The agent is still the most-used method of buying insurance.
Forrester Research, headquartered in Cambridge, Massachusetts, surveyed adults with insurance who go online at least weekly and found 84% buy homeowners coverage through an agent, 82% buy auto coverage through an agent and 57% buy life insurance through an agent.
But trends also indicate a growing reliance on digital insurance shopping. Google Compare is generating plenty of buzz as the latest online marketplace for auto insurance: Nearly 40% of Forrester’s respondents who have insurance but have never heard of Google Compare say they’re willing to try it.
Tech as Accelerator
Sixty percent of agents say Google Compare will drive change in how they engage with customers and 60% also say it will spur them to increase investment in digital systems. Still, many don’t envision it as a direct competitor.
“I think [Google Compare] will be more of a dispersion source rather than an underwriting engine,” says Jay Howlett, president & owner of Chase & Lunt Insurance of Newburyport, Massachusetts. “We may one day compete with Google on price and product, but nothing compares to an agent when it comes to service.”
Even if independent agents continue to win on value, many are rethinking the definition of “service” as consumer expectations continue to change. Ellen Carney, principal analyst, insurance e-business and channel strategy at Forrester Research, believes these new competitors target traditional agent channels for disruption.
“Google Compare is breathing down their necks,” Carney says. “It’s had a huge impact in its first few months, and I think it will become a huge force when Google figures out how to combine their knowledge of consumer preferences with their search and aggregation capabilities.”
Agency investments in technology will revolve around improving the customer experience in terms of ease of use and convenience, according to Forrester. Three-fourths of survey respondents say improving lead generation is a top priority in the coming year, while 65% will implement or expand a digital marketing strategy and 41% will expand mobile capabilities.
At Watson Insurance in Gastonia, North Carolina, IT manager Debra Hoffmann says most new services introduced to make life easier for customers are on a digital platform. “I think we’ve been forced into that world,” she says. “Customers are moving to other areas, and we have to be competitive. Insurance companies are in a sense competing against us in the service arena because they have the mobile apps and tools that our customers need.”
But it doesn’t end with easy payments and the ability to access a declaration at a moment’s notice. Carney anticipates an even more expansive transformation that involves “digitizing the kitchen table conversation.”
“Digital will take care of the selling,” Carney says, “while the agent will be an advisor, guiding the customer with a tablet or wearable. This changes the engagement model for insurance carriers in that it keeps them more front and center with consumer.”
Increased engagement with the customer throughout the life of a policy must rely heavily on digital because an agency can’t afford face-to-face interactions with every customer all the time. “In-person [engagement] is really expensive,” Carney says. “Consumers are often just as satisfied going to the agent’s or carrier’s website and getting their questions answered.”
Changing the Blueprint
Based on the realities of the digital marketplace and evolving consumer behavior, Carney foresees agents changing the model by adopting what she calls a “service ecosystem.” “The transition from a traditional insurance sales model to a service ecosystem can be challenging,” she says. “Agents know how to sell coverages, but the shift to this layered services model will push many agents outside their sales comfort zones.”
Fortunately, good examples of the service ecosystem model exist. Commercial insurance sellers are already accustomed to pitching loss control services. Carriers and agencies that cater to affluent customers are already offering fine art appraisal and restoration services, employee background checks, and disaster and emergency preparation services.
Here’s how agencies are adapting to the new expectations.
FROM INSURANCE AGENT TO RISK COUNSELOR
Watson Insurance offers 24/7 live phone support, which is a mix of human and digital intervention. Hoffman says an operator can refer the client to a member of the agency’s on-call staff, who can travel to a site if necessary. “We had a house that burned to the ground, and our personal lines manager was on the property with the person helping them take care of things,” she explains.
FROM ADMINISTRATOR TO ADVISER
Watson Insurance will soon migrate to the Applied Epic agency management system, which will enable the agency to host policies on its CSR24 portal for clients who don’t want paper. This will free time for producers to spend on advising clients.
The agency also utilizes Virtual Check, which enables commercial customers to pay premiums online by entering bank routing and account numbers. Unlike with credit cards, there’s no charge and no postage for handling paper. Watson is also considering a similar service for its personal lines customers.
Herlong Bates Burnett (HBB) Insurance in Greenville, South Carolina takes advantage of services on carrier portals, such as posting workers comp claims for a client’s HR staff to review, says COO Tom Bates. Complex issues such as loss frequency might be reserved for a discussion with the carrier.
FROM SELLER TO FACILITATOR
Chase & Lunt has an agreement with a company that handles all its glass claims—an arrangement Howlett says is more effective than if Chase & Lunt handled the claims itself. Again, the customer pays no service fees; the glass shop and insurance company bear associated costs because doing so reduces their workload.
FROM PRODUCT- TO NEED-BASED
Carriers can make this shift to a service model easier for agents by bundling services with the coverage so an agent just has to sell it, Carney says. Some insurers are doing just this by bundling identity theft coverage with identity monitoring services.
For example, in response to payroll provider ADP offering pay-as-you-go workers compensation, Chase & Lunt now offers coverage on those terms. Watson Insurance offers training to customers that require OSHA certification. Employees come in for a two-day course and leave with an OSHA booklet and ID card on a flash drive.
FROM OFFICE-BOUND TO MOBILE
Chase & Lunt agents are 100% mobile optimized. Watson Insurance has a mobile app for clients, through which they can report a claim, take photos, summon a tow service, store policy information or look up agency contact information.
FROM COMPENSATION- TO VALUE-DRIVEN
“We look at the bottom line from a service standpoint rather than from a profitability standpoint,” Bates says. “We look at the services we offer, because if we’re doing them right, the profit appears.”
Of course, digital platforms may come and go, and Howlett conceives of the service ecosystem in a broader context. “I like to think we have a community ecosystem,” he says, noting Chase & Lunt contracts with local businesses like body shops, banks and real estate agents to provide insurance-related services.
“The community ecosystem is raising everyone’s boat,” Howlett says. “They’re referring us and we’re referring them.”
Carney agrees on the importance of acting like matchmaker between your personal lines customers who might need help on a home repair and your contractor customers who can fulfill their needs. “Consider offering a finder’s fee or incentive for the referral,” she suggests.
HBB also “pulls in other experts as partners to satisfy the needs of customers,” Bates says. “If we can get more people into more lines of business, the probability of having them years down the road is much greater.”
But don’t sacrifice your core strengths for a few potentially delighting bells and whistles. “I’m not a big proponent of offering more services than you can handle that aren’t relative to what you do, which is writing policies and making sure proper coverage is in place with affordable and competitive premiums,” Bates says.
The consensus? Agencies that survive and thrive will do so because they think and act more like service providers and counselors, inspired by digital self-service models and aided by significant investments in technology.
“The agency of the future will still deliver the best product and the best price with the best service possible,” Howlett says. “Make your clients feel secure with a sense of trust. That’s always going to be the same.”
John Novaria is an IA contributor.
60% of agents say Google Compare will drive change in how they engage with customers.
Carriers recognize the challenges and opportunities the digital revolution presents. Understanding that the agent is a critical link in their value chain, they are streamlining their interactions with agents to create a more positive transactional experience.
Forrester reports nearly one-third of insurers (31%) whose primary goal is to grow revenues in the next year say they intend to improve the efficiency of channel and re-seller partner relationships to meet their targets—compared to 29% in other industries.
“A number of carriers tell us they’re investing in core system modernization projects, which includes updating their agent portals,” says Ellen Carney, principal analyst, insurance e-business and channel strategy at Forrester Research. “That’s true for pretty much everybody who’s doing a policy administration upgrade.”
“We’re able to do what a lot of larger agencies and brokers can do because of the resources we can access from our carriers,” says Tom Bates, COO of Herlong Bates Burnett Insurance in Greenville, South Carolina.
But while Jay Howlett, president & owner of Chase & Lunt Insurance of Newburyport, Massachusetts, admits things like improved online portals will result in efficiency gains, he thinks carriers can also play a useful role by sticking to the fundamentals.
“What we want in a partnership is the best product at the best price and the best service experience possible for our clients,” Howlett says. “Anything else carriers offer us is gravy.” —JN