar

Here are four InsurTech solutions in development now that will benefit independent agents in the future.

1) Billings and payment. Katie Wexler, a former agent and now the founder and CEO of Pavo Insurance Solutions, a company that digitally connects the premium financing space, says the next big wave of InsurTech innovation will be in billings and payment.

“Anything on the back end that the agent can pass off is a target," she says. Her company's solution is connected to the finance and accounting systems of their customers in real-time, reminding insureds when it's time to pay a monthly installment or if there is a potential notice of cancellation for non-payment.

2) Policy presentation. Nelson says policy presentation tools will become more sophisticated and comprehensive. “Something like 97% of all content consumed right now is video, but I would say less than 2% of insurance proposals are video," he says. “So, we're about as opposite as you can possibly be from the way people want to consume information. Having a video created with an AI automated tool—with the lens of insurance knowledge—will be key."

3) Workforce assistance. “I refer to it as the non-traditional workforce," Reed says. “Both virtual assistants and AI [artificial intelligence] fall into that bucket. When it's hard to find good people and workers are ghosting and just not showing up, we'll continue to see payroll shifts."

4) AI-enhanced human staff. While AI might seem cliché, there is an increasing recognition that more and more solutions will remove trivial or redundant work from humans, Pat Cline says. “The goal, from what we see and hear from both companies and agencies, is not to replace people," he says. “The goal is to move them to higher and better purposes."

Agencies are both excited and concerned, he says, because while they want to free up their people to focus on human-centric tasks, they also live with the reality of errors & omissions and cybersecurity concerns. For example, 71% of agencies said the effort and time it takes to sign in to carrier systems has gotten worse, according to a recent study by ID Federation—a real agent pain point. “Could a machine sign on?" Pat Cline asks. “What are the regulations—and how will they evolve?"

Taking the Leap

There is widespread agreement that InsurTech innovations—many of which will be based in AI—will continue to transform the way agents work.

“Agents that don't adopt modern technology are going to lose because they won't be able to compete against the agents and brokers that have a better client experience," Droege says. “If you're going to email a client 12 PDFs to complete as part of a renewal process, forget about it."

Rob Bowen, founder of Patriotic Insurance Group in Inlet, New York, thinks that too often agency owners get caught up in figuring out the perfect process before they make any changes. “People feel that they have to have a perfect playbook before they start automating," he says. “If you have 60% of the information you need, make a decision. If you don't make a decision, that's a decision—you end up not implementing anything. And if you don't implement anything new, you'll be out of business."

Katie Butler is account executive at Aartrijk.