Despite facing inflation, market volatility, and evolving technologies, independent insurance agents remain optimistic about their businesses and overall economic conditions. This optimism is reflected in the latest findings from the Nationwide Economic Impact Survey, which highlights an improvement in agents’ perceptions compared to last year.
According to the report, 62% of agents rated current U.S. business conditions positively, marking a significant jump from 41% in 2023. Confidence in their own agencies is even stronger, with 79% giving a positive outlook for 2024, up from 73% the previous year.
Looking ahead, 65% of agents anticipate revenue growth within the next six months, while only 10% foresee a decrease. However, there are still pressing concerns on the horizon. Agents report being “very or extremely concerned” about inflation (63%), artificial intelligence (AI) advancements (51%), and both U.S. (49%) and global market volatility (50%). Additionally, 46% of agents are worried about a potential recession, while 45% cite high interest rates and the upcoming U.S. presidential election as top concerns.
For principal agents, inflation remains the top issue (31%), though concerns about rising living costs have dropped 15% from 2023. However, other issues like acquiring new customers (up 11%), taxes and government regulations (up 10%), and financial market volatility (up 7%) are on the rise.
In response to these challenges, many principal agents are seeking ways to reduce costs. More than half (53%) are exploring expense-cutting measures, with 35% having applied for personal loans and 34% for business loans in the past six months. Many are also delaying technology upgrades (61%) and deferring investments in business processes (51%) due to economic uncertainty.
Economic conditions are also influencing customer behavior. A significant 84% of agents report rising rates for customers, while an equal percentage has seen more customers renegotiating policies. Additionally, 81% of customers are changing their coverage, and 55% of agents have observed a drop in policy demand over the last six months.
To stay ahead of these challenges, nearly 40% of principal agents have invested in generative AI and automation tools in the past six months. About 62% of independent agents have already integrated AI technology into their businesses, with many finding opportunities in customer service, underwriting, pricing, and sales. With the benefits of AI becoming more apparent, 41% of agents plan to adopt AI in the next six months, and 77% are considering using it to assist their clients, a 15-point increase from last year.
As independent agents continue to navigate a dynamic business landscape, their willingness to embrace AI and adapt to changing economic conditions positions them well for future growt