Nationwide has seen a small but perceptible percentage of its in-house agents go independent in the first phase of a transition process, to the benefit of at least two big brokerages that have subsequently acquired those newly independent agencies.
Nationwide in 2018 announced plans to end its exclusive arrangement for about 1,700 agents and have all of its policy sales and servicing handled by independent brokers by 2020. The company wants to simplify its distribution by working with just one type of model, using independent agents who are free to sell policies from other carriers, said Amy Shore, president of Nationwide's P&C sales and distribution.
Less than 5% of Nationwide's exclusive agents opted to make more immediate switches, which meant they transitioned on July 1, Shore said in an interview. Those terms required brokers to buy the renewal rights for their books of business in exchange for having a shorter term of restrictions placed on them after the transition.
Nationwide, which had to approve the deals, wanted the changes to be as least disruptive as possible to broker and customer relations. Shore said the company realized that its exclusive channel had almost as many rationales for going independent as the number of agents.
"That's why we realized early on that one option and one answer wasn't going to fit everyone's needs, and we wanted this to be a transition where we felt like agents were coming out on the other side of it with a win for them," Shore said.
The company drew on its relationships with large national companies to lubricate transactions with exclusive agents who sought to merge their businesses with brokerages, Shore said.
"We have worked with them ahead of time so that they are able to have an expedited approval process," she said.
Hub International Ltd. snapped up the businesses of two Nationwide brokerages in Pennsylvania where agents decided to take the early transition option. Hub used the opportunity to bring in agents they knew filled a specific niche or were growth businesses with demonstrated ability to keep expanding their books, said Neil Hughes, president of Hub's central region.
Hub offered capital to Nationwide agents who wanted to establish brokerages under its brand, as well as the infrastructure and access to more insurance markets and management systems agents would otherwise have to set up on their own, Hughes said in an interview.
"From an infrastructure standpoint, it was going to be a lot of work," he said. "We were able to make the transition very smooth."
Dennis O'Neill, a 38-year exclusive Nationwide agent who now leads one Hub's new Pennsylvania brokerages, saw the option as a once-in-a-lifetime opportunity. It is a very rare situation in which someone can buy the books of a top national insurer and set up shop, as and O'Neill's Cosaint Insurance Partners LLC did, on the platform of another established national brand. When Nationwide informed its exclusive agents about the transition plan two years ago, O'Neill and his partners began looking for other Nationwide brokerages and books of business to accompany Cosaint into the Hub fold, he said in an interview.
"Strategically, we're trying to define where we can get talent in the marketplace to come over and join our team," O'Neill said. His group will continue to recruit exclusive Nationwide agents who have not yet committed to a transition plan. The team expects to lure more over when they learn after the transition deadline how hard it is to start a brokerage from nothing, O'Neill said.
Hub is not the only brokerage that has picked up business from Nationwide. Brown & Brown Inc. announced in August that a subsidiary had acquired a Virginia Beach, Va. agency that had been part of Nationwide's network of exclusive agents.
Nationwide has used independent distribution for nearly a century, and the vast majority of the agents the insurer sells through, some 10,000 in all, are independent. Shore said the company expects that agents being able to sell other insurance products will, in the end, actually benefit Nationwide as well.
"We firmly believe that are agents will be better positioned to grow," Shore said. Those who transition on July 1, 2020, will get ownership of their books of business but with a longer period of restrictions from Nationwide.
