Carrier-agent friction eases as visibility gap widens

First Connect has published its 2026 State of the Industry Survey on carrier-agency relationships in insurance. The study found year-on-year declines in several points of friction between the two sides.

The survey drew responses from 238 independent agencies and 44 carriers and managing general agents. Major challenges around timely quotes, understanding carrier appetite and appointment timing all eased from the previous year.

Significant challenges in receiving timely quotes fell to 11% from 22%. Problems understanding carrier appetite declined to 8% from 17%, while significant appointment timing challenges dropped to 18% from 31%.

Coverage availability also improved as an agency concern, falling to 35% from 44%. The report said the shifts pointed to better operational responsiveness between carriers and agents after several years of strain.

At the same time, the data suggested many carriers remain narrowly focused on internal measures and may have limited visibility into broader market changes. Three-quarters of surveyed carriers said they do not regularly use third-party market intelligence to assess competitive positioning and market opportunities.

That finding stood out alongside the improvement in day-to-day interactions. Carriers appeared to be making progress on service issues that affect agents directly, but many still lacked information on where business is being placed elsewhere and how distribution patterns are changing.

Competitive pressure

Direct-to-consumer competition remained the biggest pressure on the agency channel. The share of respondents citing it as the largest factor affecting agent distribution rose to 43% from 37%.

The survey also found that customer expectations for self-serve quoting, faster policy issuance, automated application prefill and policy customisation remained high or increased from the previous year. Together, those demands are putting more pressure on carriers and agencies to improve speed and digital processes.

Independent agents now compete in a more crowded distribution environment that includes digital aggregators, embedded insurance providers and direct-to-consumer carriers. The report suggested these parallel channels are forcing traditional insurance relationships to adapt more quickly.

First Connect said the drop in reported friction reflected an industry starting to remove some long-standing operational obstacles. It also cited a softer market as one factor easing pressure on carrier-agent relationships.

"The friction that has defined the carrier-agent relationship for years is finally beginning to ease," said Aviad Pinkovezky, CEO, First Connect. "We're seeing meaningful improvements in quote turnaround times, appetite transparency and appointment responsiveness. That's encouraging because partnership is the unit of growth in this industry. While technology and workflow improvements are helping, a softening market is also reducing some of the pressure that has strained carrier-agent relationships in recent years. When agents and carriers are aligned, both sides spend less time managing friction and more time serving customers and growing their business."

AI uptake

The survey found a gap between attitudes toward artificial intelligence and its current use in agency operations. While 53% of respondents said they were optimistic about AI's long-term impact on insurance, only 35% of agencies said they use AI in day-to-day work.

The findings suggested that caution, rather than outright resistance, is shaping adoption. Insurance workflows carry underwriting, compliance and customer risks, which can make experimentation harder than in other sectors.

As a result, agencies appear to be focusing on limited uses that can improve efficiency while keeping staff oversight in place. The report described this as a measured phase of adoption rather than a broad shift across the sector.

"We're entering what could be described as the fast-follower era for insurance technology," said Pinkovezky. "The conversation is shifting from whether the industry should modernize to how quickly organizations can operationalize better intelligence, automation and digital experiences before those capabilities become baseline customer expectations."

Visibility gap

The survey's broader message was not only that workflow friction is easing, but that market visibility may now be the bigger issue for carriers. The report said many insurers still rely mainly on metrics such as conversion rates, loss ratios and premium growth to judge performance.

Those indicators can show how a carrier's own book is performing, but they do not show where agents may be placing business with rivals or where new opportunities are emerging across the distribution system. In a fragmented market, that leaves carriers with an incomplete picture.

The study argued that broader intelligence on agent behaviour, customer demand and competitive movement is becoming more important as the distribution structure changes. That need is becoming more urgent as customer expectations continue to rise and agencies face greater pressure from direct channels.

"For years, the industry's biggest challenge was friction," said Pinkovezky. "Today, it's visibility. Most carriers are measuring what is happening within their own book of business, but growth increasingly depends on understanding what is happening outside of it. You can be performing well in your own lane and still miss where the market is moving. The carriers that pull ahead will be the ones that combine strong internal performance data with a broader view of agent behavior, competitive activity and emerging opportunities across the ecosystem."