How AI Is Shaping the Future of the Independent Insurance Agency

Artificial intelligence (AI) is unlocking ways for insurance agencies to operate more efficiently and focus on what they do best: building relationships and protecting the people, businesses, and communities we serve. From faster quoting to smarter prospecting and more efficient client service, AI is helping agencies work more productively, serve clients more personally, and compete more effectively in a fast-changing marketplace.

Key Takeaways

• AI is helping independent agencies streamline quoting, document review, and policy submissions.

• AI-powered prospecting tools can identify and qualify leads in minutes, reducing acquisition costs.

• Digital service agents are automating routine client requests, improving efficiency and response time.

• AI enables smaller agencies to scale operations and compete with large consolidators without losing independence.

• ISU Steadfast’s AI Working Group helps members adopt AI responsibly, avoid missteps, and stay ahead of industry trends.

Discover the benefits of ISU Steadfast membership today.

AI in the Insurance Agency: Current Trends & Use Cases

Across the industry, agencies are moving beyond experimentation and discovering how AI can simplify, speed up, and improve the accuracy of everyday tasks. “What used to take me two days now takes 10 minutes,” says Jeff Brehmer, President of Smith Davis Insurance, describing how AI is transforming document analysis and policy reviews.

“It’s amazing how much quicker you can get 90% of the way there, versus having to put together everything manually.”

Prospecting & Lead Generation

AI can also reshape how agencies prospect for new business. Today’s tools can identify prospects, analyze market segments, and generate qualified lead lists in minutes — tasks that typically require outsourcing lead qualification to call centers or using existing staff. By automating the research and qualification steps, agencies can reduce their lead-acquisition costs and provide producers with a flow of leads for new business and cross-sales.

Automation

Additionally, agents are using AI to automate repetitive back-office work, including scanning and interpreting policy documents, verifying quotes, building proposals, and preparing submission packets. Todd Hufford, COO of Conner Insurance, notes that AI is also streamlining front-end client communication. 

“We’re developing what we call a ‘digital service agent,’” he explains. “Our first objective is to have AI automatically handle routine client requests, like vehicle changes, then hand off to a live account manager for review. This will save 15 to 20 minutes or more per transaction and enhance the customer experience.”

Hufford explains that the initiative is currently in testing, with the team mapping out service workflows and training the system to recognize common client requests through natural language. The goal is not only speed but also accuracy, ensuring the digital agent can securely process changes, populate necessary forms, and notify the right account manager with a complete, ready-to-review packet. 

“We want the technology to handle the repetitive steps so our people can focus on relationships and higher-value conversations,” says Hufford, describing the approach as a combination of automation and human oversight designed to enhance the personal touch clients expect.

AI Agents

Steven Tuften, Director of AI and Emerging Technology at Steadfast Group (ISU Steadfast’s parent company), explains that agencies are increasingly turning to what’s called “agentic AI.” These are virtual assistants that perform full tasks or workflows rather than isolated commands. 

“It’s where you’ll also start to see real value as these systems cut down time spent on repetitive tasks, allowing agents to focus on what they’re best at — building relationships and providing advice.”

What Does AI Mean for the Independent Agency Model?

AI offers independent agencies scalability, something that larger firms have. “The tools available now help smaller agencies punch above their weight,” Hufford says. “You don’t have to be a giant consolidator to operate efficiently or deliver a sophisticated client experience.”

However, technology shouldn’t replace the personal side of the business.

“The value that independent agents bring is their expertise and communication,” Brehmer says. “AI can’t replace empathy or judgment. It just lets us do more of what we do best.”

Both Brehmer and Hufford warn that there’s a risk in independent or smaller agencies  falling behind. Larger consolidators and direct-to-consumer platforms are investing heavily in AI. Independent agencies that ignore it could struggle to stay competitive. Tuften echoes that concern, noting,

“Agents who use AI to enhance their human skills, such as active listening and problem solving, will thrive.”

The key, all three agree, is choosing technology that supports staff, not replaces them. “There’s a lot of shiny stuff out there that doesn’t do much,” Tuften says. “You need to evaluate tools carefully and focus on those that truly help your team.”

At the same time, agencies must be mindful of the reputational and ethical risks associated with AI, including inaccurate outputs, data privacy concerns, and overreliance on automation. A single misstep in how AI is used or communicated to clients can erode trust, which remains the foundation of every independent agency relationship. McKinsey research highlights the growing importance of ethical AI governance — especially around pricing, privacy, and claims decisions. Agencies must ensure the responsible use of AI to maintain client trust and regulatory compliance.

How ISU Steadfast Drives AI-Powered Progress 

ISU Steadfast is helping its member agencies navigate the fast-moving AI landscape with its AI Working Group. The group includes nearly 30 agency leaders across the United States who meet regularly to share insights, test tools, and evaluate real-world applications.

“The working group is agent-led,” Hufford explains. “We set our agenda, identify which tools to explore, and share what is and isn’t working. Sometimes that means discovering a great product; other times, it’s realizing something’s overhyped.”

“We help members understand what to look for in an AI product and make informed decisions, from security certifications to responsible data practices,” Tuften adds.

Innovation Without Isolation

One of ISU Steadfast’s greatest strengths is its spirit of collaboration. “Agencies don’t have to figure out AI alone,” Hufford says. “You can learn from others who’ve already tested solutions and avoid repeating mistakes.”

With a supportive network behind them, independent agents can innovate at their own pace, experimenting, sharing insights, and finding practical ways to integrate AI without giving up their independence.

“Together, we’re moving everyone up the knowledge curve,” Tuften says. “That’s the real value: progress through collaboration.”

Embracing the Future With AI

AI is about empowering agents to focus on what clients value most: empathy, insight, and trust. As Tuften points out, there are moments, especially during a claim, when technology can’t replace a human connection. “When someone’s just experienced a loss, they don’t want to talk to a chatbot. They want to speak with a real person who can reassure them and guide them through the process.” AI can handle background work, so agents have more time to be present in moments that truly matter to clients.