Blog

It’s not easy out there for insurance agents and brokers. Between new regulations and advances in technology, the industry is facing new challenges that can be detrimental to business. Here are just a few reasons why it’s tougher for independent agents and brokers to sell insurance now than it was a few decades ago.

Customers shop online a lot more. Most retail insurance companies have websites and offer instant online quotes. Health insurance companies are now required to compete on an online marketplace designed to make it easier for people to pick a plan on their own. More and more, insurance agents are finding themselves excluded from the sales process as more consumers go online, get quotes, and sign up for plans—sometimes without talking to a single salesperson.

Information is easier to come by. Part of an insurance agent’s job is to provide information and guide the consumer through the sales process. But with insurance information and advice freely available online, many consumers feel more confident than ever doing the research and picking a plan on their own.

The economy isn’t what it once was. In some decades, consumers took it for granted that their investments would just keep going up. The same cannot be said today. Many consumers lost a significant amount of money, even when it was managed by competent financial advisors, during the economic collapse of 2008. As a result, they are less likely to trust a financial advisor today and have to be extra careful about how they invest their remaining money. Insurance policies and financial products need to be very clearly worth the investment.

Major legislative changes. Perhaps the biggest one is the Affordable Care Act, signed in 2010. It introduced a penalty for people who don’t have health insurance—theoretically, increasing demand. But it also changed the health insurance landscape, introducing new and constantly-changing regulations that make selling health insurance much more complex.

The Department of Labor’s fiduciary standard is another piece of legislation that could change things for insurance agents. The legislation proposes that the definition of “fiduciary” under the Employee Retirement Income Security Act (ERISA) be broadened to include those providing investment and retirement advice to consumers with employee benefit plans and retirement accounts.

Under this rule, insurance brokers and agents could be subject to the same requirements regarding disclosure and compliance that registered investment advisors have to comply with. It could also force insurance agents to register as investment advisors, which would mean foregoing a commission.

The bill is currently under consideration and open for public comment, but if it goes through, it could mean significant changes for insurance agents and brokers.

Despite the changing economic and legislative landscape, however, insurance agents and brokers are needed now more than ever. Buying insurance has hardly become simpler, and especially with the expanded health insurance legislation, more people need insurance now than ever—and could use an expert to help them sort through their options. Insurance agents and brokers who are tech-savvy, who establish a reputation online as experts, and who build community ties can still thrive—even in a changing landscape.